Brands and resellers are realising the importance of brand monitoring and seller monitoring to safeguard their distribution strategies on the number one digital sales channel.
3.23 trillion US dollars was spent globally through the top 100 online marketplaces in 2021, a figure which is expected to grow 9% by 2024. Much of that spend was generated in just three marketplaces, Amazon, eBay, and Shopee, which leaves you thinking about the importance of defining adequate online selling strategies to boost your sales and the importance of controlling what happens in those channels using brand monitoring and seller monitoring software.
Let’s have a look at why you should be thinking about these solutions in more detail, and how you can protect your business within online marketplaces.
Let's take a closer look at the mind blowing stats across some of the world's largest marketplaces.
Global reach: Amazon has 20 global marketplaces throughout Europe, Asia, North America and Australia, all allowing third-party sellers to trade with their 310 million customers worldwide, shipping to more than 100 countries.
eBay is available in over 180 countries, with 180 million active buyers, whilst Shopee sells in 13 countries (mainly in Asia and South America).
Revenue: In 2021 Amazon recorded a net revenue of 469.8 billion US dollars, up from 386 billion in 2020. In contrast, eBay generated 10.8 billion US dollars in 2021, a 5.8% year-on-year increase.
Sellers: Amazon sells more than 12 million products worldwide, however, if we consider that there are 2 million small businesses who trade through Amazon as third-party sellers there are actually closer to 350 million products listed.
19 million sellers have accounts on eBay with 159 million people active on the marketplace (most in the US). On average there are around 1.6 billion live listings at any one time.
Shopee is working with over four million vendors, selling more than 180 million products.
Traffic: In terms of monthly web traffic Amazon.com averages 2.5 billion visits, ebay.com receives approximately 730 million, and Shopee 190 million.
Marketplaces represent the number one channel for e-commerce. So it's easy to see why those who seek to benefit from various forms of intellectual property infringements and unauthorised selling choose these very platforms to drive sales and steal market share.
The internet is a fertile ground for fraudsters. Through fake listings, sophisticated scams they are able to deceive shoppers who part with their hard earned cash under false pretences.
In our own exclusive research study we found that 19% of online shoppers believe that if a product is advertised and sold on a well-known marketplace then it must be genuine, 47% claim to be sceptical about the authenticity of some products, whilst 29% trust some marketplaces but not others.
Whilst 91.5% of consumers are aware that counterfeits are advertised and sold online, just 34.5% are sure that they could identify one which highlights the importance of a counterfeit protection solution. Not only did this cause a loss of sales for the official brand, but the response from those consumers was to warn friends about shopping with that brand, or to cease buying products from that channel.
In our research we also discovered that 33% of online shoppers hold marketplaces responsible for their failure to protect intellectual property and brands on their platforms, whilst 24% thought official brands should be investing more in protecting their customers and online sales from these fake products.
As we have seen, due to the sheer number of marketplaces, the amount of sellers, and the vast range of products sold online, marketplaces are a primary sales channel for any business that wants to expand their global reach and increase their revenue. However, this ecosystem also represents the perfect platforms for those that wish to piggyback on the success of well-known brands and products to generate their own revenue, albeit through illicit means.
“E-commerce has enhanced consumer choice, and offered businesses new, flexible ways of market access. At the same time, there is ample evidence that the online environment has also attracted bad actors, who pollute e-commerce distribution channels with fakes. The EUIPO is working hand in hand with a number of e-commerce marketplaces to help tackle online infringements of intellectual property rights.”
Christian Archambeau, Executive director of the EUIPO
Fake branded products are rife throughout marketplaces, and despite the fact that many platforms have introduced technologies including brand monitoring and counterfeit protection solutions that help prevent counterfeiting and intellectual property infringements, the problem still exists.
Your authorised distributors may abuse the terms of their distribution agreements. This can relate to the markets in which they are selling your products, and under what conditions, for example. This can undermine your online commercial strategy and negatively impact your revenue and reputation.
Third-party sellers who trade products without permission results in more competition for approved resellers who trade the same products legitimately. This may cause a strain on commercial relationships. The task of monitoring sellers online, both approved and unapproved, is a costly and time consuming task if it is managed in-house.
Parallel imports are items which are imported and sold in unapproved distribution channels or markets without the trademark owners consent. This can leave consumers at risk as the product or supporting materials may not be adapted to the local language, or the product and packaging may not meet regional safety or testing standards.
Companies can be exposed to great revenue loss due to these risks, as both compliant and non-compliant sellers, as well as counterfeiters, might be taking advantage of their products’ success for their own financial benefit. This is the main reason why all businesses should take protecting their online presence as a top priority.
