Before marketplaces like Amazon became popular, brands were largely shielded from the consequences of channel practices. Brick and mortar stores could set their prices how they wanted and control distribution without many negative impacts. With the advent of online marketplaces platforms, everything changed, and brands were presented with a slew of new challenges.
One of those challenges is loss of control over product sales online. In an October 2019 webinar, industry professionals and experts at Pattern discussed the reasons why brands lose this control and how you as a seller can take it back.
John LeBaron, Chief Revenue Officer at Pattern, said unauthorized sellers and “bad actors,” (sellers unwilling to follow the rules) have a serious impact on brand control. One brand Pattern has worked with that carries products in the electronics category had over 1,000 third-party sellers on the marketplace at one point, he said, and as a result, very minimal compliance and high costs.
“They were spending about half a million dollars a month in these types of fees back to Best Buy because of the price erosion that they were facing and the price inconsistency on Amazon,” LeBaron said.
These kinds of impacts don’t just affect brands.
“It is your distributors, your downline sellers, your resellers that are being affected by some of these bad players as well,” LeBaron said.
Denise Zmuda is the Client Success Officer at Vorys eControl, where she helps brands with overall ecommerce practice strategy. Before Vorys, Zmuda was with Zebra Technologies, which worked with traditional channel partners to provide tech solutions and products. She said unauthorized sellers affected their relationship with their partners.
“With the anonymous third-party sellers that had come onto the marketplace and were securing products from gosh knows where, they really put a lot of downward pressure on pricing for the rest of our channel ecosystem, and it became very, very difficult for our more traditional channel partners,” Zmuda said.
Zmuda said customers would price compare with third-party sellers and then ask other resellers to match them. In one case, Zebra’s partners identified unauthorized third-parties were selling below their cost.
“That was really the impetus behind me saying, ‘enough is enough’,” Zmuda said.
Lack of rules and enforcement
Zmuda said lack of parameters on who could or couldn’t sell Zebra products on marketplaces was a big reason for their loss of control. Another was with the way they enforced MAP.
Zebra products weren’t being represented well online—the pricing packages were iffy and the listings and photography were poor. This impacted the reviews of their products’ and reflected negatively on their brand.
Regaining control of your brand online can feel daunting, especially when there are lots of bad actors causing problems. Zech Hintz, president of Borderless Distribution, said there are some “shockingly easy” and creative things brands can do to regain control in the short-term, however.
**Product modification and differentiation **
Hintz said Borderless Distribution was selling a restoration kit users apply to a headlight to clean it. Due to the number of unauthorized resellers selling their kit, they were unable to get control of their product, so they made it a different product.
“Simply, we added a latex glove that you use to apply the product, and that automatically takes that item and turns it into a new ASIN or listing,” Hintz said. “All of a sudden, you have this product that no one really in the market has.”
Zmuda said Zebra took this approach for their brand as well, developing unique material differences in their products.
Hintz said unauthorized sellers won’t take the time to do differentials such as bundling products, adding a polybag, or a stamp of quality, which puts you in a good place to regain control of your product.
“If you just throw a little bit of ad dollars behind that, all of a sudden you’ve got your new listing that’s outperforming the previous one, and you’re basically killing the opportunity for anyone to sell on it,” Hintz said.
Selective distribution and quality control policies
According to George Hatch, Marketplace Director at Pattern, one of the more serious steps brands may need to take to regain control of their brand online is reassess their distribution agreements and see where they can become more selective.
“Brands need to figure out how to get their arms around distribution agreements, who’s allowed to sell where and when, and really create a playbook, in essence, as to who controls how the brand rolls out and who has authorization,” Hatch said.
One of the ways Zebra regained control was to consult with a legal team and enact quality control policies that allowed them to distinguish between authorized sellers of their product and those they didn’t know anything about. Zebra also picked a single authorized third-party seller.
“I’m a firm believer that for a particular category of product, you should have one seller, otherwise right out of the gate, you’re very over-distributed and sort of competing amongst yourself by having multiple sellers on such a vertical marketplace,” Zmuda said.
Challenges you might face
Cleaning up your market space can create some challenges. You may need to have difficult conversations with channel partners and even cut them off.
“We have brands that we work with that have some of their largest distributors that were leaking product and breaking some of their agreements, and so they made the hard decision to cut them off for 90 days,” Hintz said.
Though that experience wasn’t pleasant for the brand, it cleaned up 50% of the marketplace immediately.
“It’s hard to quantify at first, because it looks like a loss, but I think when you do the math correctly, in the sense that you’re looking at the bigger picture and what you’re actually losing, a sense of eroded prices or slender markets, you’re probably going to have a bigger win,” Hintz said.
Zmuda said one of the first steps to implement changes is educate stakeholders on what’s happening so they see the problem. Zebra worked with an expert who pulled data on their company to show them what was happening. They learned from that data that they had 250 plus sellers representing their product who they’d never heard of before or who were selling their product anonymously. From that point, they were able to proceed with regaining control.
Brands like Pattern can supply buyers with the information they need to start regaining control of their brand. This includes details like how much of the Buy Box you’re losing, who you’re losing to, which third-party unauthorized sellers are undercutting your business, and where they’re getting profit.
To learn more about how you can take back brand control, contact us through the form below.
Find relevant content to accelerate your ecommerce business. Stay on top of industry trends and best practices.
Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.
In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.
From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.
According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.
From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.
It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.
A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.
Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.
The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)
Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.
Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.
Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.
Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.
Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces.
Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.
So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.
Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products.
An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.
An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.
Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.
At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services.
It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.
It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.
The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.
Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces.
With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.
Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.