Let’s put things into perspective – how would you react if you went to buy something online only to find that the product you chose had a multitude of different sellers and even price points? More than likely, you would be confused. How are you supposed to know which one is the real deal? This creates a lack of trust and usually ends up with you, as a buyer, having to find a different product or just dropping the whole thing all together.
The average consumer doesn’t have time for all that. And, as a brand, neither do you. Despite this, having your product aligned with different sellers isn’t inherently negative. Unless, of course, you aren’t managing those sellers the way you should.
When relying on third-party (3P) sellers, brands must be aware of the various risks to their profits and reputation that can occur if they don’t monitor and manage these partnerships. In this article we work to explore:
- The importance of establishing comprehensive guidelines
- Key questions about protection against unauthorized sellers
- Advice on often-overlooked aspects of brand control policies
- Essential brand control tools
- The significance of fostering relationships with trusted sellers and distributors
Truth is, not all 3P partners are bad, and we’re here to set the record straight so you don’t have to learn the hard way.
Understanding 3P Seller Risks
Lacking strong brand control prevents brands from truly realizing their maximum growth potential. This is due to issues that emerge that negatively impact their ability to optimize, manage, and even distribute their products. These issues include:
- Multiple Resellers: Take note - Amazon and other marketplaces offer a selling platform accessible to anyone capable of sourcing your products. That means anyone who buys, steals, or in some other way obtains your product has the right to resell, unless you specify otherwise. And, as this number rises, your marketplace performance sinks. If you want to succeed on marketplaces, it becomes necessary to establish limitations on who is allowed to sell what.
- Price Erosion: When multiple sellers offer the same product, with only pricing as a differentiator it results in the erosion of brand value. This can lead to challenges in implementing successful Minimum Advertised Price (MAP) or other pricing programs.
- Inventory Management: With multiple sellers competing for the Buy Box, it creates an unpredictable environment where sellers base their ordering decisions on historical sales, which may not accurately reflect the current demand. This causes issues with staying in stock and carrying the correct inventory.
- Negative Customer Experience: 81% of consumers need to trust a brand to consider buying. Yet, having multiple sellers diminishes this trust by creating a variety of experiences your buyers face, and not all of them are good. It becomes impossible to monitor them all and can quickly erase your brand's good standing. Increased prices or fees from these various sellers also put your product at risk of reduced shelf space or being dropped from their offerings altogether.
- Content and Ad Optimization: Something that all the above risks have in common is the impact they have on the Buy Box. Because of these disruptions, advertising dollars get spent inefficiently and have limited effectiveness. Certain ads will not run when a brand does not own the Buy Box. For others, brands can experience ROI erosion from both onsite and offsite ads directing to inconsistent product detail pages further impacting overall growth tactics.
Establishing Guidelines and Policies
Despite these negative implications, there are things you can do to help guard against unauthorized sellers or sellers that may not represent your product positively. When entering a new seller partnership, the first action should be to create guidelines. Establish clear limits expressing who can sell what and how it correlates with your go-to-market strategy. This becomes a true 1 to 1 relationship between the product and the seller. Not having these guidelines in place sets your product up for wide distribution, allowing anyone to sell your product.
Next, have policies in place to help protect against those who may venture outside of the guidelines you have created. The idea is to prevent a second-step distribution. Meaning, your brand only sells to trusted partners and that trusted partner is only allowed to sell within specified marketplaces and conditions. Circumstances that go outside those policies would be at liberty for removal.
When discussing this topic with Spreetail’s Director of Merchandising Strategy, Nate Williamson, he had this advice to give to brands seeking to better understand how they can control their marketplace reputation:
“Through the first sale doctrine, any entity that acquires your product legally has the right to sell your product on any channel they deem fit, unless you have established a foundation to prevent against those sales, such as a material difference, warranty difference, or some other form of foundational and distribution policy. Identifying your go-to-market strategy is of the foremost importance. Once you have identified that, preventing sellers from disrupting that strategy should be your focus.” - Nate Williamson
Helpful Brand Control Tools
Outside of these policies and guidelines to help you from a legal standpoint, many marketplaces have tools that help guard your brand against unauthorized sellers who may be infringing on your brand and IP rights. Here are just a few that can help protect you:
- Brand Registry: Amazon Brand Registry helps you protect your intellectual property (IP) and manage your listings while allowing you to detect and report suspected intellectual property infringement.
- IP Accelerator: Amazon Intellectual Property Accelerator connects brands with a curated network of trusted service providers which offer trademark registration services at competitive rates.
- Amazon Transparency: Transparency can help prevent customers from receiving the wrong version of your authentic product. Amazon requires all sellers to provide your brand's unique Transparency codes before the products can be listed or shipped to customers.
- Amazon Project Zero: Project Zero uses the power of Amazon technology combined with brand insights to detect and remove counterfeits. You can also add unique codes to your products to proactively prevent counterfeits from reaching customers on a unit level with our optional serialization service.
- Walmart Brand Portal: This is an easy-to-use unified hub where companies can manage various brands, submit multiple types of intellectual property claims, and track claim status.
- Verified Rights: The Verified Rights Owner (VeRO) Program ran through eBay allows owners of intellectual property (IP) rights and their authorized representatives to report eBay listings that may infringe on those rights.
At the end of the day, even with the help of these tools, the best resource of all are the relationships you build with trusted sellers and distributors. Building a genuine relationship with 3P partners helps negate many of the risks involved with having multiple sellers – especially if that partner happens to be an accelerator who can help market, stock, fulfill, distribute, and protect creating the ultimate collaboration.
The world of brand control and unauthorized sellers is a difficult one to navigate. Not only from a time and resources standpoint but there are also legal nuances and regulations that can be confusing. Instead of trying to go it alone, this is where a trusted 3P partnership comes into play, specifically with Spreetail.
We connect your brand with a third-party law firm with experience in eControl to establish a solid legal foundation and enforce the boundaries that support your go-to-market strategy – giving you back all the control.
Not sure how your brand is being impacted from 3rd party sellers? Fill out our form to talk to one of our buyers and discover how much your brand is being disrupted.