Are All Online Sellers Authorized Sellers?

When it comes to online brand protection there are many proven strategies for brand-owners to take. The two most frequently adopted ones are MAP (Minimum Advertised Pricing Policies) and ARP (Authorized Reseller Programs). Brands usually adopt them both. But what are they and what, exactly, do they protect?

A MAP Policy protects retail margins and brand perception. It is a statement that tells retailers the lowest price at which its products may be advertised or listed. It doesn’t affect the ultimate sale price. It’s not an agreement that must be signed, rather, it’s a statement made by the brand that establishes a mandatory rule for merchants that want to sell its products. Consequences of non-compliance range from loss of discounts and payment terms all the up to suspension of the seller’s account with the brand and/or its distributors. Click here for a more comprehensive explanation of MAP Policies.

An Authorized Reseller Program establishes and supports a brand’s distribution and, through that, bolsters its perceived value. It helps the brand to control perception in a number of ways: Seller type (e.g., mass market v. specialty, marketplace v. dedicated ecommerce stores), intellectual property usage, etc. Although it can be a policy, it is more powerful when used as a signed agreement. The obligations and benefits of being authorized are added to the terms and conditions of sale. Click here for a more comprehensive explanation of ARPs.

While implementing a MAP Policy is fairly straightforward, the creation and implementation of an ARP is a bit trickier. Besides determining and setting up internal processes to vet new sellers, brands need to consider how to handle their existing online merchants. At MAPP Trap, we propose two primary approaches.

“Everyone is Authorized until they’re not.” Or, as we like to call it, the horses are already out of the barn. For brands that already have a lot of online sellers, even if they don’t know all of them, this strategy provides an easier starting point. They don’t need to automatically de-authorize, vet, and begin re-authorizing retailers. They can take some time to review who the sellers are, how they got inventory, and whether they fit the brand’s partnership requirements. While doing this, the brand can launch MAP and de-authorize based on non-compliance. Companies that want to continue carrying a brand will comply with MAP and the Authorized Reseller program. They can observe seller behavior and, by not acting in haste, may actually be able to find new brand partners in the existing population of merchants.

This method can present certain challenges. Seller visibility may be difficult to determine, which means de-authorizing sellers may be a futile effort because they can continue getting inventory. This is especially true for brands that work with wholesale distributors. Additionally, if the brand launches an ARP, their favored retailers may balk at them continuing to allow such a large population of sellers. Lastly, damage may already have happened, in which case, the second strategy may be the best first choice.

“Nobody is Authorized until they are.” This approach is ideal for new brands that don’t have a lot of online distribution yet. They have the opportunity to shape their online footprint according to the characteristics stated in their ARP. They can control who sells their products and dynamically authorize and de-authorize retailers based on behavior before any damage can be made. This is the best strategy to take overall. For brands that started with the “Everyone is authorized until they’re not” perspective, once control has been retaken, they should move to this method. This method should be employed for any new accounts that want to sell their products, even if they begin with the everyone is authorized strategy.

For brands that work with independent sales reps and wholesale distributors, both of these strategies can be challenging. They must require their sales representatives to either vet and get signed ARP Agreements from their potential new accounts or send them to the brand for approval first. Unfortunately, when it comes to seller visibility for brands that already have undesired sellers, wholesale distributors are frequently unwilling to provide information about their accounts.

It’s important to note that implementing MAP policies and Authorized Reseller programs may have legal implications in some jurisdictions. To ensure that brands navigate these strategies within the boundaries of the law, we recommend seeking legal counsel. Attorneys can provide valuable guidance on the creation, implementation, and enforcement of these policies, helping you protect your company, as well as your brand.

Choosing between these two brand protection strategies may seem simplistic but many times simple is the best way to go. Whichever one you choose is just a starting point because, ultimately, you should end up with the second strategy. “Nobody is authorized until they are” is ultimately the best long-term choice for brands looking to preserve their value. It offers greater control and ensures that your brand remains in the right hands, safeguarding its reputation and success.