Reducing The Negative Impact of Marketplace Sellers: Legal vs Marketplace Approach

There are two primary approaches to mitigating the negative impact of online marketplace sellers: the legal approach and the marketplace-centric approach. Both are valid and useful for brands in various ways. In this article we will summarize both approaches and provide details on best practices to reach overall seller compliance and take back control of the online marketplace.

LEGAL APPROACH

This involves engaging with legal counsel on a more aggressive and potentially risky approach to unauthorized seller investigation and take-down. This usually includes communication to resellers, regulatory escalations, subpoenas and filing lawsuits. These actions are typically billed hourly per claim and there are higher costs if proceeding to legal discovery and litigation. This approach may work for small to midsize brands that need to be more aggressive, have relatively limited distribution, and don’t have deep internal legal resources.

MARKETPLACE APPROACH

This involves engagement with (POTOO) a technology, data and services provider with extensive experience of the online marketplace. Our database is built on experience working directly with all product categories, brand leaders and global resellers. The service can involve, but is not dependent on adjusting authorized partner policies, product labeling, distribution agreements and pricing policies.

The actions taken include a review of marketplace data, identification of policy, marketplace and legal violations and communication directly to impactful resellers. In tandem with direct communication with resellers, this approach utilizes the resources provided by the marketplace to submit cases accompanied with data and evidence found identifying violations. This option provides brands with full marketplace visibility to identify the size and scope of their problems, avoids the need for litigation in most cases, and allows for the opportunity for brands to learn from the responses and behaviors of 3rd Party sellers.

This approach is typically a fixed cost program based on services required and easier to budget. This approach also works for brands that want to effectively monitor and control the marketplace product supply chain while accessing a robust reseller database to track sourcing information, depth of inventory and quantity of sales to assess the level of impact prior to escalating to a more aggressive approach.

Three Reasons to Start With a Marketplace Approach :

1. ENGAGE & GATHER : Discovery communications allow for the opportunity for brands to learn from the responses and behaviors of 3P sellers. This includes, other brand products on-hand, amount of owned inventory, pipeline, distribution source, warehouse capabilities, condition of product, expiration dates, production lot codes, product serial numbers, etc. Resellers are more likely to engage and provide additional information when communicated with in a softer way to start. Beginning with communication directly from a law firm can cause a seller to be more resistant, less responsive and engage in their own outside counsel.

2. NEGOTIATE : Many sellers are unaware of marketplace guidelines. Our discovery communication can very well be the first time a seller is notified of the following violations that are grounds for removal from the platform. Educating these sellers can allow them to correct the current violation, list the product as “USED” and/or organically remove their listing from the marketplace.

3. BUILD A CASE : While the majority of marketplace resellers in violation of guidelines will be removed, experienced resellers may push back. Taking the time to gather as much information as possible prior to escalating to legal action will help you build a case to increase the likelihood of success when/if legal action is necessary. In depth research and in some cases test buying products is necessary for violation reporting. This limits the hours spent on legal resources as well as the risk for negative PR, and potentially high legal fees.

Both, legal and marketplace approaches help brands reduce the negative impact of unauthorized 3rd Party sellers on the marketplace. The path to marketplace clean-up and seller compliance can vary. However, beginning with a data driven, marketplace-centric approach allows for communication between resellers to uncover valuable information that would otherwise be very difficult to obtain, while also tracking seller behavior trends and targeting the most impactful sellers. Once the impactful, sophisticated sellers have been identified, all resources have been exhausted, and information has been collected to build your case, escalating to a legal approach is a great end result.

POTOO has affiliations with some of the largest law firms in the world providing several options for outside legal support and counsel if the need is identified.
To learn more about POTOO can help you take back control of the online marketplace message us on LinkedIn or contact us at info@potoosolutions.com.