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November 18, 2021

Reducing Gray Market Sales Doesn’t Have to be so Hard

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Gray Market activity on Amazon continues to accelerate, putting brands at risk of losing sales and profits. While this activity increases, so does the confusion regarding what tactics are most effective in shutting down unauthorized sellers. This leaves many brands overwhelmed, not knowing where to start or how to create a strategy that is legally-backed.

Often times, brands may attempt to solve their gray market problem by focusing on metrics that don’t measure the true effectiveness of efforts, like the number or percentage of unauthorized sellers removed. If your enforcement efforts are not specifically focused on driving your KPIs, you are failing to meaningfully improve them. Brands will find that 20% (or less) of their unauthorized sellers cause 80% (or more) of their Amazon brand erosion problems. The good news is there is an easier and more effective way to reduce gray market sales and stop unauthorized sellers.

Easier Path to Stopping Gray Market Sales

Gray market sales present a serious problem for brands, regardless of industry. In fact, a Forrester survey reported that 87% of brand manufacturers cited gray market sales as a problem on online marketplaces. So, where do you begin solving the problem of gray market sales?

Brands can start solving the problem when they implement a strategy that includes awareness, foundation and enforcement.

  1. Awareness: Being aware of unauthorized sellers allows for brands to move to a proactive approach versus a reactive approach. This is achieved by combining data insights with human expertise. This approach validates hypotheses on what is happening in the marketplace, so the right strategic approach is put in place.
  2. Foundation: Establishing the requisite legal foundation that provides an actual basis for enforcement against unauthorized sellers is critical, as brands often otherwise have no basis for removing such sellers. In a recent ruling, a Colorado federal court granted partial offensive summary judgment against an unauthorized gray market seller that further strengthens the ability of brands to stop the unauthorized sale of their products on online marketplaces, including Amazon. Establishing the foundation is essential in creating a legally-backed strategy.
  3. Enforcement: Conducting enforcement in a manner that drives real commercial outcomes, as opposed to focusing on meaningless vanity metrics (like “take down” percentages), saves time and drives effectiveness. This is accomplished by leveraging a data-driven process that identifies the sellers causing the most harm and uncovers large gray market diversion schemes.

To effectively combat unauthorized sellers, brands need to take the proactive approach by establishing the necessary legal foundation and then engage in a data-driven, precision enforcement process tailored to driving real commercial metrics.

Vorys eControl helps the process of reducing gray market sales easier by providing one solution that incorporates legal services, data and technology to provide customized brand protection solutions.

Start the easier path by scheduling your no cost initial strategy consultation.