One of the most defining moments in e-commerce history took place when Amazon created its third-party marketplace, known to retail insiders and analysts as 3P. More than a million independent sellers have entered the world of e-commerce as 3P sellers. Many of them came from eBay to sell used items while others were enticed by the prospect of setting up online stores powered by the comprehensive Amazon retail platform. The 3P Amazon Marketplace clearly fits within the intended business model of the company, which intends to become “the everything store;” however, this model has brought about some unintended consequences.
Retail analysts from Credit Suisse estimate that the Amazon Marketplace is on track to generate nearly $260 billion in sales by 2020, and a good portion of this revenue will come from unethical and illicit practices. Counterfeiters and unauthorized sellers are the scourge of the 3P Amazon Marketplace. In January 2018, a report by the United States General Accounting Office estimated that 43 percent of the goods offered by third-party sellers on Amazon are either fake or fraudulent.
The Problem with Unauthorized Amazon Sellers
Anyone can become an unauthorized seller on Amazon. The way this retail platform works makes it too easy, and the problem is that safeguards currently in place are not available to all merchants. Virtually anyone who is approved for a Seller Central account can sell products already listed on the Amazon Marketplace, and this is where the problem begins.
Let’s say a seller acquires a lot of neon-colored Ticonderoga number two pencils in packs of 10; this product is already listed under the Amazon Standard Identification Number B00OFNI9VK, and thus it will not require the creation of a new listing. As long as Dixon, the owner of the Ticonderoga brand, does not object to the open sale of its pencils, anyone can list against this ASIN and apply strategies to “win the Buy Box.”
Risks in the Amazon Marketplace
Since virtually anyone can list against most ASINs, a rogue merchant can easily start selling counterfeit Ticonderoga pencils or even trick shoppers into purchasing other brands. This is a major risk for third-party sellers who seek to build their brands on Amazon.
If for some reason Dixon suddenly decides that only certain distributors should be approved to sell its products on the Amazon Marketplace, the company will have two options: getting approved for Brand Gating or actively monitoring their ASINs with a subscription service such as Brandlox.
Brand Gating is not a realistic option for many Amazon sellers. Thus far, only major brands are getting approved for this program, which essentially allows companies to lock their ASINs so that only approved sellers can list against them. Dixon would probably get approved, but this will not be the case for a white label distributor who is just getting started with a new line of pencils.
Active Monitoring Reveals Unauthorized Sellers
Independent merchants who cannot get approved for Brand Gating should let Brandlox identify unauthorized sellers. A basic Brandlox subscription is ideal for manufacturers, inventors and white label distributors who have created 10 or more new ASINs. Sellers enter their ASINs and the IDs of Amazon merchants who have been cleared to list their products. Should an unauthorized seller try to pass off your items as theirs, Brandlox will immediately notify you.
Armed with the Amazon ID of unauthorized sellers, you can contact them to remind them that they must go through an approval process. In most cases, sellers will stop listing against your ASINs once they know that they are restricted. If you need to issue a cease-and-desist legal notice, Brandlox can do that for you, and you can even conduct test purchases against counterfeiters to get them kicked out of the Amazon marketplace.
Learn more about stopping unauthorized sellers with Brandlox. Contact one of our consultants today. Call 1-866-848-6072 or contact us online.