The Hidden Causes, & Costs, of Brand Erosion on Ecommerce

Josh Mendenhall

December 9, 2020

Picture this: Your company has curated the perfect design, typography, image stack, and copy to portray your brand to your ideal consumers on ecommerce. You’ve dedicated time, money, and resources to testing your product to make sure it’s high-quality and reliable.

But once you start selling your product to third-party distributors, it’s clear they don’t care about your brand nearly as much as you do. They use subpar photos, sell your product for prices under MAP, and even start selling counterfeit products under your brand’s name. Suddenly, the consumer trust you worked so hard to establish is destroyed and extremely difficult to rebuild.

Sound familiar? Unfortunately, this situation—called brand erosion—is common in ecommerce. If consumer trust is important to you, preventing brand erosion should be one of your top priorities. Here, we’ll discuss what causes brand erosion, its consequences, and what you can do to prevent it.

What is brand erosion?

Before we can talk about brand erosion, we need to be clear on the definition of a brand. A brand isn’t a logo, it isn’t typography, it’s not even the tone in your copy—it’s how consumers perceive your company or product.

Everything your company does factors into this perception, for better or for worse. How your product is marketed, your product listings, your creative strategy, your customer service, and, of course, the quality of the product itself all contribute to how consumers see you. Building a brand, especially one with a positive perception among consumers, takes significant time, effort, and money.

But unless you have a person or team carefully and consistently monitoring how your brand is perceived, it can be easy for this carefully-crafted perception to be eroded by negative consumer experiences and unmet expectations. Brand erosion is the decline in your product’s brand perception in the eyes of consumers.

3 causes of brand erosion

In some cases, brand erosion starts with third-party distributors, many of whom aren’t necessarily invested in maintaining the brand you’ve worked so hard to form. These distributors may be more concerned with selling as much product as possible, sometimes while sacrificing your brand in the process.

1. Price erosion

Price erosion is one form of brand erosion. Third-party distributors start to lower product prices to win the Buy Box, and in response, brands make price concessions over and over to match their sellers’ low prices. This race to the bottom decreases margins for both your company and your sellers, and lower prices devalue your product.

Let’s take, for example, Pattern partner PopSockets, which sells pop-up grips for cell phones. PopSockets sells its own products and also sells them to third-party sellers. If the third-party distributors lower the prices on their PopSockets, PopSockets must lower its prices in response in order to win the Buy Box, and the cheaper prices start to devalue the brand.

Popsockets Listing Brand Equity Example | Pattern

2. Mixed creative strategy

Discrepancies in creative strategy can also lead to brand erosion. Inconsistent design and poor quality photography can make a brand seem sloppy, inconsistent, and untrustworthy. Partners and distributors who don’t understand the importance of maintaining the brand may just shoot photography as quickly as possible without taking care to be consistent with brand photography.

Photographs with poor lighting, low-quality cameras, and unprofessional framing immediately discredit your brand. When the internet is filled with inconsistent photography of your product, the perception of the brand could be inconsistent—and that’s not a value that any brand wants. To learn more about how product photography affects your brand’s image, click here to read our Ecommerce Product Photography Guide to Storytelling Success.

POPSOCKETS

Going back to the previous example, PopSockets’ style guide states that product photographs shouldn’t be taken with two fingers on each side of the grip, but with one finger above the grip and the rest of the fingers below it. Jewelry brand Pandora states that images should show a model’s lips, but not her eyes or much of her nose. Inconsistency in small details like these, which can easily be missed when distributors aren’t focused on maintaining brand integrity, can have negative consequences on your brand’s perception.

3. Unauthorized sellers

Unauthorized sellers can also lead to brand erosion. These distributors may sell your products for ridiculously low prices, completely disregard your style guide, and possibly even sell a counterfeit, low-quality product under your brand’s name. When unauthorized sellers cut your prices and authorized sellers are forced to do the same to compete, Amazon will protect its own margin—which may mean reducing your product’s visibility and, eventually, dropping it altogether.

In the case of counterfeit products, which, along with pirated goods, amount to as much as 3.3% of world trade, your brand’s reputation can be seriously tarnished by sellers who sell low-quality products with your brand’s name on them.

And we know this could never be the case with _your _brand, but some brands cause their own erosion issues because of a lack of internal communication, inconsistent creative elements, weak or rarely-enforced style guides, or the lack of Minimum Advertised Price, or MAP, policies.

What are the other consequences of brand erosion?

We’ve already discussed quite a few of the overarching consequences of brand erosion, including price erosion, consumer distrust, and overall brand inconsistency. But the issues don’t stop there.

As you’re well aware, consumers rarely keep their negative experiences to themselves. Even just one consumer receiving a counterfeit product could cause a ripple effect if they leave a scathing review.

Many negative reviews over time lead to further brand erosion and distrust, less traffic on your product listings, and, ultimately, less conversion, as 85% of customers trust reviews as much as a personal recommendation. Selling or supplying counterfeit products could lead Amazon to suspend or terminate your account, withhold funds, destroy inventory in their fulfillment centers, and impose legal consequences.

Brand erosion is also synonymous with a decline in brand equity, or the perceived worth of a brand—the combination of customer opinion of a brand, their experiences with it, and the products’ value. Without brand equity, your brand loses customer trust and loyalty and the ability to charge more for your products.

