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When Retail Partners Go Rogue: Warning Signs and Prevention

This is a guest post by Kate Slobounov, Sales Director at Wiser Solutions.

We often hear of unauthorized third-party sellers disrupting price parity and creating price erosion in the online marketplace. While often assumed to be counterfeiters, individual “basement bandits” reselling products, or professional liquidators, on occasion that’s not the case. The pressure to compete in a saturated market amid truly unauthorized discounters can cause the most loyal of retail partners to go rogue. These days, anyone can open up an Amazon storefront latching their inventory to existing Amazon ASINs as one more purchasing option under a unique seller alias.

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Some Warning Signs

Sudden Increase of Wholesale Inventory Purchase

If nothing changed about the retailer’s online presence or no new physical locations have opened, it’s not likely that your retail partners have hit a lucky streak with sales or suddenly increased foot traffic. Look at previous orders and notice any drastic changes, particularly on key items or best sellers. We all love a bigger order, but this can be a warning sign of an unauthorized new online store to funnel inventory.

Mirror, Mirror

Similar to the first example, a trend to look for is product inventory spikes in the online marketplace itself. This one may be tricky as inventory levels are not available on Amazon. However, if your brand sells to a distributor that resells to others, a MAP monitoring platform should allow you to see new sellers and new violations on your products daily. Additionally, eBay is a common marketplace to notice this trend. It’s often overlooked, but still one to watch.

The Over-Purchaser

Depending on your brand’s retail partner relationships, you will have access to their sales data. Often used to determine future assortment and product performance, a poor sell-through report may be a warning sign that your retail partner can’t move inventory fast enough. You guessed it: a panic reaction is to sacrifice margin and sell through an additional channel under an unauthorized alias store name. While larger retailers have access to liquidation partners and in-store foot traffic that allows for heavier discounts, the smaller scale retailer and boutique store has fewer options.

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Solution ideas

Empower Your Sales Team

Awareness of red flags allows your dedicated account reps to see the warning signs as they arise. An increased order from a new or long-time retail partner is a great incentive for sales reps to ignore the red flags and unusual purchasing behavior. It’s important to communicate the long-term damage to the brand as well as the overall relationship if the retailer is discovered to have an unauthorized online store and loses status as an authorized retail partner. While you’re at it, remind them of your MAP policy.

Data is King

Many brands now utilize some form of automated price monitoring solution and have access to new developments in the online channel. Many now have a dedicated administrator whose job is, 100 percent or in part, to be the guardian of the brand’s online image. It’s important for Sr. Exec leaders to understand the data as well to familiarize themselves with the market and be equally empowered to make business decisions. These executives must have tough conversations internally and externally.

Lead by Example

Give retail partners a leg up by pricing at full MSRP if your brand is equipped to run an official eCommerce website. Your “everyday” price will set the standard and anyone compliant with MAP is competitive to win the sale. Yes, you’re taking it for the team, but for the greater good of the brand. Communicate this clearly as part of your MAP strategy to show support to your wholesale channel.

A Bonus Idea!

Give your authorized partners a break. Allow for scheduled and controlled promotional windows with a specific start and end date and a designated Promotional MAP price. A little breathing room goes a long way.

Final Thoughts

Keep a watchful eye on retail partner behavior, unusual trends, and data, of course. While the omnichannel dynamic continues to evolve, your goals to delight shoppers and protect brand integrity remain the same. Awareness, empathy, and agility are the winning formula.

Kate Slobounov | Guest Author

Kate has several years of expertise in working with brands and retailers across industries in support of their omnichannel goals and initiatives.

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