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Maurice Lacroix explains why and how to control unauthorized sales online

ANTI-COUNTERFEITING
BRAND PROTECTION
SELLER TRACKING
SALES CONTROL
November 10, 2022

Famous watchmaker Maurice Lacroix details the challenges they faced in monitoring and detecting unauthorized sales online, and the best practices in eliminating them.

Do you want to know if your brand is at risk online?
Talk to an expert

Companies established prior to the 1990s thrived in an offline world where business was conducted largely at a local level, but over recent times the explosion of e-commerce has brought a wealth of new opportunities. Existing companies adapted to changing behaviors and trends to reap the rewards of a borderless global economy, and newcomers have placed e-commerce at the forefront of their business strategies, with some operating solely online.

Older generations are becoming increasingly tech savvy whilst millennials and gen z´s have grown up alongside digital technology making e-commerce their preferred shopping channel. With this in mind, we recently held an exclusive webinar with our friends at Maurice Lacroix to take a closer look at the importance and challenges to control unauthorized sales.

Selling online

There are two ways in which today's retailers can sell online. The first is directly to the end consumer through the various channels and markets. The second is indirectly, where brand owners work with authorized distributors who then sell to the end consumer. These indirect selling relationships rely on distribution agreements which rely on a set of terms, often including the channels and markets in which they can trade, to whom they can sell, and under what conditions. 

This e-commerce environment includes numerous channels such as websites which might be owned by the official brand, or by third-parties who might sell products from a range of brands from various industries. We also have digital marketplaces which are effectively online retail stores which in fact make up 62% of e-commerce sales.

Next there are social media platforms, originally designed to facilitate social contact between individuals, but have since developed into important channels for companies to build awareness, advertise their products, and have recently evolved to facilitate sales. This development means that consumers can now complete a purchase without leaving the social network. Social networks as a sales channel are still at an early stage, however due to the global penetration of socially active consumers, they are already very significant players.

Last but not least we have mobile commerce (m-commerce), a sales channel known as m-commerce. This channel is greater in Asia where companies have developed strategies to build audiences through mobile devices and sell directly to them through mobile apps. 

Control unauthorized sales throughout digital channels 

As we heard in our exclusive webinar, currently 20% of global retail sales are conducted through e-commerce platforms, driven by an increase in global internet penetration, the introduction of fiber optic high speed connections, and device ownership (which has risen sharply over recent times throughout the developing world). 

E-commerce channels are forecast to attract greater market share, in fact predicted growth is around 56% over the coming years, but it's not only official businesses that have identified this online trend, or the opportunities for those operating within these channels. 

Based on the strength and speed of growth within e-commerce, and considering the number of channels and markets, it´s an environment which is increasingly difficult for companies to monitor and control unauthorized sales internally. There are a number of bad actors who seek to exploit the situation, and for this reason companies must remain vigilant by monitoring who is selling their branded products, through which channels, in which markets, and under what conditions. 

“When we take into account the number of traders on the internet across the aforementioned channels, and the quantity of product listings, technology such as product monitoring and brand protection tools are the only way to maintain a holistic view of the associated threats which exist and emerge online.”

Threats within the digital ecosystem

During our webinar, Smart Protection´s Sales Director - Enrique Mon explained that as a leader in online monitoring and protection we have a wealth of experience in detecting threats to companies, brands, and products. He went on to outline the main dangers which we must be alert to:

Unauthorized sellers who trade authentic products without the brand owner's knowledge (a grey market situation). This means that there is no control of the channels, markets, or the condition of sale. These unknown sellers may also be utilizing intellectual property without consent, or using photos of the original product taken in-store which impacts consumer confidence and brand reputation. The latter of course makes it harder for bad actors to generate sales (specifically for luxury products) as the listings look unprofessional or fake. These unauthorized sellers may be operating in markets where you do not currently trade, or where you have an exclusive seller, and their presence in either scenario can harm expansion plans, impact commercial deals, create competition, and damage sales revenue if companies fail to control unauthorized sales. 

Non-compliant distributors who have permission to trade your products may not be honoring their contractual agreements. This may be intentional or accidental, however it must also be monitored and acted against. Unauthorized pricing strategies or promotions, or the adaptation of their selling models to different territories or different markets without the control of the brand owner. This is something that did not happen in offline sales. 

When the strategies that companies may have implemented are not being followed the results can be extremely harmful, and therefore this control is required in order to understand, and ensure that whatever is defined is later implemented in the online ecosystem.

Parallel imports occur when an authentic product marketed for outside the European Economic Area is commercialized in any territory of the European Economic Area.. We are seeing this regularly, when products are sourced elsewhere (where the authentic item can be purchased for less), and sold within the European Union, where a higher sales price can be charged. So, once again pointing to a lack of control that needs to be implemented somehow.

How can Smart Protection´s product and brand protection tools help?

Well, the first step is monitoring. Our automated machine learning technology allows us to collect vast amounts of data in the digital ecosystem, in social media networks, in marketplaces, and in websites. This gives companies (our customers) a vast amount of information that it's very difficult to collect without this technology which is paramount to control unauthorized sales.

Secondly, it allows companies to regain the control that they have lost, with full visibility of which sellers are trading what products, where, and how. Understanding the prices they are sold for, which product descriptions they are adding to the listings, where those listings are being published, and any other information that may allow companies to make decisions and regain control of their sales strategy.

