Recovering revenue is essential to prevent damage to your bottom line and brand reputation. Unfortunately, revenue leakage is inevitable for any business, but it can be recuperated.
One of GreyScout’s clients, Lansinoh, increased its return on investment by 14 x by undertaking revenue recovery in under five weeks.
What is revenue leakage?
Revenue leakage is when a business loses potential revenue due to failing to capture it for various reasons.
Customers have paid money and bought your product, but the sale and the money does not get attributed or credited to your business P&L, and this can significantly impact your bottom line.
E-commerce fraud resulted in $40 million in losses in 2022, which is expected to increase. It is estimated that 42% of companies experience revenue leakage up to 5%. While it is problematic to prevent fraud from happening, revenue can be recovered.
What causes revenue leakage?
Revenue loss and brand abuse can be caused by various factors, such as unauthorized sellers, counterfeit products, unauthorized discounting, and the encroachment of distribution agreements.
On Amazon’s platform alone in 2022, they stopped over 800,000 attempts of account creation by bad actors and more than 6 million counterfeit product units.
How to identify revenue leakage
You can isolate unauthorized sellers by monitoring who sells your products on all e-commerce marketplaces like Amazon, eBay and Walmart. Price erosion is another factor that can indicate revenue leakage.
When 3P unauthorized sellers sell your products or parallel imported products without your consent, they can undercut a product’s price. By doing so, they can win the Buy Box on Amazon, which can put your business under pressure to offer a more competitive price. Losing the Buy Box could mean you lose sales.
Not only that, but customers’ discernment of your product can diminish, which lowers its perceived value. In some instances where products are damaged, expired, or counterfeit, they can also harm consumer safety.
Why is revenue recovery important?
Revenue recovery is indispensable for any e-commerce business to protect your reputation and bottom line.
- Increase your bottom line
Counterfeit products and unauthorized sales can significantly impact your bottom line, but recovering your revenue can help you maintain financial stability and be more profitable.
You also have more opportunities to invest in your business, which allows you to grow.
- Protect your brand
Counterfeit products can be materially different and of a lower quality, damaging your reputation as the customer likely won’t realize it is not the original product.
Unauthorized sellers can sell damaged goods or provide inadequate customer service, dissuading customers from purchasing these products again and damaging your brand’s equity.
- Increase customer loyalty
When you address unauthorized sellers and counterfeit goods, your customers can be confident that it is the original when they purchase your product.
Your customers will trust they will receive a consistent and smooth customer experience, encouraging repeat purchases.
- Market positioning
Ensuring consistent pricing across all authorized channels can maintain your market positioning.
This means your customers’ perception of the value and quality of your product is protected. Consistent pricing reinforces your value proposition and helps to encourage loyal customers.
- Minimize legal risks
In some cases, counterfeit products can be challenging to separate from the original, which means a customer could generate a legal claim against your company if they find a problem with the counterfeit product.
What are the Challenges with revenue recovery?
When you are mindful of revenue leakage, it can be a multifaceted process to plug these gaps. Businesses face many challenges in recovering their revenue, including:
- Identifying unauthorized sellers
With 9.7 million sellers on Amazon alone, let alone other marketplaces, it is a full-time job trying to identify unauthorized sellers.
That is before considering the tactics unauthorized sellers could be using to avoid detection, which makes identifying unauthorized sellers a difficulty for any business.
- Gathering evidence
It is not enough to simply identify any unauthorized sellers or counterfeit goods. You need evidence to enable your business to initiate action against these sellers.
When sellers are located in countries with differing laws, it is difficult to provide robust evidence and the time and resources to build cases for multiple infringers.
- Enforcement
When enough evidence can be gathered, undertaking legal action can be costly and complex.
You may even need to undertake legal action in multiple jurisdictions, making enforcement and legal action counterproductive.
How do you recover revenue and protect your brand?
By having a brand protection strategy, you can recover your revenue. Strategies you can include are:
- Implement a selective distribution model
Choosing authorized retailers and distributors should be done after careful consideration to ensure you can regulate how your products are sold.
Creating a process to do this will help sustain the standards of authorized retailers and distributors and enable your business to more easily identify unauthorized sellers.
- Enforce MAP policies in markets like the US
Creating a MAP policy and strictly adhering to it can deter unauthorized sellers.
When unauthorized sellers cannot advertise prices below the MAP, selling that brand’s product is less beneficial.
The MAP policy will also provide a framework for enforcement and legal action against unauthorized sellers which will deter these sellers by the threat of enforcement.
- Use brand protection software
With brand protection software, revenue recovery is automated to save hours. It can quickly detect, authenticate, and take enforcement action against grey market sellers. Their revenue recovery and brand protection services can monitor online marketplaces for unauthorized sellers, counterfeit products, and other violations.
This can help you quickly identify sellers impacting your bottom line and address them before damage to your brand.
Brand protection software can also execute test purchases to authenticate sellers.
How GreyScout can help you increase your profit
At GreyScout, our brand protection software can quickly monitor and detect online marketplaces for unauthorized sellers, counterfeit listings, and bad actors. GreyScout platform can help verify the product inventory and listing on eCommerce marketplaces like Amazon, eBay and more to identify revenue leakage. You can also create verification and enforcement actions against unauthorized 3P sellers who are suspected of infringing consumer safety and brand policies within the GreyScout platform.
Using our brand protection platform, our client Lansinoh, a global leader in the baby product market, achieved a 14x return on investment in under 5 weeks. They also saw a 260% improvement in their Buy Box for priority SKUs.
By utilizing GreyScout’s brand protection software, your business can safeguard its reputation, increase customer loyalty, and enhance its bottom line.
