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How To Handle Unauthorized Sellers On Amazon

  • Written by  Alex Chaidaroglou, Altosight

0aaaAlex Chaidaroglou AltosightIt’s fairly obvious that Amazon is growing by leaps and bounds. In fact, Amazon was estimated in July 2018 to own 49.1% of all online retail purchases in the U.S., and 5% of total retail purchases in the U.S.

If you think about it, it’s pretty insane. And it doesn’t show any signs of stopping any time soon.

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This growth poses both opportunities and problems for retailers, aspiring retailers and businesses that manufacture their own products, which they sell through those retailers.

The retailers saw that if they sign up for Amazon and sell their products inside their ecosystem, they stand to gain many extra customers, with minimal effort. Also, for an extra fee, they can get their products automatically shipped to their customers by Amazon.

Aspiring retailers also saw that if they can source some private label products or some branded products (counterfeit or not), they can make a pretty good income.

And here lies the problem for both the professional retailers and the brands that sell their products through those retailers.

Issues With Unauthorized Amazon Sellers

Before we get into the details about them, let’s see what issues these unauthorized sellers cause.

First of all, they are killing the margins of legitimate, long-term retailers, by offering their products at a very low price to get a quick sale.

Naturally, the long-term retailers will ask from the manufacturers or from the distributors of these products to act on these unauthorized sellers. Otherwise they might even stop carrying their products.

However, these unauthorized sellers not only cause problems for the retailers; they also cause damage to the manufacturers of these products. If some of these sellers start selling counterfeit products from this manufacturer, the consumers will start to lose faith in that brand.

Also, if they start engaging in a long-term price war that will lead to consistently lower prices for the products of the manufacturer, it will also damage their brand image.

These are serious issues that have to be addressed by the manufacturer. So what can we do to counter them?

Sign Up For Amazon Brand Registry

The first and easiest thing to do is to sign up for Amazon Brand Registry.

Through Amazon Brand Registry, you will have better control of your brand on Amazon, and there are a number of other benefits.

It’s always evolving, and the version 2.0 which was released last year allowed brands more control over their listings and faster support.

Before you start tracking and reporting unauthorized sellers, though, you have to lay the groundwork in order to both have more success and have Amazon act on your claims.

Lay The Groundwork

Just because you tell Amazon that your products are sold by unauthorized sellers doesn’t mean that Amazon will act on it. Even if they are counterfeit products you will have to provide proof.

In order to make your work easier, you have to enhance your products with the following:

1. Customer benefits, as in guarantees, warranties, return policies and special promotions that are offered to customers only if they purchase the product from an authorized retailer or distributor.

The reason is that when you make a test order from Amazon to check the seller or the product, you can then tell Amazon that this product can’t be sold as “New,” because it’s an unauthorized seller and the warranty is void.

In this way, the seller won’t be able to list your product as “New” and compete with your authorized sellers.

2. Quality controls, like certain packaging, storage and shipping protocols that, if they are not followed, the product won’t be used as intended by the manufacturer.

This might be a little trickier, because if some of your legitimate retailers send their products to Amazon to be sold with Fulfillment By Amazon (FBA), they might break this.

After that, you have to monitor (at least once per day) the sellers of your products on Amazon in order to understand their case. This can be done either manually or by using software.

Know though that it’s virtually impossible to eliminate 100% unauthorized sellers, but you should aim for an 80/20 ratio with regular monitoring.

Identify The Case Of The Sellers

Now, once you have a daily list of the sellers selling your products, you have to filter out the legitimate retailers and keep only the sellers that you don’t know.

Having also the name, price, condition (New/Used) and stock of each product they are selling can be informative.

Based on this information you can generally group them into two categories:

1. Individual seller: A seller who sells only a couple of units or SKUs. This seller is probably an individual liquidating the products he got as gifts.

A subcategory of this seller can be professional “Retail Arbitrage” individuals, who go to major retailers, scoop up their clearance items and relist them on Amazon for a profit. These are one of the most common causes of complaints of legitimate retailers.

2. Counterfeit sellers: These sellers either knowingly or unknowingly sell counterfeit products of your brand.

These kinds of products can be acquired online or from overseas, and sometimes the seller might be a first-time retailer, who thought they were original products of your brand.

Regardless, you have to identify them and act on them fast. Later we will see how.

3. Liquidators: These are sellers that got your products from a shop closing down or through other means. They sell them through Amazon for a profit.

To identify them, you should check how many SKUs of yours they sell and monitor them over a period of time to see if they are a short-term or long-term seller.

You should also join some groups on Facebook (generally they include the keyword “FBA”) in order to keep a pulse on the market and on retail arbitrage sellers’ methods.

Daily Brand Monitoring In Amazon And Other Marketplaces

Once you have identified the sellers you want to deal with, you can take a number of actions, with various results from each one:

1. Usually, the best method is to perform test buys and then file A to Z claims. If you have laid the groundwork it should be fairly easy to win them, since the warranty will be void and you can claim it’s not “New.”

At least these sellers won’t be able to sell your items at full price, which will heavily discourage them from listing them again because they won’t be able to turn a profit.

2. For copyright infringement you should submit a report here:

https://www.amazon.com/report/infringement

3. Last but not least, you can send cease and desist letters, but sellers are catching up and have started to ignore them.

You can try them and see how they perform. It’s the fastest and easiest method after all.

Conclusion

You have to set up a process to monitor your brand’s product listings, as well as who is selling what, how often and at what price.

After that, you will have to classify each seller to take the correct actions. If you have laid a bit of groundwork beforehand, it will make your life easier.

Also, for large brands, Amazon is allowing them to gate their brand, which can block sellers from listing their products. Keep an eye on this as it may expand to small brands too.


 

Alex Chaidaroglou is the director and co-founder of Altosight, the most accurate online price monitoring platform. Altosight helps brands to monitor and reduce their Minimum Advertised Price (MAP) violations, track their prices accurately and those of their competitors. Chaidaroglou has years of experience in digital marketing and selling on Amazon. He shares his thoughts on digital marketing through his blog, WeeklyGrowth.

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