Last but not least, we can take action. Our grey market service allows us to detect those unauthorized sales, analyze them, communicate with these sellers and warn them about the infringing activity they are carrying out. In some cases we can enforce using our product and brand protection tools to remove the unauthorized sales but most important, to identify and unmask the infringer which is risking the online distribution network of brands. This enforcement varies depending upon the different geographical regions where we can act. The various platforms have different procedures, and obviously the law differs depending on each case.

In general terms, the intellectual property infringements that we can act against are related to copyright, brand abuse, trademark, and parallel imports. This allows us to supply our customers with information about the digital ecosystem to regain control, and also enforcing and taking action when we see an unauthorized distributor, or an authorized seller that is not honoring their contractual agreements.

Maurice Lacroix - monitoring and managing their online sales strategy

During our exclusive webinar we heard from Elsa Dufresne, Regional Sales Manager at the famous global watchmaker Maurice Lacroix. Elsa explained the challenges they faced, and how they overcame them.

Maurice Lacroix operates with a two level selling structure (as we outlined earlier). The first is selling directly to the end consumer through their own subsidiaries worldwide where they have strong monitoring and control as they own and manage each stage of the sales process.

The second selling structure relates to territories in which they have no subsidiary and therefore they use exclusive partners which are referred to as distributors. They have contracts to trade Maurice Lacroix products to their own partners. So this is a more complex structure, from a monitoring perspective as it has several levels. Of course they have defined trading contracts but they realized this was not sufficient to protect the Maurice Lacroix brand and also their official partners throughout the various territories.

In terms of the channels and territories, Maurice lacroix forbids any partner to sell on marketplaces, and also to sell official watches beyond the territory in which the contract is based.

“Online sales have been booming lately, especially within the past two years. As a result, these channels have become increasingly difficult to control and to monitor alone. Failure to monitor or control unauthorized sales online is of course a threat to our revenue, but also risks damaging the confidence and the trust that our customers have in our brand at both partner level B2B, but also B2C level and to damage the brand reputation.”  Elsa Dufresne, Regional Sales Manager - Maurice Lacroix

How Maurice Lacroix overcame their problems with Smart protection

Maurice Lacroix explained how they contracted the Smart Protection´s product and brand protection tools to manage the flow of counterfeit products on various channels like Taobao and Alibaba within the Asian market. They are also benefiting from solutions to control unauthorized sales, which is currently focused on Amazon, eBay and Google within the US market, and Chrono24, ebay, and Allegro in European markets. 

“We are using Smart Protections technology to conduct various levels of monitoring and to analyze listings on a regular basis to give us visibility of our product resellers. We do not have the structure to do it and therefore Smart Protection is there to help us define the frame of trading online.” Elsa Dufresne, Regional Sales Manager - Maurice Lacroix

The famous luxury watchmaker described how our flexible solutions have allowed them to identify breaches of their contracts throughout the various channels and markets to control unauthorized sales in an automated and scalable way. 

Elsa explained how the process works… So, if we take the Swiss market as an example. Our partners in this market have signed contracts which state they must not sell through marketplaces such as Chrono24, and they also agree not to trade outside of Switzerland. So, if we pair this contract with the Smart Protection tool then they detect and notify us if a breach of the contract is identified and we can then take swift and appropriate action. Not only are we able to analyze our own networks, but also other platforms and unauthorized sellers or Maurice Lacroix. 

In terms of how we manage this process internally, each of our sales managers manage the relationship in their territory. Smart Protection provides a user friendly dashboard which displays a report, which is the perfect tool for us internally to see the results of this campaign. We can filter by territory, marketplace, or time period, and analyze the threats on a weekly basis.

The dashboard stays in the hands of the Mauris Lacroix team, as it is key to protect this information. So, we communicate on a weekly basis with our distributors and provide them with the listing of the offers so they can get back to us on the action to take to control unauthorized sales. Sometimes there may be no action required , so we ignore, meaning it can be like a second-hand offer from a private reseller so we do not want to tackle it of course. But sometimes it is to be eliminated when it's an unauthorized reseller or when it´s a private partner of ours who is wrongfully selling on this marketplace. 

So, this is something that we use internally, but we also use externally with our exclusive distributors. We will soon provide this tool to all of our distributors who are interested in the project, and this is planned for next year because this is a tool which is perfect to monitor, control and also frame your network and let the brand develop itself in the right way. 

A final word from Maurice Lacroix

For us at Maurice Lacroix it is very important to be able both internally and externally (with our partners) show that we are aware of the online sales channel getting bigger and stronger everywhere, not only as a means of information but also as a trading channel. This is a channel which we take seriously and to show that the brand is trying to help and support our partners to control unauthorized sales. It's about brand reputation. 

Definitely we have already seen the results of working with Smart Protection and using these dedicated product and brand protection tools by fighting against the grey market offers, especially on the e-commerce platforms and throughout marketplaces. We see that the brand is stronger to increase brand loyalty both with the end consumer, feeling more secure buying on official online channels rather than on grey market sources despite the big discounts on offer because they feel secure working directly with our official partners. We have also increased brand legacy with our exclusive distributors because they feel heard and respected, and they know that we want to protect their network, and of course increase profit. The goal is to secure these online channels and control unauthorized sales now and for the future. 

Do you want to know if your brand is at risk online?
Talk to an expert

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