Enhancing Brand Identity Through Consistent Pricing
August 9, 2019
Most people might think that a downed production line might be one of the biggest problems facing a manufacturer, and, truthfully, they might be right. But a close second is a shadowy topic known across industries as “rogue sellers”, or product resellers who buy products in bulk from manufacturers and resell them well below the manufacturer’s established minimum advertised price (MAP). Now you might be thinking that this isn’t a big deal, especially since many manufacturers are raking in the profits, but this action can lead to costly repercussions for the brand, manufacturer, and their partners.
Rogue Sellers on Amazon
What many brands, especially smaller brands, may not realize is that rogue resellers disrupt ethical business practices by selling products at lower prices than competitors, specifically e-commerce websites and brick and mortar stores. In turn, not only do the pricing actions of a rogue seller undermine the brand’s identity – especially if the offering is a luxury product – but they can also damage relations with online partners and brick and mortar stores, which may drop a product if projected sales are not achieved or exceeded. Consequently, this can lead to a diminished profit margin for all parties involved, especially the manufacturer.
To better illustrate the actions of a rogue seller, say you walk into Target in search of latest and greatest tech gadget. You find the product, see the price, and immediately whip out your smartphone to do a price comparison to see if any other stores or e-commerce websites, such as Amazon, have the same product for a cheaper price. All prices appear to be the same, except for one Amazon reseller who is offering the same product for just slightly less (plus the beloved 2-day shipping). Of course, you want to save money, so you order the product from the cheaper reseller and receive your product 2 days later.
The Cost of Rogue Sellers
While you might have received a bargain on your purchase, that sale still comes at a price for the manufacturer who may not even be aware of the reseller’s unethical business model. A rogue seller’s business model operates based on volume, so while their pricing strategy may only result in a few cents on the dollar for each sale by undercutting a manufacturer’s MAP, this action enables them to pigeon hole a manufacturer’s brand so a large number of sales are processed through them at the lowest possible price. As a result, the manufacturer and brand lose credibility, profit margin, and brand image with both consumers and business partners, which can ultimately lead to lowered brand perception and reduced partnerships.
Ultimately, few companies are able to accurately identify, contact, and correct the pricing actions of rogue sellers, and it can prove to be a difficult task for brands to identify illegitimate resellers on their own, while fielding countless phone calls and emails from resellers looking to purchase their products.
Fortunately, ZQUARED is able to quickly identify the major rogue sellers that are trying to undercut our clients’ prices on resale and convey this information to them – in real-time – so that our clients can extinguish that detrimental business relationship and maintain consistent pricing across all platforms. This necessary service allows our clients to protect and preserve their products and brand identity, as well as enhance business relationships with legitimate retailers and resellers, which may bolster their bottom line.
For more information on how ZQUARED can help preserve your brand’s identity by combating the harmful actions of rogue sellers, contact ZQUARED today at 234.978.2733.
Our company was born from a service mindset. Our passion is helping you navigate the online retail space in a way never before imagined. With years of industry-leading experience selling on Amazon, our team’s primary goal is helping you achieve success. We have solutions for managing all aspects of the Amazon platform: design, fulfillment, product listings, enhanced brand content, headline and sponsored ads, MAP violations, and even social media marketing. Though understanding all aspects of this sales channel can be overwhelming, we break down every aspect of your brand and what you will need to increase sales on Amazon.