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September 30, 2020

4 Ways In Which Online Sales Control Can Drive Increased Business Value For Your Brand

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As Amazon and other online marketplaces continue to grow and expand, brands are becoming increasingly aware of the importance of ensuring that sales of their products are made in the right channels by the right channel partners. Given the online marketplace model, the ability to assert online sales control through an eControl program is a critical component to realizing optimal performance. Here are four ways in which eControl can improve total business – both online and offline:

1. Improved Negotiating Position in 1P Model:

1P Brands that have control over their online sales are able to ensure that Amazon wins the overwhelming majority of buy box and that it is not being undercut by freeriding unauthorized sellers. When Amazon is able to win virtually all sales in the channel, with little to no unauthorized 3P disruption or off marketplace retail pressure, 1P brands vastly improve their negotiating position with Amazon, enabling them to avoid chargebacks, frequent discount requests, CraP’d products and other financial detriments.

2. Increased Channel Sales & Margins:

Brands with control are able to sell more products in the marketplace channel through their authorized seller – whether via a 1P or 3P model. Often, the margins brands achieve on these sales are materially better than those in the brand’s two-step distribution channel, which, for many brands, is the source of diverted product sold by unauthorized 3P sellers. Unauthorized sellers typically do not invest in driving demand. In fact, the presence of unauthorized sellers actually inhibits sales and growth by disrupting brands’ marketing efforts and investments to generate demand such as content, images, SEO and advertising. As such, most brands will experience increased sales and margins when their online marketplace sales are made by only those authorized– be that in a 1P model, through an authorized 3P seller or a brand’s own storefront.

3. Enabling Authorized 3P Seller to Own Buy Box and Grow Brand:

For brands pursuing a 3P strategy, your results will only be as good as your 3P seller’s ability to win sales. Without a control strategy in place, your 3P storefront will just be another seller trying to compete and win sales among a sea of other 3P sellers. With a control strategy, your brand can effectively enforce against unauthorized 3Ps, allowing your authorized seller to win the vast majority of sales in the channel, and affording your brand the full benefit of the 3P model.

4. Achieve A Competitive Advantage Over Others Lacking Control:

Brands able to assert effective control over online sales are better positioned against competitors that cannot. In addition to improved outcomes with and on the platform itself, brands in control are best positioned to improve their business offline – demonstrating to omnichannel and brick-and-mortar customers that they will not be disrupted by freeriding unauthorized sellers in a chaotic online environment. When only limited numbers of high quality, invested sellers in the online marketplace channel are winning sales, brick and mortar channel customers can have the confidence necessary to invest in and promote the brand. In physical locations, this can come in many forms, including optimized or expanded distribution, improved shelf placement, off shelf (dual) placement and more. With omnichannel retailers, there may be additional opportunities to increase awareness and sales through product or brand features on site or in marketing campaigns, or enhanced search rankings. This, of course, has the potential to further increase sales in traditional channels and drive an improved overall omnichannel brand experience.

For a comprehensive overview of how your company can take better control over your brand’s online sales and leverage control to drive better business outcomes, download our ebook, Achieving Brand Control and Stopping Unauthorized Sales Online, or contact Daren Garcia at dsgarcia@vorys.com or 513.723.4076.