Welcome back! If this is your first time with us, we’re glad you’re here and hope that we’re able to provide ongoing value to your brand as you navigate the complicated world of online retail. This week, we’ll be talking about everyone’s favorite subject – unauthorized resellers. As most brands are acutely aware of, the rise of unauthorized sellers on online marketplaces poses a growing challenge and is a constant headache for sales and marketing teams alike. From undermining MAP (Minimum Advertised Price) compliance to damaging brand reputation, these resellers complicate the task of maintaining control and make for difficult conversations at so many levels. With Amazon’s status as a distributor following the June 2024 ruling, brands have gained new visibility into who is selling their products and have seen additional protections. Yet, the fight is far from over and addressing unauthorized sellers requires a nuanced, proactive strategy that we’ll start to unpack with you today.
Amazon’s Role
A brief background note on that point: in June 2024, the Consumer Product Safety Commission (CPSC) issued a decision that classified Amazon as a distributor rather than just a marketplace. This granted brands greater visibility into how their products are handled and sold on the platform. It also offers potential protections against unauthorized sellers but even this presents gaps and loopholes that we’ll address in future posts. For brands, this is a step forward in regaining control of their product distribution on one of the world’s largest sales channels, but it’s not that easy.
Over 62% of units sold on Amazon in the last year came from third-party sellers, highlighting their massive influence on the platform. This trend has grown because Amazon has streamlined the seller registration process, provided global access, and – in so many ways – has enabled sellers of all sizes to leverage low-cost sourcing that ultimately undercuts authorized retailers. Many of these sellers operate out of Asia, where oversight is limited, adding another layer of complexity for brands.
Amazon is a great channel for sales, there’s no denying that, but working with Amazon is rarely easy for brands as they’ll often push back or require the brand to do the necessary leg work. And before we go too far in making Amazon look like the only problem facing brands, let’s be clear here: unauthorized sellers remain on nearly every sales channel, not just on Amazon. These sellers are well established on platforms like Walmart, Temu, Instagram, Rakuten, Shein, Alibaba, TikTok, and Facebook, making a broad strategy essential for brands who want to gain control of the market.
Who Are Unauthorized Sellers
Because MAP enforcement involves team members from various sides of the business, with varying tenures, we have to assume that some readers will appreciate being brought up to speed. Unauthorized sellers are resellers operating outside a brand’s official distribution network. These sellers source products in ways that circumvent agreements or brand oversight, often leading to pricing inconsistencies, poor customer experiences, and damaged brand reputation. Several factors contribute to growth in numbers of these sellers, mainly: low barriers to entry, little investment required in technology or capital, the ability to remain anonymous, and the lack of geographic limitations on sellers. Platforms like Amazon and TikTok make it incredibly easy for anyone to list products without verification, and unauthorized resellers have taken full advantage of these opportunities.
Unauthorized sellers often enter the picture due to gaps in a brand’s own distribution practices. Without formal distributor or reseller agreements, brands lack the framework to enforce MAP policies or control product flow. Poor tracking mechanisms can exacerbate the problem, allowing products to flow unchecked into gray market channels. Internal misalignment, especially between sales and eCommerce teams, can also lead to unintentional oversupply or inconsistent messaging about MAP priorities.
The Impact of Unauthorized Sellers
The fear that many brands have of unauthorized sellers damaging a reputation they’ve worked so hard to build is valid. On marketplaces, for example, poor reviews, subpar customer service, and counterfeit products all reflect poorly on the brand, not just the reseller. When too many unauthorized sellers appear on a product’s listing, customers may question the product’s legitimacy or quality, creating long-term impacts on consumer trust and loyalty. This erosion of trust can significantly hurt a brand’s reputation, even when the issue stems mainly from unscrupulous resellers.
How to Approach the Unauthorized Seller Problem
While the default approach taken by many brands is to simply eliminate unauthorized sellers entirely, that’s not always the best approach, in our experience, and can actually do more damage than good. Truth be told is that some unauthorized sellers can be valuable allies with the right strategy. Many operate without bad intentions, unaware of MAP policies or proper distribution practices. By identifying and working with these sellers, brands can uncover supply chain leaks, gain insights into how products enter the gray market, and even create new retail partnerships.
Several years back, a consumer electronics brand in the Smart Home space discovered that a gray market seller was unknowingly sourcing through a secondary distributor. Because they had such a poor experience tracking down and stopping other unauthorized sellers in the past, they were taking a scorched earth approach to any new resellers that popped up. They had recently hired a new SVP of Sales who believed you can catch more flies with honey than vinegar and he was anxious to try his hand at this problem. After several days, they identified the correct contact and reached out to start a conversation centered around education. Within 30 days, they converted the seller into a valued retail partner, generating significant revenue in the new account, gaining insight into the gaps in their distributor network and streamlining their supply chain. By year two, this new vendor was one of their most valued partners.
There Is Not One Approach
Dealing with unauthorized sellers requires a balanced approach. Brands must monitor broadly across platforms, not just on Amazon. By ensuring they’re operating off of the best data possible, brands can act quicker and with higher confidence, knowing that there is little likelihood that their data will be called into question. Retailers are more likely to respect MAP policies when they know violations are handled equitably. While many sellers do, in fact, need to be shut down, others may present opportunities for partnerships that add incremental revenue and provide valuable insights into the supply chain.
The rise of unauthorized sellers is not going to slow down any time soon. Online marketplaces will continue to be a challenge every brand will contend with in the coming years. While platforms like Amazon now offer more visibility and protections, the problem extends far beyond a single marketplace. The first step in addressing the issue, before understanding how unauthorized sellers operate, is to identify where violations are coming from and to understand the impact to sales (we’ll talk about that in a future post). Once you know who the sellers are, your team can formulate a plan approaching them strategically. This will help brands regain control where possible and strategically turn potential threats into opportunities.
Last Thoughts
If your brand is grappling with unauthorized sellers or MAP compliance challenges, the team at Pervasive Mind is here to help. With deep expertise in navigating these complex issues, we’re ready to guide you every step of the way. We’d love to hear from you and would welcome the opportunity to turn these challenges into strengths together.
