Watch out for unauthorized resellers
“It keeps me up at night. It’s something that we constantly struggle with. The challenge is no matter what we do, it’s all our fault. Even though we’re not funding it, the question always comes [from authorized sellers] about where’s the sell-through credit,” one attendee lamented on the state of unauthorized sellers on Amazon, who get their hands on product and resell them below established prices.
The problem has escalated in the last decade as promotions have increased in frequency and severity, enabling third parties to purchase product at lower cost. One attendee summed up the reason why:
“We used to do minimum promotions, and when you’re doing 5-10% off, that used to work. It doesn’t work when your largest competitor is doing 30% off three weeks out of every month. As Black Friday and other big promotional periods happen, retailers want to do something big, and it ends up with third-party distributors. When you discount 30%, that’s typically where the third party problems start.”
The volatility of the Amazon Buy Box has only heightened this concern. This piece of invaluable digital real estate sits on the right side of an Amazon product detail page. It’s the quickest way for a consumer to purchase a product on Amazon by either hitting the “Add to Cart” or “Buy Now” buttons. A staggering 82% of Amazon sales process through the Buy Box, and that percentage is even larger in mobile purchases. The problem? That sale doesn’t necessarily go to the maker of the product. Amazon gives just as much opportunity to third-party resellers as the original manufacturer. With pricing the primary factor influencing who “wins” the Buy Box, the struggle is real.
Attendees volunteered various solutions, many to keep third parties from acquiring large amounts of product. Limiting the volume that one account can purchase —even if it’s from a company’s own digital storefront—will keep these sellers from stocking up on heavily discounted goods. And aside from adding serial numbers and using legal action to combat unauthorized sellers, one attendee offered a more unconventional—if effective—fix: buying their own product back.
“We just bought $10,000 of our own product in the last three weeks,” she explained. “Because the problems that ensued in the retail channels are far greater. That’s how we do a temporary fix. It’s just a domino effect.”
The roundtable offered attendees a unique opportunity to collaborate on hurdles that hinder the entire industry, and many shared how valuable it was to connect with their peers. Stay updated on upcoming events near you by signing up below to receive the latest Alloy news and insights. And to see why Alloy software is a critical part of Tile’s strategy to navigate modern supply and demand, schedule a demo today.