Third-Party Seller Enforcement and Why You Should Care

This article was originally published in the Fall 2018 Inside Advantage newsletter. 
With the rise of third-party sellers only gaining speed, are you doing everything you can to protect your brand?

The explosive growth of eCommerce across all categories has created a unique challenge, Third Party (3P) Sellers and Marketplace Sites. Marketplace sites allow for sellers to enter the platform and sell a variety of items through well-known and recognized URLs such as Amazon.com, Walmart.com, and Jet.com. Planet Retail RNG estimates that Amazon 3P sellers already account for over 50% of Amazon sales; it is predicted that by 2022 Marketplace sellers will account for $130 Billion of the total gross merchandise value.

The concern is that 3P Sellers are controlling the price to the consumer and eroding the brand equity that brands have worked so hard to develop.  Many call it the “Wild West of Retail” and most brands struggle to gain control of their online presence.

Planet Retail RNG estimates that Amazon 3P sellers already account for over 50% of Amazon sales…

What Can You Do?

To help to identify the scope of their 3P seller issues, brands should ask themselves a few questions:

  • How many re-sellers do they really need selling the brand on a retail site?  
  • Are these re-sellers representing the brand appropriately; appropriate pricing, great content, answering questions, good shipping experiences, etc.?
  • Are the re-sellers affecting product reviews negatively?
  • Is brand equity or consumer confidence affected?
  • Are re-sellers causing pricing pain points for the brand both online and in brick and mortar? 
  • Who are these re-sellers and do they have permission to sell the brand?

Many brands have considered tactics like minimum advertising policies (MAP) and eCommerce minimum advertising policies (eMAP); these are very limiting in nature and often cause more conflict than resolution.  As a result, Sage Tree recommends a very different approach, creating an Authorized Seller program. Creating and enforcing re-seller policies can be a daunting task, but with the right partners and tools, it can positively affect the brand’s online presence, pricing, margins, and brick and mortar retailer relations.  

Sage Tree identified the need for Seller Enforcement and formed a strategic alliance with an AM Law Top 200 law firm to jointly bring this strategy to market. Together, we have created a best-in-class solution combining legal expertise in the online channel which includes foundational policy creation, online monitoring using Advantage Digital’s new Canopy software, light enforcement, and escalated legal enforcement. 

The Three-Step Process

Seller Enforcement is a three-step process.

  1. The first step is to establish a legal foundation for enforcement. This starts with an update to your current distribution and resale policies or provides the opportunity to build new policies.  In this phase, we also spend time identifying the type and number of Third-Party Sellers a brand would ideally want to support each retail environment. Sage Tree’s Seller Enforcement team helps brands evaluate the size of the 3P market by analyzing how many sellers are selling the brand, what items they are selling, and monetizing the amount of product being sold in the 3P channel.  Based on these findings a strategy for enforcement is built and executed.
  2. Once policies are established it is crucial to begin step two, monitoring the marketplace sites. This process identifies the sellers and ensures that they either agree to the policies or stop selling the products. Light enforcement entails reaching out to unauthorized sellers to request that they remove their item listings from the platform. Non-responsive and non-compliant sellers are presented to stakeholders for alignment on next steps. 
  3. The final step is escalated legal enforcement for the sellers that don’t comply with light enforcement.  Escalated enforcement tactics include subpoenaing information from retailers to identify sellers, sending cease and desist letters, and filing a draft complaint to serve the seller with a lawsuit.  During both parts of the execution phase, KPIs are reviewed regularly and adjustments are made as needed.

How You Will Benefit

Amazon has over two million active marketplace sellers that sell over one billion units annually (Kantar Retail 2017), with new 3P sellers joining every day.  This means that seller enforcement is an ongoing cycle of “whack-a-mole” to ensure that unauthorized sellers don’t re-list items or change storefront names in an effort to continue selling.  

Benefits of deploying a seller enforcement strategy include increased profitability, stabilization of retail pricing, control of online content, minimizing negative reviews due to 3P issues, optimized spend on advertising and promotions, and ultimately greater control over the brand’s image.

 

Michelle joined Sage Tree with over 17 years of sales and management experience in the Professional Hair and Skincare Industry. Her previous experience on the vendor side of the
table gives her a broad understanding of the needs and challenges of distribution, traditional retail, as well as omnichannel sales. After spending two years as a National Account Manager at Sage Tree Michelle was given the opportunity to start and lead, the Marketplace Enforcement Team. This team focuses on providing solutions in the ever-changing 3P channel. This division has grown to include work streams specializing in protecting brands through Seller Enforcement, eMAP Monitoring, and Authorized 3P Sales Partnerships.  She also leads the Review Management team that focuses on responding to reviews and answering questions for brand partners in the online space.

Read More: Voice Commerce: The Newest eCommerce Channel

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