January 3, 2023

Strategies to Combat Amazon 1P Diversion


Many manufacturers come to Vorys eControl puzzled because they see their products being “shipped from and sold by Amazon.com,” but the manufacturer does not sell directly to Amazon in a first-party or retailer relationship. When these unauthorized first-party sales occur, it can be very disruptive to the brand’s third-party Amazon strategy. What next? In this piece, we share a few insights on how Amazon may be getting your products and how to determine who is supplying Amazon.

Is your organization selling to Amazon?

Amazon may be selling 1P U.S. inventory outside of the United States and vice versa, so even if a manufacturer has a third-party Amazon seller strategy in the U.S., that third-party strategy may be disrupted if the manufacturer supplies Amazon 1P outside of the U.S. While manufacturers can still have a hybrid 1P/3P Amazon strategy globally, doing it in a way that supports each country’s specific Amazon go-to-market strategy will likely need to involve global strategy considerations and conversations, as well as potential outreach to your Amazon vendor manager in the countries in which your company has a 1P relationship to address any ongoing cross border supply issues.

But what if my organization doesn’t sell to 1P anywhere?

Vorys eControl diversion diagnostics is often a prudent first step. This is where our team of legal, business, and data professionals analyze sales data to determine what customers/ accounts have purchased the product variety and quantity being sold by Amazon 1P. If your customers/accounts have concerns about sharing that data, there are steps that lawyers can take to have the data just shared with Vorys (rather than with the manufacturer) for purposes of the analysis, such as through a non-disclosure agreement or an NDA.

But what if I can’t get Vorys the data for the diversion diagnostics analysis?

Product tracking or lot code tracking, as well as subpoenas, are other methods to surface source information. Test buys over a period of time showing specific lot/product codes may help identify which of your accounts could be potentially providing products to Amazon. If the manufacturer has a broader eControl program with a formal authorized seller program implemented in its U.S. distribution channels, the manufacturer could also consider subpoenaing relevant parties for the source information. This is one of the many reasons why it is so imperative for the manufacturer to have a broader U.S. eControl program, so it has robust tools to identify sources if and when this issue occurs.