Bad Distribution Outlets Threaten Your Brand's Health in a Recession
Updated: Jul 17
All signs suggest we are on the doorstep of a recession. Consumers are tightening their belts and spending less money. This is bad news for businesses, especially those that sell products that are not a necessity. In a recession, consumers will increasingly turn to marketplaces like Amazon and eBay, where buy-box competition will put pressure on product values. If you don't want your brand to suffer during these tough times, it is more important than ever to understand and address how your products are getting to the Grey Market and unauthorized 3P Sellers.
The Grey Market is a big problem for brands because it allows unauthorized sellers to undercut authorized retailers on price. This not only erodes margins, but also hurts relationships with good retail partners. Unauthorized sellers don't usually adhere to MAP (Minimum Advertised Price) agreements, which will put your authorized distribution system at a disadvantage and further devalue your products in the eyes of consumers.
Brands need to protect their product values to maintain a healthy retail relationship and ensure the longevity of their products. There are three main reasons for this:
1. To maintain market share and keep consumers from turning to cheaper alternatives
2. To protect relationships with good retail partners.
3. To maintain the integrity of the brand and its products
To protect your brand's health in a recession, you need to be proactive about monitoring the Grey Market and taking action against unauthorized sellers. Working with a tracking company to understand the scope of the issue and who is disrupting your sales is a must. After that, maximize your tracking investment by making that information actionable. Counter Diversion can help with that step, by identifying where in a brands distribution network the product is being diverted to the unauthorized 3P sellers. The goal of this process is to allow brands to quickly and confidently understand what steps need to be made to protect long term health. By taking these steps, you and your authorized distribution can weather the storm of a recession and come out stronger on the other side.
What are your thoughts? Have you had issues with the Grey Market or Unauthorized Sellers? Let us know in the comments below!
For more thoughts on how to protect your brand, check out our blog post on "The Diversion Problem: Unauthorized Sellers are robbing you blind." https://www.counterdiversion.com/post/the-diversion-problem-unauthorized-sellers-are-robbing-you-blind
You can also learn more about how Counter Diversion can help you track and take action against unauthorized sellers www.counterdiversion.com. Be sure to sign up for our newsletter to stay up-to-date on all the latest news and insights from Counter Diversion. Thanks for reading!
For more information on how to protect your brand and product values, or to learn more about our services, contact us today.
Counter Diversion is a boutique SaaS company - we don't have marketing and we don't use high-pressure sales tactics. Our goal is to have solid, honest conversations about the issues at hand and then either recommend our service or another one that is a better fit for your needs. If you'd like to engage in that type of discussion, please schedule a free consultation.