Unauthorized sellers on Amazon can be pretty sly, and when left unchecked, they’ve got a bite that can do serious damage to your ecommerce brand equity and wound your growth. It’s important to be aware of the problems unauthorized sellers cause so you can take active steps to prevent them.
After all, the unauthorized sellers in your ecommerce business might just be the reason why you’ve been passed up for that big promotion lately. And no, it's not just your ecommerce person's problem. Here are three of the biggest ways unauthorized sellers negatively impact your brand’s growth, and what you can do to get them under control (ergo, helping your CEO clearly see the value you’re bringing to the organization).
Unauthorized sellers don’t ask for permission when it comes to moving on price: They don’t have to. In most cases, they’ve purchased your product from another source just to turn around and resell it. This becomes a big issue when they dip below your minimum pricing.
As a quick aside, the reason this unauthorized seller got hold of your product in the first place is most likely because you have a wide distribution net. The wider your distribution, the more difficult it is to control sellers, and price. If you don’t believe in limited distribution yet, see this blog that explains the concept in depth.
Where were we? Oh yes. When an unauthorized third-party seller undercuts your pricing, the pressure falls on other distributors to do the same to keep up. This can often lead to a nasty price war that pulls in big distributors like Walmart or Amazon who move to even lower prices to stay competitive and won’t budge on price. Other distributors can’t afford to lower their price when this happens, but they also can’t afford not to. Just like that, your brand has experienced price erosion.
Price erosion leads to loss of sales and shrinking margins, and by simply reselling your product at a low price, an unauthorized seller can cut deeply into your brand’s profits.
At Pattern, we’re strong believers in profit over revenue. That’s why we believe that a wide distribution net pulling in more revenue on the surface will never make up for crappy product images and sinking prices from authorized sellers eroding it below the surface. The first step in getting in control of unauthorized sellers is limiting distribution. If they don’t have your product in the first place, your problems are mitigated. Imagine explaining this to your CEO and CFO… Trust us, it’s a game changer.
Though they’ve got a funny moniker, CRaPped products are nothing to laugh about. A product that’s been CRaPped by Amazon is a product that “Can’t Realize a Profit.” Typically, CRaPped products are low-cost, high-weight items that cost a lot to ship and are therefore deemed unsellable by Amazon, but shipping costs aren’t the only thing that can CRaP a product: fluctuating prices can, too.
When an unauthorized seller cuts the price on your product and other sellers move to deal-match, that product becomes increasingly unprofitable to Amazon. In order to protect its own margin, Amazon will CRaP the product. They’ll stop promoting it and bar your access to marketing services like Subscribe and Save and AMS, they’ll suppress your Buy Box, and if you don’t take action, Amazon may even drop the product altogether, causing further damage to your ecommerce growth. More on CRaP here.
Plus, if your prices get to that point, it’s likely your brick-and-mortar sellers won’t be too happy either. You might even lose a few of them. More on that below.
When an unauthorized seller causes harm to your brand online, that harm extends offline as well. To keep up with price changes online and maintain sales, many brick-and-mortar stores offer price matching to customers. This can prevent showrooming and capture sales that may otherwise have gone to an ecommerce merchant like Amazon or Walmart.
When an unauthorized seller has eroded your pricing and caused price fluctuation on a product, it can harm your brand’s relationship with brick-and-mortar sellers. These sellers may see that your brand is out of control online and want little to do with it, for good reason.
The negative effects of an unauthorized seller not only hurt your profits but they hurt your relationship with the valued distributors you work with and want to keep working with. When pricing lowers online, these distributors lose margin and sales to keep up. They may come to you demanding discounts on your products because they can’t move them at the eroded price, or they may decide it’s not worth it to distribute your product at all. Any forward momentum with them can be severed. When that happens, the sales-machine you built with blood, sweat, and tears is at a standstill. And so is that promotion deck you were making.
So how do you prevent unauthorized sellers from hijacking your ecommerce brand and your relationships with other distributors? How can you prove your worth to your organization beyond top-line revenue? There are many ways you can regain control, such as limiting your distributors (as we discussed earlier), creating a robust MAP policy, and attacking the root of the problem with software like Predict that shows you where it’s happening so you can take decisive action to stop it.
Schedule a free consultation with Pattern to get a demo of Predict (our price-tracking software that empowers you to find unauthorized sellers) and see how making Pattern your authorized distributor can fix your price erosion woes AND get you in line for that promotion you deserve.
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If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.
Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.
At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead.
An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.
A great Amazon SEO Agency partner will:
Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance.
Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS.
To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.
A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.
It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.
Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins.
Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.
As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.
Contact us to learn more about our SEO optimization services.