IRVINE, California — Amazon shoppers are often unaware their purchases are sold by unauthorized third-party vendors, rather than by Amazon, authorized sellers or the brand itself, leading to an array of problems and pain points for brands, according to two industry experts participating in “Protecting Your Brand Online,” a webinar hosted by Advantage Digital Commerce, a division of Advantage Solutions.
As long as a brand’s products are available to be sold, sales through unauthorized third parties will exist, according to panelists Michelle Dailing, director of brand protection for Sage Tree LLC, an Advantage Digital Commerce agency, and Denise Mosteller, director of brand protection for TrackStreet.
Amazon’s Marketplace, the online retailer’s platform for third-party sellers, has long been plagued by counterfeits, price degradation and bad digital content, Dailing said. “Up to 4,000 new sellers enroll in Amazon Marketplace each month in the U.S. alone,” Dailing noted, “and sales by third parties — which include authorized sellers and unauthorized sellers that are unidentified rogue sellers — now account for 54% of Amazon’s online sales.”
Third-party sellers may sell anything they want at any price they want to, Dailing noted. “Amazon does not dictate [third-party] prices. Quite often you see very high price points and very low price points, mainly due to how products are acquired.”
Products sold by unauthorized third-party sellers are subject to quality control issues, such as expired products, and bad content, including erroneous or misleading product descriptions — all of which can affect brand equity, she said. “We also see counterfeit products and missing or incorrect Q&As. If someone is shipping your product and has no vested interest in your brand, they will ship damaged goods, goods past expiration or broken, leaking packaging. These are things that prompt consumers to leave poor product reviews.”
Loss of brand equity online negatively impacts brick-and-mortar sales, as roughly 80% of shoppers start their research online and many research products on Amazon before they walk into a store to make their planned purchase, Dailing said.
Relationships with retailers may also be strained by third-party vendors who are disrupting pricing. “If you have third parties upsetting your pricing, you could have retailers come back to you asking, ‘How are they selling it for this price?’ and wanting to discuss margin to reduce the price to stay competitive with online prices,” Dailing said.
To avoid third-party pain points, brands must have a clear distribution and channel strategy. “You may be selling to authorized distributors that sell to dealers, who are then selling to retailers and/or third-party Amazon sellers,” Mosteller said. “And you have shoppers who are going into retail stores and buying bulk discount items to sell on their own third-party Amazon store, leading to muddy waters very quickly.”
To help protect a brand’s integrity and intellectual property, Amazon offers several tools. Amazon’s Brand Registry, for example, enrolls brands with a federally registered trademark and helps them combat the sale of counterfeit goods, trademark infringement, and copyright and patent infringement, and allows brands to have more control over product pages and how listings appear to shoppers. Registering products through Amazon’s Brand Registry provides Amazon with richer data, enabling the platform to proactively take down counterfeit listings, Mosteller said.
Another tool that helps brands protect themselves is Project Zero, an initiative to give trademark owners more power to auto-remove counterfeit products. To be eligible for the program, a brand must be enrolled in the Amazon Brand Registry and have submitted trademark violation reports with a 90% acceptance rate.
Finally, Transparency is an Amazon product serialization service that identifies authentic goods by tagging every product with a transparency code. No code, no place in the Amazon Marketplace.
Outside of using Amazon tools, many brands are partnering with legal firms and service providers to help determine the right distribution policies and marketplace monitoring tools to ensure their products are going to the right places and are sold by the right people, Dailing said. “The first step to brand control is to build or update your agreements, first-party sales doctrine and distribution policies to include the right language protecting products from being sold online in any unauthorized capacity. Anyone who is selling online would apply for authorization.
“The next step is to monitor marketplaces and enforce against unauthorized sellers. If there is still no resolution, legal action may be necessary. We see 100% compliance once attorneys get involved, leading to total e-commerce channel control.”
To consider taking legal action, brands must have a strong foundation with the necessary language in agreements and policies. “Brands should be proactive and think about who they want to sell their products,” Dailing said. “Determine what qualifications need to be met and what makes a dealer a good partner. It’s also important to educate the company, especially the sales team, on what makes a good customer. No reason to work so hard to clean up a system just to continue filling it with problems.”