This post is by James Thomson and Joseph Hansen of Buy Box Experts.
With antitrust investigations in the U.S. and European Union, recent press investigations into Amazon’s use of seller data, and the U.S. Congress summoning Jeff Bezos to address inconsistencies between public statements, there will be even more public scrutiny into how Amazon handles brands on its marketplace.
Amazon continuously recruits new sellers, adding product selection and driving lower retail prices for customers. Amazon does not distinguish between which sellers are authorized by brands to sell their products, and which are not, but it does have well-documented policies regarding acceptable seller behavior.
Yet enforcement of these policies is nowhere near adequate enough to prevent transgressions. That leaves customer complaints as the defacto enforcement method for Amazon. Brands that don’t want to rely on random customer complaints for policy enforcement need to do their own constant policing to ensure that their brand equity is protected.
Were Amazon to manage product risk preemptively, much of the counterfeiting and poor customer experiences would simply disappear. Customers would be protected, while brand owners would become more trustful that Amazon is protecting them. Let us examine the actions that Amazon could take.
- 1. Comprehensive catalog control
- 2. Accentuated trademark protection
- 3. Accelerated patent control
- 4. Gating products that are repeatedly counterfeited
- 5. Gating brands with no foreign presence
- 6. Requiring compliance certificates
- 7. Policing fake reviews more effectively
- 8. Stopping FBA inventory commingling
- Preemptive enforcement is the solution
1. Comprehensive catalog control
Today, a third-party Amazon seller can create or modify a product listing, regardless of whether that seller has suitable, correct content to use. While Amazon’s Brand Registry program helps trademark-protected brands lock down content, it’s still easy to create duplicate listings that pollute the brand’s content management efforts.
A malicious actor can trump Brand Registry protections by submitting new content through a Vendor Central account, overwriting what was supposed to have been protected. This program doesn’t allow brands to remove fake or non-manufacturer UPCs that are regularly used as workarounds to Amazon’s catalog cleanup efforts.
As a result, brands need to monitor the Amazon catalog constantly for unscrupulous activity, while figuring out how to escalate issues to Amazon. With a clean, accurate catalog being in Amazon’s best interest, the efforts of brands and Amazon could nicely align through tighter catalog control.
2. Accentuated trademark protection
A brand holding a trademarked term will find limited protections through Brand Registry. Our clients have spent millions of dollars building and protecting their trademarks, only to have Amazon allow other sellers to use them in new listings.
Furthermore, competitors can buy Amazon advertising on those exact trademarked terms, enabling competitors to grab market share from the rightful owners. In the physical retail world, competitors are not allowed to promote themselves as “Apple” in order to grab Apple customers, so why is this possible on Amazon?
3. Accelerated patent control
Amazon sellers commonly seek to sell knockoffs of patented products. Last year, Amazon launched its Patent Neutral Evaluation Process program, helping brands challenge Amazon sellers whose products appear to violate patents.
However, it’s still lucrative to sell knockoffs until Amazon addresses patent complaints made by rightsholders. We’ve had clients see both patents and trade dress violated for many years before Amazon finally removed the offenders.
As Amazon grows its seller base globally, brands spend more each year to counter rapid increases in IP-violating sellers joining the marketplace.
4. Gating products that are repeatedly counterfeited
Amazon usually tackles each counterfeit complaint from a brand as an isolated event. Amazon may remove an offending product, but the brand must play whack-a-mole to get Amazon to remove the next counterfeit.
Once a large enough supply of counterfeit inventory is manufactured, we find multiple Amazon sellers accessing that inventory. When one counterfeit seller is removed, new sellers are likely to appear.
Brands and customers would benefit from a process that makes it easier for products that are at high-risk of being counterfeited to have restrictions put in place on who can offer the products to Amazon customers.
5. Gating brands with no foreign presence
For made-in-U.S. brands with top-selling products on Amazon, they often experience the frustration of foreign sellers showing up, claiming to have endless inventory of their products.
Even if the brands conduct test buys to verify that products are not authentic, Amazon’s enforcement time is often long enough to cause those brands to lose tens of thousands of dollars of sales to counterfeiters.
Such a gating program could be as simple as allowing a brand approved for Brand Registry to indicate if it has any foreign manufacturing or distribution. If neither applies, Amazon would preemptively flag new sellers of these products, and verify with the brand that those sellers are offering legitimate products.
Meanwhile, Amazon could ensure that such gating policies came with sharp penalties for brands abusing the process to remove sellers who are merely unauthorized (rather than counterfeit product sellers).
6. Requiring compliance certificates
In categories like Health & Beauty, certain products require FDA certification. While Amazon sometimes asks for documentation, it is still easy to list products without ever having sent in any paperwork.
Properly-certified brands have had to compete against sellers with no documentation. Then the certified brands file complaints, only to have Amazon drag its feet on enforcing its own rules. Not only is it unfair to rule-abiding brands, but customers are put at risk after expecting Amazon to vet sellers properly for safety standards.
Other marketplaces have figured out this certificate review process, so why can’t Amazon do the same, keeping everyone safe?
7. Policing fake reviews more effectively
One of the easiest black-hat techniques for taking down your competitor is to submit fake product reviews on your competitors’ listings, especially reviews that contain “trigger” terms that will cause Amazon to deactivate the listings immediately, and require the seller to explain what’s going on.
Because of Amazon’s willingness to allow anyone to leave a product review – including consumers who have not actually bought the product – it’s easy to hurt your competitor. Once a seller falls victim to such an attack, the process for getting Amazon to investigate the false claim is extremely difficult.
This situation is comparable to an anonymous tip to the police resulting in your neighbor being arrested, and held without representation for weeks. With no timely due diligence, honest sellers are hurt by bad actors and by Amazon’s lack of effective escalation channels to get false reviews removed.
8. Stopping FBA inventory commingling
When the Fulfillment by Amazon (FBA) program introduced commingled inventory as the default setting for sellers starting to use FBA, most sellers didn’t understand the risk that they were absorbing for Amazon’s own financial benefit.
Yet each year, one seller after another gets accused of selling questionable inventory that they never sent into Amazon. Instead another seller sent the same product into Amazon fulfillment centers, and that inventory got mixed with others’ stock, creating a major problem in identifying the provenance accurately.
Preemptive enforcement is the solution
The scrutiny of media attention will continue to grow as Amazon operates its marketplace in a partially self-regulating manner.
So, we recommend that Amazon do a favor to itself, its customers, and brands that propel the marketplace. Invest in long-term consumer and brand trust by providing preemptive and not just reactive enforcement.
This post was by James Thomson, Chief Strategy Officer, and Joseph Hansen, Chief Executive Officer, at Buy Box Experts, a team of ecommerce experts specializing in marketplace consulting and management for medium to large brands.