Gray Market
4 mins

How to identify and stop unauthorized sellers in 3 steps

How to identify and stop unauthorized sellers in 3 steps

One time-tested way for brands to grow is by selling to distributors that can sell to a wide base of customers. But without the ability to track seller behavior and identify unauthorized sellers, brands are at risk for issues like gray market websites, complaints from other distributors, MAP violation, reputation erosion, and the loss of product exclusivity. 

It’s extremely easy for just about anyone to create a seller profile on an ecommerce marketplace and start selling products outside of a brand’s distribution channels. If you use a network of sellers, vendor relationship management is a critical part of your business. Not all of them will follow distribution agreements at all times. The key is to monitor the web to discover unauthorized sellers wherever they emerge. This post will walk you through a step-by-step guide for identifying and stopping unauthorized sellers. 

Summary

  • Brands should monitor sites like ecommerce marketplaces, distributor websites, and gray market websites 
  • Brands can protect themselves by identifying unauthorized sellers, monitoring distributor pricing, and notifying sellers of MAP violations or sending cease and desist notices 

Which sites should you monitor?

Let’s take a look at three main areas you should monitor to protect your pricing power and reduce unauthorized sellers. 

Marketplaces

Marketplaces like Amazon and Walmart.com allow brands to grow and reach more customers through third-party sellers, but they also present some challenges. You may have a variety of legitimate third-party sellers across several marketplaces, but some may violate your MAP policy from time to time. MAP violations can erode your pricing power online and even affect your in-store pricing. Customers can check Amazon to find the price of an item before visiting your store, and if it’s much cheaper online, they’ll avoid purchasing from your store. 

Also, when you search for your products online, you might notice some sellers that are unfamiliar to you and not part of your distribution network. The barriers to entry are low for selling on platforms like Amazon. Unauthorized vendors only need to get their hands on gray market products and set a competitive price. 

Seller’s website

Vendor management should also include monitoring seller websites to ensure compliance. It’s possible for distribution partners to go against your MAP policy to sell items faster or get an edge in their market. However, that can lead to other sellers complaining to your organization about losing sales or pricing power. Plus, when customers can find your items at a variety of different prices, they may question the real value of the item. Or, they may wonder why they paid a certain amount for a product when different businesses offer it for cheaper. 

Individual grey market websites

Particular products lend themselves to entire ecosystems of gray market sites. Watches, cameras, cars, and perfumes are all examples of products targeted by gray market sites. Different factors can influence how certain products end up on the gray market. 

For example, an economic recession can decrease consumer discretionary spending, and watch distributors may end up with piles of old stock in their warehouses. Distributors will then feed the gray market by offloading stock to resellers outside official distribution channels. A watch collector may enjoy lower prices from a gray market site, but they won’t get any after-sale support or warranty coverage from the manufacturer. 

Consumers risk their safety when purchasing other products on the gray market, like pharmaceuticals, cosmetics, and vehicles. If you see your products on a gray market site, that’s a good sign that you need to be more aware of distributor and vendor management. 

How to protect your brand from unauthorized sellers in 3 steps

There are three main steps to protecting your brand from unauthorized resellers: identify rogue sellers, monitor pricing, and notify unauthorized dealers. 

Step 1: Identify rogue sellers

You can’t take any action until you know who to go after. Today, an advanced monitoring system can scan marketplaces, seller websites, and gray market websites to look for instances of your brand and products. 

A monitoring system can also work to connect the dots between multiple seller accounts and find contact information and make enforcement more effective. With information on unauthorized resellers, you can also uncover how they purchased your products to see which of your distributor contracts needs attention. 

Step 2: Monitor pricing

In addition to identifying unauthorized resellers, you can use monitoring tools to make sure the dealers in your supply chain are following your MAP policy. This makes distribution contract management easier. With continuous monitoring, you’ll know when a seller goes against your policy. You can act quickly and maintain your pricing power in the market. 

Step 3: Notify/send cease and desist to unauthorized dealers

You now have two types of alerts to take action with: unauthorized sellers and authorized sellers that are selling below MAP. The last step is to notify these parties in the right way. You don’t want to send a cease and desist letter to a legitimate seller and possibly harm the relationship, after all. With a legitimate company, you can let them know you’re aware they are selling under MAP and outline the steps you’ll take to enforce that if they don’t comply. 

On the other hand, let’s say you found unauthorized sellers who did not sign a MAP policy agreement with you. This is where cease and desist notices come in. Also, if they are selling your products as “New,” you can make a case to Amazon (or another platform) that new products require your warranty, but since the seller is unauthorized, they can’t offer the warranty. This can give you another way to remove the listing and solve the issue. 

Conclusion

The purpose of a vendor tracking and monitoring solution is to make it easier to have healthy relationships with your distributors and to notify and remove unauthorized listings quickly. No one has time to manually sift through new listings on dozens of platforms, which is why an automated solution is necessary. With the Red Points online distributor compliance platform, you can take advantage of machine learning and AI to uncover all sellers of your products online, whether legitimate or not. 

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