Brand monitoring to detect any intellectual property infringement and monitoring sellers to understand which countries or regions your products are being sold in, through which marketplaces, by which sellers, and for how much are the only ways to retain control over your online distribution strategy. Without this information your sales, brand reputation, future expansion strategy, and even your customers are at risk.
Over recent years many marketplaces have developed brand monitoring and counterfeit protection measures to prevent counterfeiting and protect intellectual property, and the various forms of intellectual property infringement on their platforms. A great example is Amazon´s Project Zero which utilises the latest technology to detect and remove counterfeits.
Whilst many shoppers have unintentionally purchased fakes online, it's also worth mentioning the 26% that do so intentionally. Cutting off access by removing fake product listings for these shoppers can only have a positive effect on your product sales.
Some tools found in marketplaces to report intellectual property infringements are:
Reporting systems: allow brands or resellers to report listings that appear to be infringing on intellectual property rights. There are various systems which exist such as web forms that facilitate the reporting of potential infringements. The information that must be submitted varies, but usually it includes company information, intellectual property rights (such as trademark registration number) and the URL to the offending listing.
Intellectual property protection programs: a limited number of marketplaces offer a brand monitoring or counterfeit protection platform such as Amazon Brand Services and Amazon Brand Registry which allow you to report suspected infringements and fake listings. They may provide access to a dashboard where infringements can be reported and tracked.
Tools may also be available which allow users to search for listings that might infringe intellectual property rights. Registration is often required before access is provided to these programs, and once again details including your trademark registration number are likely to be requested.
Direct contact: providing assistance when using the counterfeit protection notification system or joining the intellectual property protection program. As previously mentioned, not all marketplaces provide notification systems or forms, so in this case, infringements must be reported by email, with no specific reporting format to help prevent counterfeiting.
As we have seen previously, marketplaces are becoming more conscious about the importance of protecting users and businesses throughout their experience with their platforms by implementing some measures against intellectual property infringements and other threats they could face.
However, there is still room for improvement to that shopping experience. One of the main difficulties of the digital marketplaces, as seen before, is ensuring businesses’ online distribution strategies are respected and aligned to their sales goals and strategies throughout all the channels they operate, directly and indirectly.
One solution to this challenge is gaining visibility of how your products are sold in those marketplaces.
Seller monitoring uses automated AI technology and machine learning to scrape each marketplace and reveals detailed information in a visual dashboard that enables businesses to discover which third parties are trading your products, how much they are being sold for, what (if any) discounts are being applied, any stocking issues which may arise, and even the best performers amongst your distribution network. With this information, companies can take action and stop unauthorised sellers and listings.
It's crucial that brands take the value of their intellectual property seriously by implementing brand monitoring, counterfeit protection and seller monitoring technology which can protect against intellectual property infringements within digital marketplaces. It's a mistake to solely rely on the services provided by individual marketplaces.
As we have highlighted, the systems available throughout the various marketplaces vary significantly. Often the reporting process is manual and time consuming, and response times can be slow. Moreover, not all marketplaces offer the same solutions, which makes it difficult to manage in-house, especially when you are selling in multiple marketplaces and through different sellers.
Shopping habits have also changed, brands have diversified their distribution through an omni-channel strategy which means they must align control across multiple platforms with a centralised approach.
Doing this work manually requires a lot of time and effort from a business, consuming its resources in non automated processes that could be better spent on analysing information and taking action against any identified threat.
The importance of maintaining visibility of the threats which exist and emerge throughout digital marketplaces (amongst other channels) must not be understated. Failure to do so can result in a loss in product sales, damage to brand and reseller relationships, and a negative impact on consumer confidence and brand reputation.
It's no secret that the digital world has expanded significantly over recent times. In fact, in 2021, 2.14 billion people (27.2 percent of the global population) were considered digital buyers. As a result, online sales reached 5.2 trillion U.S. dollars, a figure which is forecast to grow by 50 percent to 7.4 trillion by 2025. These same marketplaces are continuously looking to provide the best user experience and to maintain their customers’ trust.
More shoppers are buying online than ever before due to a number of factors including global internet and smartphone penetration, advancements in AI and cloud technology, and the investment by businesses in their e-commerce offering.
In 2021, 18.8 percent of total retail sales were through e-commerce, and perhaps more surprisingly is that 62.5 percent of these digital purchases worldwide happened through digital marketplaces, which highlights the importance of brand monitoring, seller monitoring software and counterfeit protection.
Would you like to know how Smart Protection can help you? Request a demo and we will be delighted to explain in detail!