Tested Methods to Protect Brands from Amazon ‘Hijackers

There’s no question that brands find an enormous amount of value in selling their products through Amazon—in many ways, there’s simply no matching Amazon’s reach, ease-of-use, and revenue potentials. That said, selling products through Amazon isn’t free from its hiccups and hassles, one of which is other sellers “hijacking” a brand’s listings, and taking advantage of the buyer-oriented system.

In most cases, these sellers acquire legitimate versions of a brand’s products and are simply gaming the system on costs, but in some cases, they’re offering low-quality counterfeit products. And when a customer gets upset over spending good money on a not-so-good product, they blame the brand, not the counterfeiting manufacturer or seller. This leads to erosion of the brand’s value, and can lead to negative reviews. In other situations, hijackers use their illegitimate business practices to undermine the manufacturer’s minimum advertised price (MAP), and cost real sellers money. Not being able to control this effectively can cause major setbacks in any brand’s sales and revenue goals.

Fortunately, there are some tried-and-true strategies for brands needing to protect themselves from hijackers on Amazon. First, they need to understand what they’re dealing with.

 

Counterfeit vs. unauthorized?

It’s important to know the difference between these two situations, as dealing with each require different strategies. A counterfeit item is one that is clearly a fake version of the original brand’s—think acquiring a low-cost handbag and sewing a premium brand’s logo on it. Counterfeiting does violate intellectual property law in most countries, so there is grounds for legal recourse, if needed. Fortunately, Amazon aggressively takes down counterfeit items.

An unauthorized item is one where the seller has no agreement with the item’s manufacturer to sell that particular product. When it comes to Amazon, unauthorized items most often show up when a seller gets their hands on a branded product and sells it for below the MAP in order to get extra attention from buyers. And unlike counterfeit items, fighting back against hijackers who offer unauthorized products comes with a little more added complexity.

This statistic gives information on the third-party seller share of the Amazon platform as of the first quarter of 2016, based on paid units. As of the last reported quarter, 48 percent of paid units were sold by third-party sellers.

This statistic gives information on the third-party seller share of the Amazon platform as of the first quarter of 2016, based on paid units. As of the last reported quarter, 48 percent of paid units were sold by third-party sellers.

 

How does hijacking happen?

Unauthorized items come from a huge number of sources, and while many like to put all the blame on Chinese manufacturers, it’s often more complex than that—supply chains, no matter where they begin, are difficult at best to negotiate. One can never truly be sure a contract manufacturer won’t produce a few thousand extra widgets and sell them to another company. Globalization of manufacturing has, indeed, increased counterfeiting activity, since it’s difficult to prosecute companies overseas.

Counterfeit items aside, Amazon aims to create a level playing field where anyone who legally acquires goods can sell them. On top of that, Amazon is extremely pro-buyer—it wants to offer the lowest possible prices. For example, the Buy Box allows buyers to pick between a number of sellers offering the same product for different prices and shipping costs, and while Amazon’s algorithms try to put forward the most legitimate option, there are ways that hijackers can negotiate around its usefulness.

When a hijacker gets their hands on unauthorized versions of a product, most often at a lower cost than legitimate sellers, they can easily undermine the Buy Box, particularly if the legitimate sellers follow MAP or some other type of strategic pricing. Hijackers often use software that automatically re-prices their items to ensure that they’re always the most favorable-looking seller.

 

MAP isn’t a silver bullet

At this point, one might think that if a hijacking seller violates the manufacturer’s MAP, there should be an easy path to recourse. Unfortunately, that’s not the case. A 2007 U.S. Supreme Court decision declared that MAP would only be used to protect companies that develop life-saving products. For most brands, this means MAP isn’t legally-enforceable, except in a few U.S. states. Amazon just isn’t in the business of keeping track of or enforcing the private contracts between a manufacturer and its resellers or retailers.

 

Can hijacking be prevented?

Successful brands on Amazon will likely find themselves attacked by hijackers at some point—it simply comes with the territory. Proactive businesses can, however, try a few different tactics to make hijacking their listings a little more difficult.

The manufacturer of a branded product, or the OEM, can apply to become part of Amazon’s Brand Registry, which means other sellers can’t make changes to the product detail page. It doesn’t prevent them from showing up in the Buy Box, but does give that company a number of other brand management tools within Amazon that could be useful, such as priority on editing the listing’s copy. In order to apply for the Brand Registry, brands need to prove ownership, such as by having their name or logo printed on the actual product.

Companies that create stronger exclusivity and MAP policies in their contracts with distributors, resellers, or retailers can use those to figure out where product is escaping the agreed-upon supply chain, particularly if they use product serialization. That needs to be dealt with outside of Amazon’s management tools, but if a distributor knows there will be consequences for not adhering to MAP, the chance unauthorized products show up alongside legitimate ones declines dramatically.

Above: This chart shows that the volume of products listed by Third Party Sellers (i.e. sellers using FBA to sell directly on Amazon) are far greater than the volume of products listed directly by Amazon (where the brand is selling inventory direct to Amazon on a wholesale basis, known as the Vendor Program)

Above: This chart shows that the volume of products listed by Third Party Sellers (i.e. sellers using FBA to sell directly on Amazon) are far greater than the volume of products listed directly by Amazon (where the brand is selling inventory direct to Amazon on a wholesale basis, known as the Vendor Program)

 

What to do when hijacking happens

One of the most important lessons in selling on Amazon is one can’t just list their products and forget about it—Amazon e-commerce requires judicial monitoring, ideally on a weekly basis, and for every product for sale. This is the bare minimum if brands want to stay aware of these sometimes-unwanted changes to their listings.

If counterfeit or unauthorized product shows up, it should be dealt with immediately, and one tested solution is to buy the product from hijackers and examine it for proof of counterfeit or unauthorized acquisition. Bobsled Marketing recently helped a client through a situation where an obviously counterfeit seller appeared in the Buy Box. After asking the seller multiple times to remove their listing, we conducted a test buy to note and photograph the differences between the product. With that evidence in hand, we filed a complaint with Amazon on behalf of the client, and the fraudulent listing disappeared. Test buys can be enormously effective, but if there’s a dozen fraudulent sellers, it’s best to test buy from each and subsequently prove each is illegitimate.


For more information on how to conduct a test buy, and what changes to look for on a listing, in addition to much more information on how to protect a brand on Amazon, be sure to check out my’ upcoming book The Amazon Expansion Plan.


Unfortunately, Amazon e-commerce is still a difficult landscape to navigate for most brands. Recourse depends entirely on the legitimate seller, and there’s no explicit verbiage outlining how Amazon penalizes fakes. Because of these unknowns, brands need to be consistent and aggressive with protecting themselves—not just the value of the product, but the livelihoods of every person who worked to make that product a reality. You can read more on How to Protect Your Brand on Amazon, here.