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Amazon has become, and remains, the go-to marketplace for online direct-to-consumer (D2C) sellers, thanks to its vast distribution capabilities and wild popularity among consumers worldwide. Growing small businesses can harness the platform's audience to appear in front of customers and generate more sales.
Despite the potential for growth on Amazon's platform, even the bright possibilities presented by this broad reach is overshadowed by rampant counterfeit products and price-cutting by unauthorized resellers. In this article, we'll discuss the challenges facing businesses that sell on Amazon and present ways you can protect your brand.
This problem of fake products came under intense scrutiny with the recent announcement of Nike's departure from Amazon's marketplace. In November 2019, Nike announced it would discontinue selling apparel and sneakers on Amazon's platform, concluding a pilot initiative it began in 2017. In an email to Retail Dive, a Nike spokesperson stated that the decision was a result of Nike prioritizing a more personalized, D2C sales approach. Though Nike will continue to use Amazon's Web Services, Nike.com products will be routed through authorized third-party sellers rather than directly through Nike.
Nike's departure from Amazon highlights the seriousness of the problems facing e-commerce retailers. Companies without Nike's sizeable audience cannot afford to be as selective or make such a bold exit as the sports apparel leader. Smaller companies may want to control their brand's reputation and profitability, yet may struggle to overcome the challenges presented by Amazon's fraud-filled marketplace.
Amazon is a wilderness where virtually anyone could outsell manufacturers by listing products — real or fake — at lower prices than those listed elsewhere. Here are two strategies used by fake sellers that are particularly devious:
For people looking to make a quick buck by reselling your products, fake Amazon Standard Identification Numbers (ASINs) enable unauthorized resellers to create Amazon sales pages that may be untraceable by your price tracking software. Because ASINs are relatively easy to create, daring resellers may make up multiple listings. Because Amazon allows similar products to be listed, resellers often try to squash your product listings in Amazon search results with their phony listings, usually under multiple fake seller names.
Fake sellers may also exaggerate their listings with fictional details that encourage people to buy the product. These false listings will be competing with your company or authorized resellers for people's attention and purchase. Because resellers overpromise, you may find that customers choose the fake seller of your legitimate product listings. These false promises obviously lead to customer satisfaction and decreased trust in your business — a real public relations nightmare.
Battling fake sellers on any marketplace is nothing unique to Amazon. After all, eBay has had its share of counterfeits. However, Amazon's policies have allowed some unauthorized resellers to not only resell products without the manufacturer's permission but also teach others to do the same.
For example, DS Domination teaches people how to "simply sell a product, and then order the item from a wholesaler, and they ship directly to the customer." To the unaffected, this sounds harmless. In practice, however, this means that these fake sellers will create fraudulent listings, and even use a manufacturer's marketing materials in their product packaging to appear authentic.
DS Domination is a prime example of a company that has turned unauthorized reselling into a profitable art form. Here are some ways you can combat this kind of fraud against your products:
Sign up for Amazon Brand Registry: One of the best things to do to protect your business or authorized sellers on Amazon is to register for Amazon's Brand Registry. This establishes that you, or your authorized sellers, are the "true" owners of the product. While not anything new, this program was revamped in 2017 specifically to address seller concerns about managing their presence on the platform. Some key features of the Brand Registry are particularly helpful:
Find more information about eligibility and sign up on Amazon's website.
Use price tracking software: Price tracking software is designed to help you get up-to-date, correct information about prices, promotions, reviews, and other product data from marketplace websites (like Amazon) and competitor websites. Once you've established your minimum advertised pricing (MAP) policies, price tracking software helps you make sure the policies are being followed. There are many options available; this is a worthwhile investment for any online seller.
Report hijacked products and phony listings to Amazon: When you spot a fake listing or phony profile, you can report it directly to Amazon. Keep in mind that Amazon generally only involves itself in cases where there’s a clear violation of intellectual property rights or incidents of consumer fraud.
While Amazon doesn't get involved in scenarios affecting your business’s policies, they’ll take action against phony sellers if they violate Amazon's seller guidelines. Here are three things to document when reporting a fake Amazon seller:
Establish distribution agreements: While you most likely have a MAP policy in place, you may want to consider implementing a distribution agreement with your authorized sales partners. This will help you restrict your supply chain, so your partners only sell to customers, not other resellers. While there are many aspects of a distribution agreement, it generally includes payment details, marketing guidelines, obligations for reporting and forecasting, and many other vital components of a successful partnership.
There’s one distinct advantage you can have over any phony seller: your customer experience. There are two types of relationships that you can have with your customer: transactional and emotional. Transactional relationships are simply an exchange of money for a product. Emotional relationships involve more than the product itself — it's when the customer connects with you as a company.
Establishing yourself as more than a random listing on Amazon will keep people returning to you, not just your product. Having an incredible customer experience is a critical part of successfully growing and thriving in Amazon's e-commerce marketplace.
Even the most vigilant companies can't stop every phony seller on Amazon. Still, by taking the proper steps to understand and plan your activity on Amazon, you can fight back and protect your brand's profitability and customer experience.
Last updated on November 14th, 2022.