Is Amazon a Brand-Friendly Marketplace?
Amazon has helped small and medium-sized businesses (SMB) grow exponentially, thus producing a growing number of millionaires in the past few years. Their business depends heavily on the trust and confidence of shoppers, which is why the retail giant is committed to providing excellent and unparalleled shopping experiences for its consumers.
Amazon is aware that the rising number of counterfeit goods is not only affecting shoppers but brands as well. The retail giant’s problem has ballooned over the last few years, causing brands to lose a significant amount of profit. Even if Amazon prioritizes the welfare of the consumers, it has a number of programs that protect sellers and brands as well.
In line with the Federal Government’s effort to fight counterfeits, Amazon imposed restrictions for third-party sellers who sell big brand names on the platform. This restriction is called brand gating and it’s designed to put an end to brands’ profit leaks. This initiative also protects big brands like Apple, Coleman, Gucci, and Nike from unauthorized sellers, counterfeiters, and supply chain leaks.
What is Amazon Gating and How Can It Affect Brands and Third Party Sellers?
Amazon Brand Gating or ABG is a policy that restricts third-party sellers from selling certain brands. It was rolled out on August 30, 2016. This policy requires sellers to secure approval from both Amazon and the brand before they can sell their products.
Counterfeits can negatively affect brands not only through profit leaks but through brand erosion caused by potential damage to their reputation. It can also reduce their Buy Box percentage which can drive down monthly sales numbers.
This policy is not very friendly to third party-sellers. To continue selling certain branded products, resellers must:
- Submit a letter from the manufacturer saying that you are authorized to sell their items.
- Furnish Amazon a copy of three different invoices or receipts for products that you purchased from an authorized distributor or the manufacturer.
- Pay a non-refundable fee of up to $1,500 (most gated brands require $900 to $1000).
- Fill out the selling application form.
The $1,500 non-refundable fee is a huge hit for smaller sellers. It’s clear that the cost of compliance is quite high, so these sellers may have to raise their prices to help cover the fees. This could reduce its market share, sales, and Buy Box share. This tool will definitely make it harder for first time sellers to find huge success on Amazon. With this process in place, resellers that have more diversified product offerings are most likely to succeed.
But, keep in mind that Amazon is not launching a vendetta against third party resellers, especially the legitimate ones. The retail giant is just trying to weed out counterfeits and unauthorized sellers.
How to Get Your Brand Gated as a Brand Owner
1. Register Your Trademark
You can’t take advantage of the Amazon Brand Gating program if you’re not the official trademark owner. This is why you should first register your trademark (brand name and logo) with the United States Patent and Trademark Office.
Go to the USPTO website and see if someone is already using your brand name. If not, you can submit an application and provide information like your name, address, citizenship, detailed description of the brand, and drawing of the trademark.
2. Join Amazon Brand Registry
The Amazon Brand Registry or ABR allows brand owners to fully control the content of the product listings associated with their brand. It also has a powerful search engine that makes it easier for you to find specific products and ASINs.
After you submit your product documents, Amazon will start scanning the online store to look for counterfeits and remove fake listings.
Having a registered brand also makes you eligible to join Amazon Project Zero, an anti-counterfeiting program. This project has three powerful tools, namely:
- Automated protection which uses Amazon’s powerful machine-learning technology that scans more than 5 million ASINs per day to look for and remove suspected counterfeits.
- Product serialization that allows you to apply unique codes to your product to confirm its authenticity. Product serialization is not required, but these codes make it easier for Amazon to detect fake products. Take note that you have to pay $0.01 to $0.05 for every product sold.
- Self-service counterfeit removal which allows you to directly report counterfeits. However, you will longer need to do this if you’re part of Amazon Project Zero. You can just remove the listing yourself.
Use this tool with caution. Amazon randomly checks the accuracy of removals and if they find out that you’re using the tool to eliminate competition, you’d lose your Project Zero access.
Amazon Brand Registry also allows you to add rich multimedia content using features like Enhanced Brand Content.
Also, don’t forget to divide responsibilities and provide Amazon with a list of brand contacts such as the administrator, the brand owner, or a registered agent (if you’re using an agency).
3. Provide the ASINs of the Products You Want to Gate
Make a list of the ASINs (Amazon Standard Identification Number) that you would want to gate or restrict. Reach out to your current support contacts and send them your list. If you have a thousand ASINs, don’t send all of them. You just have to prioritize the one that’s associated with various counterfeit activities. You can also prioritize the product that brings the most value to your business.
4. Explain Your Anti-Counterfeit Efforts
Amazon prioritizes brands that actively fight counterfeits. This is why you have to detail everything you’ve done to protect your brand from counterfeiters.
5. Provide Your Amazon Seller ID
Don’t forget this step. This can help you avoid delays.
Amazon Gated Brands: What Resellers Can Do to Minimize Losses and Selling Expenses
If you’re reselling big name brands on Amazon, here are a few things that you can do to minimize the negative effects of Amazon Brand Gating:
- Become an authorized seller. Make sure that you have a contract or document stating that you’re authorized to sell your products on Amazon.
- Keep your receipts when you purchase the products from authorized distributors.
- Avoid selling restricted or gated items. This can save you at least a thousand dollars. Below is a list of some popular gating items that you should avoid:
Take note that Amazon usually gates products that fall under certain categories like power sports, automotive, fine art, expensive jewelry, watches, DVDs, grocery, major appliances, fine art, and gourmet food.