With the recent news of the "Lollipops Hustle" on Amazon, we thought the tips and advice outlined in this article are worth a new look. 

Retail Arbitrage is a real risk to a brands reputation and in the case of Dum Dums lollipops, cost the family owned business millions of dollars in sales.

What happened to Spangler Candy Company, maker of Dum Dums, is typically the result of an out-of-control reseller situation. These resellers may be authorized distributors, unauthorized resellers practicing “retail arbitrage,” or counterfeiters. In most cases, bigger brands with broad distribution have bigger problems. Their products are more readily available and anyone who finds a good deal might be tempted to flip that item online. Similarly, counterfeiters will see big brands with active markets as ideal targets.

No matter what type of resellers you’re dealing with, this can have serious consequences for your brand. These include the following:

• Duplicate Item Pages:  Resellers of all kinds are notorious for propagating duplicate listings. A reseller will create their own listings under the assumption that doing so will help them avoid competing for the buy box with a more established listing. This logic is flawed, however, because these duplicates seldom achieve good search rankings or traffic. Even so, they can create confusion for your shopper and steal traffic from your listings.
  
  
• Low Quality Content: Resellers typically have thousands of items in their catalog. When they create a listing, they will often do the bare minimum with regard to content. The mark of a bad reseller listing is one to two images of the item packaging and about 20 words or less of product description copy and pasted from the label. This content doesn’t sell your brand, tell your story, or speak to the value of different item features. This lazy marketing reflects poorly on your company.
  
  
• Issues with Product Claims: Resellers have been known to add unsupported claims about the item to their product description. Although you know the exact words to describe your toothpaste’s 12-day whiteness guarantee, your reseller may take some “liberties” with the language in a way that sets the wrong expectation for customers. This can result in legal problems for your brand.
  
  
• Bad Customer Experience: The more unauthorized resellers you’re competing with, the less control you have over the customer experience. You may be very diligent about ensuring that your shopper never receives an expired, damaged, or otherwise unpleasant product, but your reseller likely doesn’t have the same concern for brand experience as you. Unscrupulous resellers will often “sticker over” expiration dates, ship obviously damaged units, and even short-change the shopper. All of these things destroy customer trust, ruin the likelihood of a return purchase with your brand, and can lead to negative reviews and bad P.R. for your company.
  
  
• Out of Control Pricing: Although your official distributors might observe your MAP (Minimum Authorized Price) policy, a small scale reseller probably won’t. When brands have messy reseller situations, their pricing tends to be all over the map (pun intended). If you can’t control prices, then you’re likely to lose the trust of your channel.
  
  
• Self-Competing: The only thing worse than having no control over the way your product is listed is losing sales to your own item. If you have a quality, in-demand product, shoppers are going to buy it from whoever has the best deal. If your resellers gain traction in the marketplace, it becomes much more difficult to outperform them. 

The good new is, there’s always hope. There are a number of ways to limit the volume and influence of resellers in your marketplace. Below, we’ve outlined five tips to help you clean up the mess created by your resellers—authorized or unauthorized—and reclaim control your eCommerce presence.

1. Establish a Monitoring & Response System

There are a number of tools, dashboards, and services that will help you keep tabs on your reseller situation, but it’s best to start simple. Spend an hour looking at the situation from a shopper’s perspective by searching for your popular items and seeing what comes up. Look at all the listings and carefully note any issues, especially recurring ones. If you have a limited portfolio, this “manual” approach to monitoring may be enough. 

If you have a large eCommerce portfolio and a lot of reseller competition, you’ll probably need to take a more advanced monitoring approach to help you efficiently recognize and respond to problems. We use a number of different software solutions with our clients depending on their needs. Historically, sellers were anonymous but in 2020, Amazon started requiring accurate legal entity and contact information for every seller. You can also contact the seller directly or through the marketplace. If you have a problem with their content, don’t be afraid to let them know. Got a more serious issue? Notify the retailer (Amazon or Walmart for example) of the violation.

Retailers will help you enforce THEIR rules, but not yours. In other words, if the reseller is violating Amazon’s Terms of Service with a bad product image, Amazon will be quick to come to your aid. If the reseller is violating your MAP policy, however, the retailer won't get involved.

2. Verify Product Quality and Authenticity

Something looks suspicious about that listing for your brand. It has terrible reviews and shoppers keep complaining that the product tastes stale. Furthermore, the product images shows last year’s packaging before your latest brand refresh. It doesn’t take Sherlock Holmes to figure out that someone is selling out-of-date or improperly stored goods.

Despite all the digital evidence, you’re going to need to verify this is so with a “test buy.” Order the product, have a look at what you get, and note any problems. Take plenty of pictures (including expiration date if applicable) and prepare to send these in with your case notes to the retailer. If the seller in question is selling a nonconformance product, you’ll be surprised at how quickly the retailer will respond to address the issue (sometimes within minutes)!

3. Tighten Up Your Contracts

If you find yourself competing with authorized distributors, then your problem can probably be addressed via contracts. If you’re planning on selling directly to customers through Amazon or Walmart.com’s marketplaces, then there’s very little reason to allow other distributors to sell there too. Specifically state that these marketplaces are off limits to distributors in your distributor contracts.

The contract solution may not fix everything in the short-term, but as your old contracts expire, you’ll have the chance to start fresh with new terms. Over time, you’ll be able to maintain greater control over your brand identity and listing page content—both factors that affect the customer experience and influence brand perception.

4. Merge and Purge

It’s painful, laborious, and repetitive, but you will need to address every duplicate or erroneous listing you find. In most cases, this is a matter of informing the retailer that a set of listings should be merged because they are identical items. As the brand owner, you will usually get quick attention when you make these merge requests. The UPC or other unique identifier on duplicate listings will be different from what your brand has established—this is how the reseller got the retailer to accept the duplicate in the first place.

Tell the retailer which listing is the correct one so that all sellers on other listings are moved to that one. If, for example, you have ten sellers across three duplicate listings, all ten will now appear on the one listing that remains.

If the listing is just plain wrong (bad claims or description), document those errors as well. Usually, the retailer will freeze the seller until they make the necessary changes to their listing. In the meantime, the listing will not be visible to shoppers.

5. Differentiate and Win

If your resellers are authorized, then getting rid of them might not be an option. Your brand name won’t necessarily give you an edge if someone else is offering your item for less on the same site. Instead, look for ways to differentiate yourself as a seller and reclaim your rightful spot at the front of the pack.

One of the easiest ways to leave your resellers behind is by creating special bundles or special editions with their own, brand-associated UPC codes. The differentiator could be a special flavor, variety pack, or a standard item with a value add (an accessory, some content, or anything that the shopper might find valuable). By differentiating your items and driving traffic to these special listings, you won’t have to worry about winning the buy box. 

(Originally published in October 2020)

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