How to deal with unauthorized sellers on Amazon

Amazon is a key platform for K-brands to grow fast in the US. Brands that rely heavily on Amazon, especially in cosmetics, fashion and K-pop merchandise, earn a large share of their revenue there. Some K-beauty brands depend on the platform so heavily that they generate up to 95% of their total revenue on Amazon.

But as revenue grows, so do the risks. It’s not just ad costs or price competition. Unauthorized sellers who take the Buy Box drive down sales, and gray-market (unauthorized) sales and counterfeits often show up at the same time.

Say you sell a $30 product. On top of base fees, logistics and advertising, if unauthorized sellers split your sales, your net margin can disappear in an instant. So how can brands manage this and grow steadily on Amazon? Read on.

Build a prevention system

Build a system that spots gray-market sales and responds quickly, before the damage spreads. These four strategies help you catch gray-market activity early and act on it.

Strengthen contracts with official distributors

Including a clause that prohibits unauthorized Amazon sales in wholesale and retail partner contracts is essential. But since many actual sales happen through unknown sellers several steps down the chain, brands need to pair this legal groundwork with monitoring and response strategies.

Set a Minimum Advertised Price (MAP) policy

A MAP (Minimum Advertised Price) policy sets the lowest price sellers may display in ads, preventing excessive price competition from eroding brand value. As with stronger contracts, though, it only directly binds first- and second-tier official partners. When sellers or resellers further down the chain list your products on Amazon, Amazon doesn’t enforce it, so legal and platform enforcement have limits.

Use Amazon’s brand protection programs

Amazon Brand Registry helps you protect IP assets such as your brand logo, product images and content, and gives you tools to report IP infringement and gray-market activity directly.

With the Amazon Transparency program, each product gets a unique serial code (a Transparency code) that blocks counterfeit and resold products from circulating and tracks distribution. Customers can also scan the code to check whether a product is genuine. This is very effective for building brand trust and supply chain transparency.

Add unique product serial numbers

Giving each product a unique serial number lets you clearly distinguish products supplied through official distribution from those that came in through unofficial channels. This makes gray-market sellers easier to identify and act on.

Monitoring and acting on unauthorized sellers

After prevention comes ongoing monitoring and response. The basics are checking every seller on Amazon regularly and reviewing MAP compliance and price changes. Want to know how to monitor? See our previous post.

When you find a pricing policy violation, you can report it using the “Report a Violation” tool in Brand Registry or Seller Central. If reporting doesn’t solve the problem, sending the gray-market seller a cease and desist letter is one way to prepare formal legal action. Test purchases are another effective strategy: they let you check whether an unauthorized reseller’s product is genuine and secure grounds for a report.

A real Amazon gray-market case

Brand A, a MarqVision customer, designs and produces Amazon-exclusive products and registered them under a separate ASIN (Amazon Standard Identification Number), with unique lot numbers and distinct packaging. But problems arose when outside resellers listed and sold products under the same ASIN.

Their products were genuine, but the lot numbers and packaging differed from the Amazon-exclusive versions. The difference arose because the unauthorized sellers had sourced the products through wholesale channels.

The brand proved these differences through test purchases and, on that basis, reported the listings to Amazon as counterfeit. Amazon accepted that the resellers’ products didn’t match the ASIN, treated them as counterfeit, and the problem was resolved.

Here, a brand went beyond price monitoring to build and execute its own gray-market strategy. What makes it notable is how it used small differences between its Amazon-exclusive products and its wholesale products to stop gray-market distribution.

When running a K-brand on Amazon, the heavier your reliance on the platform, the greater the risk from gray-market sales and counterfeits. That’s why you need a systematic strategy that combines prevention, monitoring and reporting. In particular, a strategic approach that uses small differences between Amazon-exclusive and general distribution products can make both gray-market enforcement and counterfeit reports far more effective.

Brand protection should start with advance planning and strategic management, not just reacting when problems arise.

As a strategic partner for K-brands preparing to enter or already expanding in the US, MarqVision supports efficient monitoring and response to both counterfeits and gray-market sales on major online platforms such as Amazon, eBay and Walmart. Request a free consultation now and get a strategy tailored to your brand.