• by James Thomson , Columnist, January 12, 2018

One afternoon you get a call from a long-time retailer complaining that your product is being sold on Amazon at prices 20% lower. Your retailer is frustrated because he’s repeatedly being asked by customers to match these lower prices, something he can’t afford to do. 

If you’re like so many brands today, not only do you not recognize the name of this Amazon reseller, you have no idea how to stop them. 

How do you make sure you know the resellers of your brand on Amazon? How can you tighten distribution to avoid big leaks?

It’s important to understand how Amazon looks at situations involving gray market sellers or resellers not authorized by the brand to sell on Amazon. The Amazon marketplace is an open marketplace and just about anyone can get a third-party seller account. 

Amazon also makes very clear that it is not in the business of managing or enforcing a brand’s distribution policies; that is completely up to the brand to work out with resellers. As long as the products are not demonstrably counterfeit or stolen, Amazon will welcome every reseller to offer its wares on Amazon, because increased competition typically leads to lower prices, which drive more customers to shop Amazon. 

Amazon’s customer-centric mentality is focused on the shopping customer, not the brand or manufacturer. With Amazon’s ultimate goal of becoming the Earth’s primary shopping destination, then low prices, constant supply and high seller performance criteria drive Amazon’s incentives much more than keeping any brand happy. 

Who is selling your brand?

For brands that have broad distribution of their products, it can be very challenging to track down who is diverting inventory to sellers that are not authorized to be selling on Amazon. Sometimes the distributor or retailer is the Amazon reseller, operating under a “doing business as” name, purposefully looking to hide its identity.

Sometimes the distributor or authorized reseller is diverting product to make a quick buck, unbeknownst to the brand. And sometimes the product shows up on Amazon because it is poorly accounted inventory that came through the product returns channel of the brand’s brick-and-mortar operations. 

Finding the leaks

There are a number of technology and operational precautions that can be used to identify and prevent product diverting. These include: 

• Constructing and sharing anonline reseller policy with anti-diversion language with all known distributors and retailers

• Regular policing with clear, consistent enforcement when a distributor / retailer violates the policy

• Integration of RF Tags, serial numbers or invisible ink for use with a test buy program to identify which distributors / retailers are the source of product purchased from unauthorized resellers

• Identify product features that constitute forms of trademark (such a handling requirement, storage requirements, warranty terms) and work with a trademark attorney to enforce potential trademark violations

• Track and investigate unexpected increases in sales for specific distributors/ resellers; often these are signals of products being diverted

Even if a brand manages to clean up the Amazon channel for its products, the Amazon channel is here to stay. That’s why every brand should build an active Amazon channel strategy, whether to sell product, advertise the brand, experiment with new products / bundles, or ensure fair share of voice across your industry.