The 8 Types of Unauthorized Sellers on Amazon

When they sell their product online, a brand must consider its perceived image and reputation on the internet and how it can be hijacked by third party sellers. 

All it takes for an unauthorized seller to take hold of the Amazon Buy Box is to have the lowest Fulfilled by Amazon price. Seller reviews hardly even matter.

All of a sudden, everything you have helped build is at the mercy of this anonymous unauthorized seller. As you may be aware, on Amazon it does not matter if the product was sold by the official brand or by a violator, good and bad reviews all count the same. Even worse, most customers don't know about third party sellers. They assume the product they are getting is coming from Amazon or the brand themselves, so if there is a problem, it's the brand's fault! Which is why you need Amazon brand protection!

Not only do these MAP policy violations impact the consumer’s image of your brand, but they also affect your ability to sell your products to your distributors. Why would your brick and mortar retailers continue sending purchase orders if customers walk into their store, find a better price on their phone, and walk out the door without a purchase? Why would your online distributors continue buying from you if they are losing the Buy Box every time to an unauthorized MAP violator? Do not let these violators win. 

Below is a thorough breakdown of what these violators look like when a light is shined on them.

As the title implies, these sellers are authorized to sell the listing online as long as they are in compliance with MAP pricing policy. However, either on purpose or by accident, MAP pricing enforcement is often violated even by those you have authorized. If done by accident, it is usually due to a clerical error since many of these sellers have thousands of listings or due to an automatic pricing error if they have auto-price match set up and another seller violated your MAP.

It's not always an accident. Sometimes an authorized seller may violate on purpose if they feel their sales are low. One example is if they are sharing the buy box with multiple other authorized sellers who are all following MAP. One seller might get greedy and want 100% of the pie. 

They may also have too much excess inventory and need a positive return on their investment. In that case, they may wait until the evening, weekends, or holidays to violate MAP when they feel the brand is not checking for violators. Another scenario where they may violate MAP is due to price cascading. If they see that another MAP violator has had the buy box for a period of time, they may get frustrated and drop their own price below the MAP price simply to compete.

The most common and usually the least of your brand's worries (if managed correctly). Most times this is just a single individual with little Amazon experience who stumbled across your product(s) through a multitude of channels and aims to quickly resell them for a fast profit.  

They may not even be competing for the lowest price since they are unaware of the automatic pricing tool. As a brand, you must realize that these types of sellers will never truly go away (unless you hit the Holy Grail and become brand-gated). Your goal should be to minimize damage.

One-off sellers are most dangerous when brands depend on Vendor Central for sales. This is a common scenario:

1. Third Party Seller drops the prices on their 1 unit below MAP
2. Vendor Central's algorithm automatically breaks MAP and matches the seller's price
3. Vendor Central maintains the Buy Box at the below MAP price, not allowing the one-off seller to sell their 1 unit
4. Authorized Channels such as Walmart or Best Buy match Vendor Central at the below MAP price due to Price Match Guarantees
5. The brand suffers brand integrity loss and charge backs from vendors due to the Price Match

Arbitrage sellers are often considered “amateur professionals” who sell on Amazon for a secondary source of income. Some are good at it while others have read only 1 or 2 books and want to give it a shot. 

Five years ago, the standard practice was to buy scanner fobs that attached to their smartphones, and then walk around retail stores scanning items, looking for something they could sell for profit on Amazon via arbitrage. As the market became saturated, these sellers evolved to focus more towards online arbitrage.

The most popular category for this type of arbitrage is toys because they may sell for $19 on Target one day and $59 on Amazon the next. This is due to the fact that inventory can suddenly become out of stock and in demand, particularly if Vendor Central runs out of units.

They capitalize on the public’s reliance on Amazon two-day Prime shipping as they know most people would rather pay more on Amazon than spend time shopping around. Many buy inventory and wait for Amazon to go out of stock so they can boost the price and sell out on their inventory at a significantly higher profit margin.

These types of violators have become more common place over the years as the returns industry has boomed. Retailers like Walmart or Target will sell off their returned inventory to liquidators for pennies on the dollar who will then have public auctions for the contents of the bulk lot. 

The winners of these bulk lots then take pallets of inventory to their garage or warehouse and go through it one by one to see what can be salvaged, fixed, and resold.

The real risk lays with the brands whose products make up this inventory. This is due to the fact that an FBA seller is able to initially sell a damaged and returned item as new on Amazon, and an unhappy customer may write a negative review, which reflects poorly on the brand, not the seller. 

Outside of counterfeit sellers or burglars, liquidation lot buyers will offer your brand at the lowest of prices. Since they are buying damaged or returned goods, they will acquire their product at far lower prices than anybody else.

Mom-and-Pops are where MAP violations on Amazon gets interesting. These are smaller retailers who buy either direct from the brand or from a distributor. They may have been around for a while or they can be relatively new to the scene.

A classic example would be of a small salon, who buys product from Cosmo Professional, or direct from a hair and makeup brand. As brick and mortar retail locations and malls have begun to have sales troubles, these businesses find themselves with excess inventory and little recourse.

Mom and Pop Shops vary in term of sophistication. They can be very sloppy, often times using the name of their physical storefront as their online seller name. Other locations are very advanced, using anonymous LLCs in New York and Delaware with PO Boxes as addresses. Some even go as far as removing serial numbers from products to avoid identification (a misdemeanor in many states).

