Unauthorized sellers on Amazon can be extremely frustrating for ecommerce businesses. Not only does it affect sales and brand image, but illegitimate sellers are also breaking various legal and policy guidelines set by Amazon.
And while dealing with the negative impacts of unregulated third-party sellers on your business operations is a demanding undertaking, it’s also a necessary part of capitalizing on the world’s largest online marketplace. Fortunately, there are some ways to approach the issue proactively and minimize disruptions to your business.
Unauthorized sellers hurt your brand
Unauthorized sellers on Amazon are third-party entities that sell products through the platform without proper authorization from the brand owner. These sellers ride on the coattails of big brands to make a quick profit off unsuspecting shoppers.
In many cases, these troublesome sellers are individuals or businesses that sell products without the brand owner’s or manufacturer’s permission or consent. In addition, they often source products from unofficial channels, such as gray markets, liquidations, or counterfeit production, leading to negative customer experiences and tarnishing a brand’s reputation.
Since they don’t incur the same costs as authorized sellers, such as marketing, training, or maintaining inventory, these scofflaws may offer products at lower prices, creating an unequal competitive environment that undercuts other sellers’ pricing, resulting in the devaluation of the brand, reduced profit margins and decreased sales.
In addition, customers who purchase products from unauthorized sellers may find they are not eligible for warranty coverage or support from the brand, leading to dissatisfaction and further damage to the brand’s image.
To protect their brands and maintain a healthy marketplace, sellers must be vigilant in identifying and addressing unauthorized sellers on Amazon. This can involve monitoring product listings, enforcing intellectual property rights, and working with Amazon to take appropriate actions against unauthorized sellers.
Know Amazon’s rules and protections
So, what are the legal and policy guidelines in place to address this issue? Amazon’s policies prohibit the sale of counterfeit items, and any seller caught doing so may have their account terminated. Additionally, Amazon offers Brand Registry, allowing brand owners to have more control over their product listings and report unauthorized sellers.
Legally, trademark laws protect brands against unauthorized use of their intellectual property. If a brand detects an unauthorized seller using its trademark, it can file a complaint with Amazon or pursue legal action. As the ecommerce landscape evolves, Amazon will undoubtedly enforce and update its policies to ensure fair competition and protect its customers.
While specific guidelines may vary depending on the jurisdiction, there are some general steps brands can take to protect their venture from unauthorized Amazon sellers.
First, register your brand’s trademarks and copyrights to establish legal ownership of your intellectual property. This will enable you to take action against unauthorized sellers who infringe on your rights.
Take advantage of the Amazon Brand Registry program, which helps protect your brand by giving you more control over your product listings and access to tools that help identify and report potential intellectual property violations. When you report an infringement to Amazon, provide evidence of your intellectual property rights and explain how the unauthorized seller violates them. Amazon may take action to remove the infringing listings or suspend the seller’s account.
Establish clear distribution agreements with your authorized sellers and distributors, outlining their rights and responsibilities, including restrictions on selling through alternative channels. If necessary, utilize a formal cease and desist letter requesting them to stop selling your products and remove any infringing content from their listings. This can serve as a warning and a basis for future legal action.
Limit the number of authorized distributors and resellers to tighten control over your distribution channels and reduce the risk of products entering the grey market. Similarly, keep tight control over inventory distribution by only selling to approved retailers and distributors, and require them to sign agreements stating they will not sell to unauthorized sellers. Tactics such as unique product identification methods, including serial numbers, barcodes, or holograms, can also make identifying counterfeit or unauthorized products easier.
Take control of monitoring and enforcement
Sellers can identify unauthorized sellers on Amazon through various methods and by using specific tools and resources. It starts with proactively monitoring your product listings on Amazon to identify any new sellers or suspicious activity. Next, look for sellers offering your products at significantly lower prices, without proper product descriptions, or using unauthorized images and content.
Customer feedback is another excellent way to gain early insight into issues. Pay attention to customer reviews and feedback on your product listings. If you notice a pattern of negative experiences related to product quality, packaging, or authenticity, it may indicate the presence of unauthorized sellers.
Conduct research on suspicious sellers by examining their seller profiles, storefronts, and customer feedback. Look for patterns suggesting unauthorized activity, such as multiple accounts selling similar products or frequent changes in seller names. In some cases, a test purchase from suspicious sellers can verify the authenticity and condition of their products. This can help you gather evidence of potential infringement or violations.
Several third-party tools and services can also help monitor your product listings and identify unauthorized sellers on Amazon. These tools can track your products, provide alerts when new sellers join your listings, and assist with reporting infringements to Amazon.
