Taking a tougher stance on brand protection, Amazon starts demanding that third-party sellers pay fees and secure approvals from brands
For years I’ve looked forward to the holiday sale season. Typically I begin prepping for that time right now in September. I increase inventory and carry between 400-600 pair of shoes at all times. Something interesting is happening however this season. First, I’m not on eBay. I’m on Amazon. Two years ago I got an e-mail informing me that I could no longer sell New Balance or Asics. This was my first introduction to what would become known as “Brand Gating“.
Brand Gating is the process of an e-commerce platform making agreements with brand distributors to limit the ability of third party sellers to sell a product on an e-commerce platform. Brands do this for a number of reasons. 1. It helps them control their market and limits the decrease in value of products that have been bought wholesale.
2. Brands do this to control counterfeits. It appears to be a win-win… but upon closer inspection it isn’t really as clear.
I obviously have a vest interest in this. If you take a quick look at my investors page, in the third party market, I’ve done close to or right at half a million a year for a while now. Since 2012, I’ve pulled in 2 million dollars using Amazon as a third party seller. I’ve done this while also maintaining a 100% rating on the platform. In other words, the customer experience shopping with my store is as close to perfect as possible (Here is a link if you don’t believe me). About a month ago, I was told to stop selling the all white adidas NMDs. I had to provide evidence that I bought them from legitimate sources. After sending them invoices as well as receipts from local area stores, Amazon still didn’t reapprove me for the shoes.
Here is what’s interesting, I created the listing. No one else had the shoes available on Amazon. I had sold over 40 pair without a single complaint and just like a light switch being turned off, I couldn’t sell them anymore. I wrote this article about that process. http://www.arch-usa.com/insider-ties-amazon-is-full-of-chinese-counterfeits-and-theyre-driving-out-legit-goods/
In an attempt to keep it short, this is what is important. Once I created the listing, a lot of counterfeit accounts popped on the same listing at a much lower price. Now, these shoes were really hot. Any customer paying below retail on this shoe should have KNOWN that the shoes were probably not real. However, customers make stupid ass decisions all the time. The problem is when they make dumb ass decisions, it affects the good and the bad. This is why the Holiday Season will be the Wild Wild West.
If Amazon really doubles down on third party sellers, people like me will find it hard to sell certain styles. Unlike most sellers I typically keep a resell shoe at or double the retail price or under 100 dollars above retail. Which means that my prices are never triple or some ungodly price for a pair of kicks. Once Amazon removes sellers like me who force the market to be fair, the people who have accounts will make Amazon a site where buying a GR will cost you a crazy amount of money for a hot shoe.
What can be done? I’m not sure, but my short post yesterday didn’t dig in enough so I think I will do an Insider Ties video today on this. It’s a very complex story that will only get bigger as we all get closer to the holidays. Keep an eye open.