In this installment of our Four Pillars of Online Sales Control series, we tackle Pillar Two: Stopping Unauthorized Sellers. We will cover:

  • The harms caused by unauthorized sellers
  • Mistakes brands make in addressing unauthorized sellers
  • The legal foundation necessary to combat unauthorized sellers
  • How to use data-driven, precision enforcement to help stop unauthorized sellers and drive maximum ROI within your brand’s enforcement budget

As we explained in our post on Pillar One, Channel Management, a deliberate channel management strategy – properly communicated and monitored – is a critical first step towards achieving online sales control. However, as many brands know all too well, the best laid channel management strategy can be quickly disrupted by unauthorized sellers. Because online marketplaces like Amazon.com are essentially open platforms, virtually anyone able to source your brand’s products can sell there – regardless of your brand’s specific channel management strategy. Often, these sellers do not adhere to brand quality standards, do not contribute to marketing and conversion efforts and do not respect manufacturer MAP policies. The illustration below shows the ever-expanding brand harms caused by unauthorized marketplace sellers:

Establishing the Necessary Legal Foundation – The First Step towards Stopping Unauthorized Sellers

While many brands are plagued by unauthorized sellers, there is a massive amount of confusion regarding what tactics are effective against them. For example, there are seemingly countless brand protection and monitoring software companies that tout their ability to remove a percentage of unauthorized sellers using automated “scary” letters, while others claim to have magic marketplace takedown tricks, and others claim to “know” secret marketplace tactics that others don’t. The reality, however, is that none of these tactics are effective because: (1) the law generally protects product resellers, and (2) these tactics, even if successful against some number of small, unsophisticated sellers, do not drive meaningful commercial outcomes.

Instead of playing “whack-a-mole” with such baseless tactics, brands first need to establish the requisite legal foundation that provides an actual basis for enforcement against unauthorized sellers. We have written extensively about the legal foundation necessary to stop unauthorized sellers. These blog posts and white papers provide a deep discussion of this foundation:

With the requisite legal foundation in place, brands can overcome the primary defense asserted by unauthorized sellers – the first sale doctrine – and leverage their foundation to conduct legally backed, precision enforcement against unauthorized sellers.

Data-Driven, Precision Enforcement: The Key to Driving Optimal Commercial ROI within Unauthorized Seller Enforcement Budgets

Once brands have established the requisite foundation, they should conduct enforcement in a manner that drives real commercial outcomes, as opposed to focusing on meaningless vanity metrics (like “take down” percentages). Brands do not have the time or the resources to chase every seller on online marketplaces. Instead, brands need to leverage a data-driven process that determines (1) which sellers are most impacting commercial KPIs and (2) which tactics are likely to be effective against those sellers. When brands are able to prioritize sellers by the level of disruption they cause and then apply the tactics most likely to be successful against those particular sellers, they are empowered to drive real business outcomes, not meaningless “takedown” numbers. Brands should consistently measure the success of their enforcement program at driving actual business KPIs, including: authorized sales growth, brand value stabilization, review sentiments and any other important metrics to their business. The graphic below illustrates this process, and additional information is provided in our white paper, Data Driven Precision Enforcement.

Conclusion

Brands seeking online sales control must account for the disruption that unauthorized sellers will cause. Without a strategy in place for stopping unauthorized sellers, brands will not achieve optimum, profitable growth on online marketplaces. To effectively combat unauthorized sellers, brands need to establish the necessary legal foundation and then engage in a data-driven, precision enforcement process tailored to driving real commercial metrics.

Vorys eControl has conducted unauthorized seller enforcement services for hundreds of brands against many thousands of unauthorized sellers around the world. Our lawyer-led foundation team works with clients to establish an unauthorized seller legal foundation designed specifically for each brand. Our precision enforcement team leverages experienced lawyers, together with highly sophisticated data scientists, analysts and investigators, to identify, prioritize and remove those unauthorized sellers most disruptive to your business with the goal of driving maximum commercial ROI within dedicated budgets.