Smash and Grab Sellers represent your typical small-time con artists working the gray area of the law. They will often rent retail space in a cheap plaza, a kiosk/Retail Merchandizing Unit at a mall or book a booth at a trade show or event for the sole purpose of acquiring a contract with a major brand in order to resell their goods online. They view such efforts as a small start-up fee for what will usually become a profitable endeavor.

The best prevention is to research where they would like to open the retail location and if it makes sense. For example, if you have a luxury beauty brand, and a client wants to open a kiosk at a low-income mall, that would be a red flag. Do your due diligence to avoid problems down the line.

If the sellers are smart they will only sign a month to month or 3-6-month lease with the retail location while continuing to buy goods from your brand. They will have their orders shipped to their residence or receive them at shipping facilities since they no longer have a physical storefront. These shipping addresses should be considered a red flag since it makes little sense to receive the product elsewhere and then move it to the storefront. They will then take the product, label and prep it, then ship it direct to FBA.

To combat such violators, it would be in your best interest to download an app such as JungleScout or Scope and see which of your products sell the most on Amazon. If your client only buys the top selling Amazon items while seemingly disinterested when you try to offer them a new line of products or a popular product that sells poorly on Amazon, you have another big red flag.

Finally, if your overall client sales are down while a few of your sellers keep buying more and more product even if they are located in middle of the road cities, consider this a HUGE red flag since the Amazon business is booming while malls/brick and mortar retail outlets are at historical lows. 

You may find the Amazon unauthorized purchases guide useful!

Wholesale Distributors are a significantly larger threat in terms sales volume than the previous five. They may either operate openly or in the shadows. They tend to have their own warehouse, employees, and liaisons to acquire new brands to buy from. They have strong legal representation ready to fight for the First Sale Doctrine and reverse Amazon account suspensions, which is recognizable in the large number of feedback responses their accounts receive. They jump industry to industry and buy in large bulk, but not so much as to cause suspicion.

Of course, if you have included the necessary verbiage in your distribution agreements mentioning that online or Amazon sales are forbidden, you can terminate the contract immediately and cut off their supply. At this point I recommend contacting each of your direct distributors and warning them to place the violating wholesalers on a Do Not Sell list. However, these companies often have numerous LLCs and addresses they operate under (and Amazon seller accounts), they may circumvent these deterrents by utilizing a new sales liaison. They are very persistent, ruthless, and are even more powerful when operating in the shadows by paying middlemen and patsies to procure product for them.

Most counterfeiters and knockoff artists originate from China or other AIPAC countries and often ship the product themselves from China (or an intermediate location) to an FBA fulfillment center. However, some counterfeiters are American who sometimes unknowingly (but often knowingly) purchase the counterfeit items from a 3rd party reseller space (such as Alibaba.com) and then proceed to resell the inventory on Amazon.

Amazon is very serious about stopping counterfeit sellers due to the legal trouble eBay found themselves in years ago with Louis Vuitton. Purchase the product and send counterfeit evidence to Amazon and they will quickly shut down the seller’s Amazon account, usually after only two or three complaints on the same or multiple listing. Legally there is not much you can do pursue international counterfeiters, but if they are selling counterfeit items in gated categories like Supplements or Topicals, suspending their Amazon account can be a big blow to their business due to the difficulty in becoming ungated with new accounts.

The first step in removing unauthorized sellers is spotting them on your listings and that is exactly what the Brand Alignment Monitoring Dashboard will do for you. With price updates every 3 hours and inventory totals for every seller on every listing, you will get the most complete picture possible of your brand on every major online marketplace.

Of course, the most important step in removing unauthorized sellers is prevention and enforcement. This is where Brand Alignment is leagues above the competition. 

In short, the answer is Yes. 

We have had our 80%-90%+ enforcement rates in every single industry we have worked in. That includes the following:

• Consumer Electronics
• Apparel and Shoes
• Pharmaceuticals
• Health & Beauty
• Sports & Outdoors
• Mobile Phone Accessories
• And More

As you are already aware, each industry has their own bells and whistles. Please contact us if you have any specific questions about enforcement in your industry.

Brand Alignment gives the brand the option of using their own personal cease & desist letters or the option to customize Brand Alignment's proven high performance Cease & Desist letters. These letters were crafted by Intellectual Property lawyers with a full focus on minimizing liability.

Any infringement complaints filed by Brand Alignment are done with the utmost care and transparency. We do not file counterfeit complaints without test buys and approval from the brand. Our trademark complaints are done with caution and all bases covered.

Finally, in this world, anybody can sue anybody for anything. But it does not mean it will stand up in court. There is nothing we can do to prevent frivolous lawsuits from disgruntled sellers. However, we do everything we can to prepare you to have any case against you quickly dismissed. Since 2018, we are proud to say that neither us or any of our brands have had any legal issues of any kind related to our service.

If you are new to shopping for a brand protection agency provider, it might be confusing to tell the difference between companies. It might sound like everybody offers the same type of monitoring and enforcement. This could not be further from the truth.

P.S.: Due to the constant changing nature of online marketplaces, our Enforcement Guarantee is a limited time offer.

Please contact us now to ensure you are locked in with your guarantee.

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