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Brand Gating Will Hit Sneaker Resale In A Big Way This Holiday Season

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If you take the time to speak to most online retail shops that carry sneakers, the majority of shops also sell on third party marketplace platforms like Amazon or eBay. Wal-Mart is now wading into the water as well. These online shops may have websites, but they have to use a series of checks and balances to earn the trust of buyers looking for sneakers. For example, if Shop A wants to sell to Customer A, three other “LEGIT CHECK” websites have to basically authorize that the site is “legit” or trustworthy. The problem is for third party sellers to get on the legit list they have to pay to get checked out. Even with the “legit” brand most online shops still have great difficulty selling on their own platforms. Take a look at my shop report for ARCH last year: http://www.arch-usa.com/arch-report-2015/ Last year 1.04% of my sales derived from my own platform. Granted I basically gave up on trying to sell through my site, but even when I have created my online shop on my platform sales have been very poor. I use a third party option in Amazon.com. 98.96% of my online sales take place on Amazon. This is an extremely dangerous thing. You never place your eggs in one basket.

When I worked fulled time years ago I ran an eBay shop. My shop was closed by eBay. I wrote an entire series about it: http://www.arch-usa.com/?s=Moving+from+ebay Since I was working then, losing my eBay shop didn’t matter. I simply built my wholesale business and eventually moved to Amazon. As a third party marketplace seller, I am once again placing my eggs in one basket with Amazon. This holiday season could be my last not because of me, but due to something completely beyond my control, Brand Gating. I’ve addressed this before on the site. I was reminded of the issue this morning by a seller of Nike jerseys. The seller was in a depression because they had bought a ton of inventory getting ready for the holiday season. They sent all of the merchandise in to Fulfillment by Amazon (FBA). The merchandise gets charged for warehouse space by Amazon and Amazon takes a percentage of each sale. This is fine if the product is selling at a high rate. The customer was selling product and has been charged. There are jerseys in transit and this morning all of that seller’s products on FBA have been pulled from being sold on Amazon. NFL products are now brand gated and this seller who, like me, has built the entire business on Amazon is stuck without any place to sell their inventory.

While I have been analyzing this from the sneaker perspective, this is evidence of a shift in e-commerce that will undoubtedly be affecting all third party channels. If you are having a hard time understanding what I’m saying here is a letter from one of the Amazon sellers who has a license with Amazon.

**Important Update From the NFL**

At the NFL owners meeting last week the league announced new policy regarding sales of the NFL licensed products on third-party websites.

Retailers are not authorized to sell NFL Licensed Products under a third-party URL. A third-party URL is any URL whose domain is not owned by the retailer including the URL of any third party Internet marketplace site (e.g., buy.com, ebay.com, amazon.com). Retailers may advertise on a third party Internet website, including Internet marketplace sites, the availability of such Licensed Products for sale, only if the ultimate transaction for such Licensed Products occurs on such retailer’s own e-commerce website and not on the third-party Internet website (i.e., payment for the Licensed Product must occur on an Internet site operated under the retailer’s URL and not on a third party URL, even though the product may be advertised on such third party URL). Retailers may continue to sell goods on their own e-commerce website provided the transaction itself takes place on its own website and the requirements below are met.

Starting April 1st, Thursday, all NFL licensed products need to be removed from third-party sites. If products are found there your account will be put on hold for all transactions until product is completely removed. 

This is a letter that is saying even if you have an account, you can’t sell the product on Amazon. This policy has long been a standard with Nike, but Nike hasn’t enforced it on third party sellers. The problem is certain Nike, and adidas, products are being gated due to customers stating that the products are counterfeit. When a customer makes this claim Amazon pulls the product for all stores as I stated in this post. Asics and New Balance have been reinforcing this for a few years. If you are considering “flipping” shoes this holiday season you could be in for a bad ride. Don’t say I didn’t warn you.