The Amazon Marketplace is quickly becoming an eCommerce juggernaut that has expanded beyond the company’s control. For the Seattle tech firm, the commissions drawn from third-party marketplace sellers are the economic fuel that will soon allow the company to surpass the $500 billion mark in terms of market capitalization. Nothing is going to stop Amazon from expanding the capacity of its marketplace and turning it into the world’s largest online bazaar.
As Amazon continues to expand the marketplace, economists and analysts are starting to see the emergence of a series of inevitable flaws and unfortunate business models. A black market of illicit goods would be the last thing Amazon would want to see developing within its marketplace; to this effect, the company has done a great job of policing its vast eCommerce platform so that items such as controlled substances and weapons are not sold therein. Unfortunately, Amazon has not been able to stop gray markets fueled by unauthorized sellers.
Understanding the Amazon Gray Market
Gray markets are retail situations wherein goods are sold irregularly but not entirely illegally. Let’s say an organic chemist who formulates essential oils wants to exert complete control over retail distribution for his or her own private reasons. Since these are products that tend to sell quite well online, the Amazon Marketplace would be a good fit for this chemist.
It would not be surprising for the chemist to find a couple of his or her essential oil vials sold on eBay or even on Amazon; these may be sellers who probably purchased his or her oils for $7.99 each and did not get around to using them all. If the chemist, however, sees an Amazon Marketplace reseller selling his or her essential oils for $9.50 while working with an inventory of 26 vials, then something is definitely wrong.
According to market research firm L2, unauthorized distribution of goods by unauthorized sellers runs rampant on Amazon, and it is starting to hurt luxury brands. In a research report entitled “The Battle Against Unauthorized Sellers,” L2 found that 143 Michael Kors handbags were listed on the Amazon Marketplace in a three-month period despite the designer’s decision to not do business with Amazon.
The size of the Amazon gray market is difficult to estimate; however, it is known that counterfeiters account for a quarter of all Marketplace listings. When adding unauthorized sellers and dropshippers to the mix, the gray market becomes an even greater threat to business owners who are trying to protect their brands on Amazon.
A Matter of Branding
We live in times when branding has become the most important business process for eCommerce entrepreneurs, but this has not always been the case. Ecommerce started off as a very generic experience in the early 1990s; back then, online shoppers mostly looked for deals and wholesale bargains. These days, however, online shoppers have become very brand conscious, but it is difficult for them to tell the unauthorized resellers and counterfeiters apart.
The challenges of the Amazon Marketplace can be faced with Brandlox, the leading tool to identify and preventing unauthorized sellers from plying their nefarious trade, A Brandlox subscription is perfect for brand-conscious Amazon sellers who list 10 or more products on the Marketplace. With Brandlox, Amazon sellers get real-time notifications about their product activity so that they can spot unauthorized sellers trying to piggyback off their brands.
In addition to monitoring, Brandlox also offers the ability to make and generate test purchases for the purpose of catching counterfeiters. Cease-and-desist letters can also be sent to unauthorized sellers so that they know about forthcoming legal action. To learn more about your brand protection options on Amazon, contact Brandlox today!