You’ve poured your heart and soul into establishing your brand as one that delivers high-quality products with integrity. What’s more, you’ve worked tirelessly to maintain your reputation by carefully selecting quality Amazon resellers, and brick-and-mortar retailers who meet your brand’s high standards to distribute your product.
One day, you discover your product is listed by a less-than-reputable unauthorized 3P seller on Amazon. The listing features poor-quality images, horribly written copy, and worst of all, a below-average seller rating. You haven’t authorized this retailer to sell your goods. So, what happened?
Well, your product has found itself in what is known as the “grey market.”
What is the Grey Market?
As mentioned in another GreyScout blog, the grey market or gray market refers to activities in which branded products are sold through unauthorised distribution channels. Grey market vendors may be unauthorised to sell those items or may not have permission to offer products in a specific country or region.
What are “Grey Market Goods” on Amazon?
Grey market goods are non-counterfeit goods that are sold through channels that the trademark owner did not approve of. Finding your product on this market indicates a leak within your supply chain.
Whether it’s a manufacturer attempting to unload extra inventory of your product, or a retailer circumventing your agreement to move product faster, having your product leak out onto the grey market can be damaging to your brand in several ways.
How can I remove Grey Market Goods from Amazon?
Don’t expect Amazon to handle grey market goods with urgency. Amazon organically being an online marketplace, is in the business of offering customers a wide selection of products at the cheapest possible price, and limiting itself to enforcing your brand’s distribution policies. To fight grey market goods on Amazon, you’ll have to initiate the actions internally within your eCommerce and Legal teams.
Goods on the grey market are out of your brand’s known supply chain channels. With these listings out of your reach, it is impossible to enforce how the items are shipped and branded, and other factors that can diminish customer perception of your brand.
– Find the source of the Leaky Supply Chain
There are several methods you can use to identify who within your distribution chain is putting your product in the hands of unauthorized sellers.
- Use RF Tags, serial numbers, and other identifiers combined with test buying to pinpoint unauthorized sellers.
- Is a distributor selling your product faster than you expected? They may have passed your product on to the grey market. Continuously monitor, investigate, and follow up on irregular sales patterns.
- Performing a test buy allows you to identify the source of the leaked product by tracking the manufacturer codes and using your logistics software to track from where the product was acquired.
- Keep an eye out on MAP violations: As discussed in one of our blogs, instances where prices of products sold across Amazon, eBay, and Google shopping by unauthorized 3P sellers are considerably below MAP, could be a reflection of more significant issues such as grey market products, parallel imports, used products being re-sold as new or even at times counterfeits products being sold as genuine.
– Take Action
Once an unauthorized seller is identified, you can use Amazon’s system to let the seller know you are aware of it. Usually, a well-communicated message from a brand owner to a reseller is enough to convince them to limit or delist their listing. For them, a potential legal battle is just not worth the hassle.
Work with a select number of exclusive resellers for eCommerce Marketplaces, ensuring they are committed to maintaining your MAP policy and also patrolling those marketplaces for unauthorized 3P sellers and breaches of your pricing policies.
Ensure you register your brand with Amazon, so you can take action against resellers that violate any agreements you have in place and also have unauthorized 3P sellers removed.
– Prevent: Take Control of Your Brand
If you find your product on the grey market, it is a sign that you need to establish tighter control over your brand and the distributors you are in business with. As the old saying goes; “a good offence starts with a good defence.”
Preventing grey market activity on Amazon is no different.
- Know Who You’re Working With: Ensure you are entering business relationships with reputable sellers and manufacturers who are as committed to maintaining your brand standards as you are. When selecting distributors, perform your due diligence.
- Don’t Overproduce: When you are producing more volumes of the product than your distributors can sell quickly, they’ll begin to get nervous. They’ll become more inclined to hand things over to a reseller, who will sell your product at a cheaper price and without adhering to brand standards, diminishing your foothold in the market. Avoid producing more than your distributors can chew.
- Establish Your Brand Firmly: Ensure that when a customer receives your product from an authorized seller, it is branded in a way that no grey market seller can replicate. By having your branding directly on the product or its packaging, you can ensure customers will know they are buying from a reputable seller.
The Bottom Line
Some brands have gotten so fed up with the grey market activity and counterfeiting on Amazon, that they’ve left the platform altogether. Birkenstock for one, went this route, but can brands afford to ignore these channels?
The fact is that Amazon and eCommerce marketplaces are the future of retail and are expected to REACH $746 billion globally in 2023. (In the US, Amazon.com already accounts for more than 43% of online retail). By establishing tighter controls over your Amazon distribution and manufacturing channels, you will maintain control of your brand, while continuing to sell on what is quickly become the No. 1 retailer of consumer goods in the world.
With the right combination of due diligence and attention to your own supply chains, you can snuff out the grey market activity and send a clear message that your brand is not an easy target.
Online and eCommerce Brand protection software like GreyScout can also make it more effortless to monitor, identify, and quickly act to defend against scammers, counterfeiters, grey market resellers, and other cyber criminals online and on eCommerce.
