On the surface it would seem like having a lot of online stores selling a brand’s products is a great thing. More sellers, means more consumer exposure and sales, right? In reality, while there could possibly be an increase in everyone’s revenue, too many sellers can actually hurt a brand in a number of ways. Here are just a few examples:
Hyper-Discounted Prices: The only real edge that online retailers have is a lower price than the competition. So, in order to get the shoppers’ money, discounts are frequent and deep. Low, low prices diminish brand equity, reduce profits, and create unlevel playing fields for brick and mortar retailers.
Brand Commoditization: The more places where a consumer can purchase a product, the less unique and special that product becomes. Too many (and the wrong) retailers hurt a brand's reputation and destroy attempts to make it stand out from the pack.
Decreased Shelf Life: Brands invest a lot of time and money into creating their products. One of the things they rely on is that the product(s) can be sold for a long period of time. Too many sellers can turn long-term trends into here-and-gone fads.
Decreased Brand Loyalty: Some seller strategies make a brand look bad. Offering discounts but not actually having the product, charging excessive shipping costs, using poor quality images and inaccurate product descriptions may be the seller’s fault, but most consumers blame the brand.
For those reasons and more, many brand-owners are now trying to limit who sells their products in online marketplaces or via third-party sellers. Or, at least, trying to limit the number of unwanted, Unauthorized Sellers. To do this, they are creating a select group of Authorized Sellers, utilizing Authorized Reseller Policies and employing Unauthorized Seller enforcement tactics.
To most brands, Authorized Sellers are retailers that purchase inventory directly, or from their approved wholesale distributors via formal distribution agreements. In many cases, the retailer applied for approval based on specific criteria. Some of those include:
Full-Disclosure: What are their store names and on what platforms do they sell (e.g., Amazon, eBay, etc.)?
Transparency: Do their online stores have contact information (not just for consumers, but so the brand knows who they are at all times)?
Ratings: Does the seller have five stars with no bad customer reviews?
Product Selection: Does the seller specialize in the brand’s industry (e.g., pet, gift, toy) or do they list products on their storefront across a wide spectrum?
Procurement Sources: What sources does the seller use to purchase inventory?
If the brand is satisfied with the seller’s answers, they may agree to authorize them. As long as the seller adheres to the brand’s policies and agreements (e.g., MAP Policies, Authorized Reseller Policies, etc.) they will stay authorized.
There are two classifications of Unauthorized Sellers:
“Unauthorized (Known)” Sellers
These are retailers that are still getting inventory from known sources. They’ve usually become unauthorized based on continued MAP policy non-compliance. Other reasons include selling on prohibited platforms like Amazon or eBay (some brands have marketplace exclusions), not using the brand’s approved images and product descriptions, not paying their bills within terms, and other reasons.
Since the brand knows how these sellers get their inventory and are not selling counterfeit products, stopping them would seem easy; just cut off the product pipeline. Unfortunately, today’s retailers have the greatest access to goods than at any other time in history. So, even if the brand or their distributors refuse to sell to them, they can just get it somewhere else. Here are just a few ways:
“Unauthorized (Unknown)” Sellers
These are the most dangerous types of unauthorized sellers. Brands have absolutely no idea how these stores get inventory. They use intentionally unrecognizable store names and bogus addresses. Many Unauthorized (Unknown) Sellers may actually be known entities but they’ve intentionally hidden their identities. Others may be counterfeiters.
Although it’s vital, figuring out their sources is very difficult. Unless you subscribe to a service with a merchant investigation department, like MAPP Trap, it can be a very time-consuming and expensive job.
How to Stop Unauthorized Sellers
The first step to stopping Unauthorized (Known or Unknown) Sellers is to use a sophisticated service like MAPP Trap to search the internet and reveal seller contact information. The brand then needs to use internal staff, attorneys or a company like MAPP Trap to send notices to the sellers. If the sellers are above board they will stop. If not, then advanced strategies need to be employed to preserve your brand value. The intensity and costs of using the strategies depends on the number of rogue sellers, the brand’s popularity, and brand’s comfort level. These strategies include:
Stop selling to them (if direct accounts)
Buy out their inventory
Conduct enhanced investigations
Conduct forensic accounting
List them on corporate website
Send Cease & Desist notices
Circulate Do-Not-Sell lists
Cut off uncooperative sales reps and distributors
Send Intellectual Property Rights infraction notices to marketplaces and domain registrars
Sue for tortious interference
Many marketplaces, including eBay and Walmart, are very helpful to brands in their efforts to expose and/or remove Unauthorized Sellers. Even domain registrars like GoDaddy are cooperative in quality control by forcing websites to remove copyrighted and trademarked materials. Amazon.com, however, remains extremely unhelpful with Unauthorized Seller removal. They make it extremely difficult, if not impossible to remove sellers or uncover unauthorized sales.
Like all businesses, brands want to make money. They want stores to buy their products then sell them to their shoppers. But they are rightfully wary, and believe that not every sale is a good sale.