Unauthorized Sellers Featured by Amazon

As Holiday season nears, battle with Amazon resellers looms.


Recent figures show that 40% of Amazon.com unit sales come from third parties. That is, Amazon brokers the sales on its website, but the sales are actually made through a different seller. Amazon calls this its 3P (third party) marketplace.

However, the product manufacturers have no control over the process, and too often the third parties are not authorized resellers of the products. They come by the goods through leaks in the distribution channels, or overseas “gray markets”, or simply wayward retailers trying to undercut legitimate operators.

When this occurs naturally in the marketplace, manufacturers take actions to shut down the unauthorized sellers. However, when they complain to Amazon, they are given a cold shoulder. Amazon doesn't feel it's their job to police the many resellers they do business with, and manufacturers are cautious in making demands that may damage their relationship with a company the size of Amazon.

Some accommodation needs to occur as the manufacturers affected can lose control of their distribution. The underlying issue comes down to pricing. The third party resellers are destroying the value proposition of important brands, by undercutting the market. Legitimate retailers will quickly shy away from brands when their distribution runs amok, and prestigious brands can wind up in the dollar store.

A potential solution to this is for Amazon to build strong relationships with well-recognized authorized resellers and limit their 3P marketplace sales to these firms.

This entry was posted in Business and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s