Leverage Amazon’s policies to fight unauthorized sellers
Many sellers operating on Amazon have undoubtedly experienced the frustrating issue of unauthorized sellers initiating price wars or damaging brand reputations. It’s likely that Amazon will continue to implement tighter registration and screening policies, enhance its monitoring systems, and establish a communication channel with brands to improve coordination and reduce the number of unauthorized sellers.
In the meantime, addressing unauthorized sellers will become more critical, and sellers will need to be proactive about working with Amazon to combat this problem. If a seller identifies an unauthorized seller on Amazon, they should report the infringing listing to Amazon immediately via the Amazon Brand Registry program or through the “Report a Violation” tool within the Amazon Marketplace.
To support the claim, the seller should submit clear evidence of their intellectual property rights and explain how the unauthorized seller infringes on them. Evidence may include trademark registration certificates, copyright registrations, product purchase receipts, and other relevant documentation.
After receiving the complaint, Amazon will most likely investigate and take appropriate action against the unauthorized seller. These actions may include removing the infringing listing, issuing a warning, suspending the seller’s account, or taking legal action.
Amazon has established a team that protects intellectual property rights and prevents infringement on the platform. In addition, Amazon has implemented policies, such as requiring sellers to obtain approval before selling specific brands or products. Working with Amazon and implementing these measures can help prevent unauthorized sellers from harming legitimate businesses and brands on the Amazon marketplace.
Another tactic to minimize the risk of unauthorized sellers is using Fulfillment by Amazon (FBA) rather than managing the process alone. The service outsources order fulfillment to Amazon and puts your products inside an Amazon FBA warehouse where they can be picked, packed and shipped by an Amazon employee. Unlike a Vendor Central 1P relationship, the seller retains complete control over pricing and inventory management while relying on Amazon logistics for the rest. Because of the advantages of utilizing Amazon FBA, including Amazon Prime status, it can make participating products a less attractive target for unauthorized sellers.
Obviously, the decision to use Amazon’s FBA service comes with added costs. In addition to paying standard seller fees on orders, Amazon will also charge a fulfillment fee based on the type and size of the product. Storage fees for the space that inventory takes up in Amazon’s fulfillment centers are another cost resulting from using an FBA model for sales.
However, some of these costs would simply originate elsewhere, such as from in-house employees or a different logistics provider. By partnering with Amazon on fulfillment, sellers enjoy an easier path to Amazon Prime status for their products, reduced customer interactions and more streamlined processes for returns.
Avoid mistakes that make your brand a target
There are several common errors that Amazon sellers commit, which make them more prone to being targeted by unauthorized sellers. Of course, by addressing these issues, sellers can better protect their business and prevent the problems that an illegitimate seller can cause.
A potent pricing policy is vital. Failing to implement a consistent and competitive pricing strategy can make it easier for unauthorized sellers to undercut your prices and attract customers. To avoid this, establish a minimum advertised price (MAP) policy and communicate it to authorized distributors and resellers to maintain price consistency.
In addition, incomplete or unclear product descriptions may confuse customers, making it easier for unauthorized sellers to create counterfeit listings with similar descriptions. Ensure that your product descriptions are accurate, comprehensive, and highlight unique features to differentiate your products from counterfeits.
Be sure your products feature consistent brand messaging across product listings and marketing materials. Without it, shoppers can have difficulty identifying genuine products, which allows unauthorized sellers to exploit the confusion.
Forgetting to monitor and address customer feedback can lead to negative reviews, which unauthorized sellers might use to their advantage by offering counterfeit products with better reviews. Regularly monitor customer reviews, address concerns, and improve your products and services based on customer feedback.
It’s also helpful if your products have unique features or distinctive branding elements. Without them, it becomes easier for unauthorized sellers to create counterfeit versions. Invest in product innovation and design elements that differentiate your products from competitors, making it harder for unauthorized sellers to replicate.
Another mistake that sellers make is exercising insufficient control over inventory distribution can result in products being sold through unauthorized channels. Therefore, every Amazon seller should implement strict inventory control measures, such as limiting the number of authorized distributors and requiring them to sign agreements prohibiting sales to unauthorized sellers.
Similarly, many sellers overlook the importance of protecting intellectual property. A lack of registered trademarks, copyrights, and patents leaves your brand vulnerable to infringement by unauthorized sellers. Register your intellectual property, enroll in Amazon’s Brand Registry, and take appropriate legal action against any unauthorized sellers ignoring the restrictions in place because of those efforts.
Amify has your back
The team at Amify know that the Buy Box is just the first step to winning on Amazon. To be successful, sellers need an integrated and interconnected approach that can find opportunities and protect against threats.
That’s why we operate as your partner, providing comprehensive strategy and execution for all the areas of expertise Amazon demands. Whether it’s warehousing, listing management, or data analytics, Amify helps you drive growth with a proven, long-term strategy. Schedule your Amazon Account Consultation today.