The Right Way to Deal With Unauthorized Sellers on Amazon

Unauthorized sellers on Amazon pose significant challenges to brands, impacting their revenue, reputation, and ability to control product listings. 

These sellers often operate without the brand’s consent, disrupting pricing strategies and customer trust. 

Businesses must understand the nature of unauthorized sellers on Amazon and implement effective strategies to mitigate their impact. 

In this guide, you’ll learn about unauthorized sellers, why they’re a problem, and how to combat them to protect your brand’s integrity and profitability.

What are unauthorized sellers on Amazon?

Unauthorized sellers are individuals or businesses that list and sell other brands’ products on Amazon without the manufacturer’s or brand’s permission. These sellers can source inventory through various means, such as:

• Gray markets: Inventory acquired from distribution channels that are not authorized by the brand, such as liquidation companies or surplus inventory.
• Unauthorized distributors: Distributors or wholesalers that sell products outside their approved territories or channels.
• Counterfeit operations: Suppliers or factories producing fake goods and passing them off as legitimate brand products.
• Retailers: Resellers often purchase inventory from retailers such as Walmart and resell it for a profit on Amazon, a practice known as retail arbitrage. 

Common examples include resellers who violate minimum advertised price (MAP) agreements by undercutting pricing, or counterfeiters who sell low-quality knockoffs. These activities undermine a brand’s pricing, reputation, and customer trust, making it crucial to address them proactively.

Why are unauthorized sellers a problem for Amazon brands?

Unauthorized sellers can cause a lot of issues for Amazon brands. Let’s go over why unauthorized sellers are a problem for Amazon brands. 

Loss of revenue

Unauthorized sellers often undercut prices on Amazon to win the Buy Box, diverting sales from authorized Amazon sellers of that brand and reducing profit margins. 

This disrupts fair competition among authorized sellers as Amazon will equally share the Buy Box on a listing as long as each seller’s pricing is within 2% of each other. The financial losses can be significant, particularly for brands relying on Amazon as a key sales channel.

Unauthorized sellers’ price cuts also affect how customers perceive your product’s value. If customers become accustomed to seeing lower prices, they may resist paying the full retail price even from authorized channels, eroding your brand image and integrity even more.

Brand dilution and customer trust

Counterfeit or used products sold by unauthorized sellers damage a brand’s reputation. When customers receive subpar products, they associate the negative experience with the brand, not the seller. This erosion of trust can result in lost long-term loyalty and negative reviews.

In extreme cases, counterfeit products can pose safety risks to consumers, especially in categories like electronics or skincare. This can lead to liability issues and further reputational damage for the brand.

Loss of control over your listings

Unauthorized sellers make it difficult to maintain consistent pricing, branding, and messaging on your ASINs. 

They may use inaccurate descriptions, outdated images, or misleading claims, leading to customer dissatisfaction (if they are able to make changes to the Amazon listing itself.) This lack of control can restrict a brand’s ability to maintain quality standards and manage customer expectations effectively.

Also, as mentioned above, Amazon’s Buy Box algorithm often favors the lowest-priced seller, regardless of whether the seller is authorized. This means unauthorized sellers are more likely to win the Buy Box, leaving brands and authorized third-party sellers struggling to compete.

How to identify unauthorized sellers on Amazon

Identifying unauthorized sellers is the first step in addressing the problem. Here’s how you can spot them:

Monitor your listings consistently

Monitor your Amazon listings regularly to identify unexpected sellers or pricing changes. Tools like Jungle Scout Cobalt’s Market Intelligence help brands identify potential unauthorized sellers on Amazon.

Watch for sudden price drops or unverified sellers

Significant price reductions or unverified sellers appearing on your listings are red flags. Investigate these abnormalities by checking seller profiles and feedback to assess their legitimacy. 

Additionally, monitor changes in your sales metrics. A sudden dip in sales could indicate that an unauthorized seller has taken control of the Buy Box or is creating fraudulent listings on Amazon.

Use Amazon’s Brand Registry tools

Amazon’s Brand Registry offers features like counterfeit detection and intellectual property protection to help brand owners safeguard their listings. By enrolling, you can gain greater control over your product listings and protect your brand from unauthorized activities.

Brand Registry also allows you to leverage tools like Transparency, which uses unique product codes to verify authenticity, and Project Zero, which empowers brands to remove counterfeit listings directly.

Conduct regular audits of your online presence

Extend your monitoring efforts beyond Amazon. Regularly audit other ecommerce platforms and third-party marketplaces, such as eBay or Walmart, to identify unauthorized sellers. 

Collaborate with a third-party brand protection service if necessary. These services can provide comprehensive monitoring and enforcement support across multiple platforms.

5 steps to deal with unauthorized sellers

Once you’ve identified unauthorized sellers, take these steps to address the issue effectively:

1. Contact the seller directly

Politely but firmly reach out to unauthorized sellers. Here’s a template for a simple cease and desist letter:

Subject: Unauthorized Selling of [Your Brand’s Product]

Dear [Seller’s Name],

It has come to our attention that you are listing [Product Name] without authorization. [Your Brand Name] maintains strict control over its distribution channels, and your listing violates our policies. Please provide proof of purchase or cease selling our products immediately to avoid further action.

Regards,
[Your Name]
[Your Brand]

To support your request, including evidence of brand ownership and details about the violation. Be prepared to escalate if the seller does not comply.

2. File a complaint with Amazon

Use Amazon’s reporting tools to flag intellectual property violations or counterfeit goods. Document your complaint thoroughly, including proof of unauthorized activity, and provide Amazon with detailed evidence to expedite the resolution process.

When filing complaints, take advantage of Amazon’s tools, such as the Report a Violation form, which streamlines the process of reporting counterfeit or infringing sellers.

3. Tighten your distribution agreements

Establish clear MAP policies and restrict access to your products through unauthorized distributors. Include terms that:

• Prohibit reselling without approval from the brand
• Mandate adherence to MAP guidelines
• Specify penalties for non-compliance, such as loss of authorization to sell that brand on Amazon

Strong agreements help deter violations and protect your brand from unauthorized sellers and the undercutting of pricing.

Consider implementing serialization or unique identifiers for your products to trace them back to the original distributor. This will make it easier to identify the source of unauthorized inventory.

4. Monitor supply chain activity

Audit your supply chain regularly to prevent gray-market inventory leaks. Partner with trusted distributors, maintain clear inventory tracking and ensure transparency in your supply chain operations.

Collaborate with your distribution partners to ensure compliance with your agreements and proactively address any concerns about unauthorized sales.

Protect your brand and regain control on Amazon with Jungle Scout

Unauthorized sellers pose serious risks to your brand’s reputation and revenue. By identifying these sellers, implementing proactive strategies, and leveraging tools like Jungle Scout Cobalt, you can protect your listings, maintain customer trust, and ensure consistent revenue streams.

Take the first step in regaining control of your brand on Amazon.