It’s extremely challenging to rebuild your brand after it’s been significantly eroded. It takes a lot of dedication, persistence, and consistency to restore a tarnished reputation and lost trust, especially when there are likely countless alternatives to your product available online.

OK, I get it—brand erosion is bad. How can I prevent it?

Since there are several potential causes of brand erosion, there are also many different avenues you need to take to prevent it.

Strong, enforced brand guidelines can also help prevent brand erosion caused by inconsistency. These guidelines may come in the form of a style, photo, or copywriting guide. Before you can implement guidelines, you need to determine your brand’s identity. To help your consumers understand this identity, implement consistent marketing, consistent creative strategy, and consistent copy.

Implementing and enforcing a MAP policy can prevent price erosion and the resulting brand erosion. Joining the Amazon Brand Registry can provide you with support from Amazon and access to the Amazon Buy Box to combat price erosion, and registering your brand with Amazon keeps other sellers from selling your products without your permission.

The most important factor in preventing brand erosion may be to only work with partners who understand the value of your brand and know how to maintain it. At Pattern, one of our core values is that we’re partner obsessed—we’ll do whatever it takes to do what’s right for our partners. When you work with us, we’ll help you both build your brand and maintain it, combat price erosion, eliminate unauthorized sellers, and so much more. Use the contact form below to schedule a free consultation with Pattern’s brand experts.

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Sept 6, 2022

Global Ecommerce Weekly News: 6th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon announces new inventory and distribution service, AWD Amazon has launched Amazon Warehousing and Distribution (AWD), providing inventory and distribution services to its sellers as a means of addressing current supply chain issues. AWD is now available for sellers using Fulfilment by Amazon (FBA), i.e. outsourcing their fulfilment to the platform. Amazon has plans to expand the service outside the platform in 2023. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/02/amazon-introduces-new-service-to-help-solve-supply-chain-challenges/) Amazon Web Services (AWS) launches in the UAE AWS, Amazon’s cloud-computing platform offering, has launched its second region in the Middle East and now provides its services in the UAE. The move will now allow anyone in the UAE who utilises cloud technologies to harness AWS’s advanced platforms and APIs. An estimated $11 billion USD is expected to be added to the UAE’s GDP thanks to the implementation, with an average of 6,000 external vendor jobs to be created annually. AWS is now available in 87 zones across 27 regions, with sights set on expanding further across Australia, Canada, India, Israel, New Zealand, Spain, and Switzerland. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/30/amazon-web-services-launches-region-in-uae/) --- Other Marketplace News --- Lazada to launch in Europe Alibaba-owned ecommerce platform Lazada is set to launch in Europe, marking a refreshed internationalisation push from the company. The move follows toughening economic conditions and performance in Southeast Asia, advancing the need to tap overseas markets. In Europe, Lazada will face tough competition from giants like Amazon and Zalando. Lazada’s exact entry strategy is to be confirmed and will be reliant on macroeconomic and market conditions, according to Lazada CEO James Dong. [Read more on DigitalCommerce360](https://www.digitalcommerce360.com/2022/09/01/alibabas-lazada-to-take-on-amazon-zalando-in-europe-push/) Chinese ecommerce giant Pinduoduo to launch cross-border platform in the United States Pinduoduo, a Chinese ecommerce giant rivalling Alibaba and JD, has announced it will be launching a new cross-border ecommerce platform. The marketplace is set to launch in the United States next month, as part of the company’s larger push into new markets. Pinduoduo found success in China thanks to its rock-bottom price offerings and harnessing of social commerce marketing, emulating strategies similar to fast-fashion giant Shein. [Read more on Yahoo Finance](https://uk.finance.yahoo.com/news/pinduoduo-launch-international-e-commerce-034129263.html) Alibaba launches its biggest B2B sales event, ‘Super September’ China ecommerce giant, Alibaba, has now launched its month-long B2B sales event ‘Super September’. The event provides 40 million buyers and 200,000 suppliers with the ability to connect on the platform, showcasing a ‘virtually unlimited’ number of products. The event hopes to foster new cross-border business relationships to tackle supply chain challenges currently faced by businesses. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/alibaba-launches-super-september-b2b-sales-event/) --- Other Ecommerce News --- Klarna’s losses quadruple in first half of 2022 BNPL provider, Klarna, has reported losses of $581 million USD for the first half of 2022. This figure is almost four times larger than a year earlier, where $129 million USD in losses were reported. The company attributes the losses to employee costs, technology investments, and rising credit losses. Klarna’s figure reporting comes amidst worsening economic conditions, fresh legal and regulatory scrutiny, and pressure from Big Tech competitors. [Read more on The Financial Times](https://www.ft.com/content/483451db-9221-4ca4-83a6-b4ddc6bfcfbb) [Read more on the Guardian](https://www.theguardian.com/business/2022/aug/31/klarna-losses-more-than-triple-as-consumer-spending-slows) One fifth of Snap employees to be laid off amidst poor financial performance Social media platform Snap (‘Snapchat’) has announced it will be laying off 20% of its employees and closing out a number of projects following a year of poor financial results.The move will see 1,200 employees globally lose their jobs, saving the company an estimated $500 million USD in costs. Snap is currently valued at $20 billion, an 84% decrease from its valuation of $130 billion last year. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/snap-to-lay-off-20-of-its-workforce-and-wind-down-a-number-of-projects/)
Aug 30, 2022

Global Ecommerce Weekly News: 30th August 2022

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Aug 23, 2022

Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)