Brand owners and manufacturers are not the only ones with something at stake when it comes to online sales. Beyond the businesses themselves, authorized sellers are also concerned about product diversion and unauthorized sales on third-party websites.
When companies arrange for their products to be sold exclusively through authorized distribution channels, but numerous products can be found online–often for less than the minimum advertised price–this is likely to anger compliant authorized sellers.
Understandably, these sellers will be both frustrated and concerned that consumers can simply go online and buy through unauthorized retailers. And disgruntled sellers might try to back out of their agreements.
Therefore, it is important that businesses who are already putting in the time, energy, and expenses to actively fight product diversion strive to keep their authorized sellers happy.
For starters, companies must assure their distributors that they are working to combat the unauthorized sales. More specifically, it is important to 1) reiterate that there is an anti-product diversion program, and 2) explain the ongoing efforts to stop the unauthorized sales. In short, the key is to show that the company is not ignoring the unauthorized sales problem.
It is helpful if a company regularly reports the success of its program to its authorized sellers. For instance, the number of third-party websites the company has stopped. Or the number of online seller storefronts they have eliminated.
This is especially important for those companies using a multi-level marketing plan. Their entire business models can come crumbling down if there distributors are angered enough to part ways with the manufacturers.
Keeping authorized sellers regularly informed about anti-product diversion efforts can have another beneficial consequence. It can keep authorized sellers from going rogue.
There are instances in which authorized sellers might get so discouraged by the amount of competing products available online that they begin diverting products themselves.
Keeping authorized sellers abreast of these efforts and ongoing successes can influence them to resist the urge to violate their own agreements. Authorized sellers are likely to respect what the company is trying to do. And they know there will be consequences if they are caught diverting the products themselves. Specifically, it can result in account terminations, meaning a loss of income for the non-compliant sellers.
In short, preventing authorized sellers from engaging in product diversion themselves is mutually beneficial for the business.
A business might think that implementing an anti-product diversion program is sufficient to meet its goals of combating product diversion. However, the business must also communicate its efforts and the resulting successes of its anti-product diversion program to authorized sellers.
It is important that those parties recognize the problem is being addressed. This, in turn, will be helpful in maintaining good relationships with these authorized sellers.