With the rapid expansion of eCommerce over the past ten years, brands find themselves struggling to control online sales, including who is selling their products online, where they are selling them and the prices at which the products are being advertised. This environment has given rise to the proliferation of unauthorized online sellers that sell products anonymously with no investment and without appropriate quality standards. These dynamics create significant challenges to brand value and a host of other problems.
Brand Equity Erosion
Without control over who may sell online, companies will often have numerous unauthorized online sellers. These sellers typically have made no material investment in your brand, and simply advertise cheap prices in an effort to win sales, which erodes brand equity. This erosion is not confined to eCommerce; it quickly spills over into brick-and-mortar channels where retailers and distributors complain about these advertised prices to attempt to negotiate lower purchase prices, to obtain refunds, or to simply cease doing business with the brand. Left unchecked, unauthorized marketplace sellers will quickly cause significant harm to your brand.
When numerous third-party sellers are present on marketplaces, they will greatly interfere with your company’s ability to implement authorized eCommerce sales growth strategies including search engine optimization (SEO), marketing, advertising and other tactics. These sellers simply “free ride” on your marketing efforts and investments, taking advantage of the traffic you generate to win their own sales. Companies that have numerous unauthorized third-party sellers often lack the incentive to engage in available tactics that drive traffic to their listings and grow their eCommerce sales. As a result, they realize only a fraction of the sales that could be achieved if appropriate channel control was exerted.
In addition, unauthorized sellers often cause brands' authorized channel partners to refuse to carry a brand's products or promote them as aggressively as they otherwise would, which reduces overall sales.
Upset Distributors and Retailers
Many companies have carefully curated distribution and retail networks, while others sell only through licensed professionals. Others, like direct sales companies, rely on individuals to sell to their social networks. When companies do not have adequate control over online sales, their products inevitably appear on marketplaces advertised at bargain basement prices. This inevitably causes customers to believe that the brand is overcharging them which, in turn, leads to demands for concessions. These dynamics disrupt business models and cause friction with longstanding customers.
Anonymous third-party sellers often make no effort to ensure product quality, instead selling damaged, expired, or otherwise devalued products to unwitting consumers. Frustrated consumers receiving these products are much more apt to blame the brand rather than the seller, which invariably results in a large number of negative online product reviews. As online marketplaces have become the world's product database for consumers to research and compare options, negative reviews cause significant harm by influencing search results, purchasing decisions, and perceived brand value.
Let us help you get back in control.
Vorys eControl provides a comprehensive, end-to-end solution to help businesses address these growing challenges.