4 Steps to Stop Unauthorized Online Sales of Your Products
As retailers are well aware, the rise of online marketplaces on which anyone can sell products with little to no up-front investment has led to an abundance of products marketed over the internet by unauthorized sellers at steeply discounted prices. These products are often diverted from a brand’s authorized distribution channels and cause considerable consumer confusion regarding their source and quality.
Because it is so easy for consumers to price compare online, they often buy products at the lowest price they find and don't realize when they're purchasing a diverted product from an unauthorized seller. The net effect is that consumers are often confused and angry with the inferior products they receive, causing damage to the brand’s good will.
Preventing Unauthorized Online Sales
To stop unauthorized online sales of their products, brands must adopt a comprehensive strategy. Such a strategy typically requires taking the following steps:
- Identify and make contact with all retailers selling your products, and cease using a distribution model where you may not know which retailers are purchasing and reselling your products to consumers.
- Require all retailers that wish to sell your brand’s products online to sign agreements or follow policies that require them to agree to sell online only on authorized websites, and to provide all the storefront and seller names through which they will sell products on online marketplaces.
- Implement material benefits and quality controls for the brand’s products that cannot be replicated by unauthorized sellers, and require authorized distributors and retailers to maintain those benefits and controls.
- Use advanced monitoring technology to identify unauthorized sales of the brand’s products. If you do find unauthorized sellers of your brand's products, send them cease and desist letters (and, if necessary, further enforcement) that set forth claims for trademark infringement and related claims.
The backbone of this strategy is the control it allows brands and retailers to exercise over both their authorized channels and unauthorized sellers who have acquired their products. Both aspects of control are critical to being able to protect and grow your business.
Importantly, setting, implementing and executing the appropriate strategy for your business can typically be accomplished in an economic and user-friendly manner.
Both brands with their own retail network and retailers selling brands manufactured by others will reap significant long-term benefits in both their e-commerce and brick-and-mortar channels by implementing such a strategy.
This is a synopsis of a comprehensive whitepaper recently published by the online seller enforcement group at Vorys, Sater, Seymour and Pease LLP.
