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Stopping Online Brand Deterioration

Posted on 4.07.2017

Imagine building a nationally recognized brand. You’ve created a product, marketed it flawlessly and it’s selling all over the world.

Now, imagine you took steps to ensure this product’s ongoing success – you created a network of authorized sellers who promised to treat your product with great respect. For example, they’ve agreed to: (1) store products at a certain temperature; (2) honor your company’s money-back guarantee; and (3) never sell below the minimum advertised price, or “MAP” you set for that product.

Sounds great, right? Now, imagine your IT department finds your product for sale on Amazon for $14 below its MAP of $38. As you read through buyer reviews, you see that hundreds of consumers are angry because the product didn’t work as promised, and even worse, the seller wouldn’t give them their money back. You ask the IT department to check the seller name against your authorized seller database. No match, yet, this seller appears to be moving hundreds of units of your product. Now what?

The Unauthorized Seller Problem

As online marketplaces continue to proliferate, the unauthorized seller problem will continue to grow. By some estimates, marketplaces like Amazon.com sell only about 17 percent of products offered on their websites. The remainder of sales come from third-party sellers; some legitimate, some less so.

These online forums are perfect for unauthorized sellers, who are required to provide surprisingly little identifying information to set up a virtual storefront. Moreover, once a rogue seller is identified or hit with too many negative reviews, he can just close shop and open a new seller account under another name. This is how unauthorized sellers hid from e-commerce enforcement professionals for years.

In fact, past efforts at enforcement tended to stop at the monitoring phase. Software as a service (SaaS) providers could identify when products were being sold below MAP, but could do little to stop unauthorized sellers from operating.

Modern E-Commerce Enforcement Tracks & Stops Unauthorized Sellers

Today, the gold-standard for stopping illicit sellers is a three-legged stool. It takes a combination of technology, investigation and legal processes to build a successful enforcement strategy.

From the technological standpoint, today’s software platforms are much more sophisticated. In addition to monitoring for sub-MAP pricing across the Internet, they also (1) identify SKUs that are susceptible to unauthorized sales; (2) track suspected and known unauthorized sellers; (3) identify potential counterfeiters; (4) identify seller name changes; and (5) identify when sellers fail to comply with cease and desist demands. In fact, some automated processes will send electronic cease and desist notices, or “EC&D notices” through communication portals provided by Amazon and other online marketplaces.

Unfortunately, EC&D notices are not as effective as they might sound. Many sellers ignore them. Others simply close one online store, only to open another under a different name within a matter of days. In those cases, it is time to unleash the second leg of the e-commerce enforcement stool – investigation.

Effective enforcers not only have access to law enforcement information, they also have proprietary databases and other tools that identify things like seller name, modus operandi and – most importantly – the names of the individuals operating these rogue storefronts. Once a name is obtained, address and phone information is not far behind. Thus, the second phase usually culminates in cease and desist notices being sent via certified mail directly to the offenders’ homes. That usually catches the attention of these pirates, who prefer to hide behind the online curtain of anonymity.

In those cases where an unauthorized seller persists, legal processes must be employed. First, lawyers send cease and desist demands to the offenders. If that doesn’t work, a first draft of a Federal Court lawsuit is sent to the seller's home addresses. Rarely do the hijinks persist beyond this point. Indeed, faced with a lawsuit, many sellers will not only agree to stop illicit sales, but will also reveal the sources of their illicitly obtained merchandise.

Unauthorized sales will continue to flourish as long as popular brands are sold on the internet. Fortunately, companies now have a tried and true method for shutting them down wherever they crop up.


About the Author

Bruce Anderson is the director of e-commerce enforcement at E-Enforce. For more information, contact E-Enforce enforcement team at 800-892-0450, follow them on Twitter (@eenforcecis) or connect at LinkedIn-E-Enforce.

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