Retailers struggle with resellers and unauthorized sales as brands step up their own defenses

• Korea's resale market expected to reach KRW 2.8 trillion by 2025, with damage from resale and unauthorized sales growing, led by well-known brands
• Brands step up their response to resale and unauthorized sales as brand value falls and official sellers suffer
• MarqVision responds quickly and accurately with monitoring and enforcement that shows the damage from unauthorized sales in real time
  

One of the biggest themes in retail over the past three years has been “resale.” According to eBEST Investment & Securities, Korea's resale market, worth KRW 700 billion in 2021, passed KRW 1 trillion in 2022 and is expected to reach KRW 2.8 trillion by 2025.

Some predict a long slump for resale after the economic downturn that followed COVID-19, but the resale market for well-known brands still looks as strong as ever. For all the upside of a thriving resale market, the downside is significant too. Retailers in fashion, beauty and other categories are struggling with the loss of brand value that resale causes.

Fast-growing new brands wrestle with resale, and turn to AI to strengthen enforcement

Brand infringement through resale is spreading beyond luxury and long-established brands to emerging ones. In response, the industry is turning to IT in earnest to fight back.

Many brands that are wildly popular with Millennials and Gen Z, such as depound, Gentle Monster, KIRSH and rom&nd, use AI-based monitoring from AI company MarqVision. MarqVision's B2B SaaS platform, Marq Commerce, gives brands worried about counterfeits and unauthorized sales, including resale, real-time monitoring and enforcement. Because products are listed and sold worldwide so quickly in e-commerce, fast and accurate detection matters, and MarqVision uses deep-learning AI models to monitor listings and sellers across 1,500 marketplaces in 180 countries.

Because resale is closely tied to product prices, MarqVision runs price monitoring to protect brand revenue. It detects and takes action against the specific products and sellers that violate the minimum price a brand sets for each product.

Lifestyle wear brand depound is one example of a brand that successfully took action against unauthorized sellers with MarqVision. A favorite among Millennials and Gen Z, depound had been struggling with sellers offering its products on Naver Shopping without authorization. “As the brand grew more popular, the number of large unauthorized sellers damaging our brand value soared, and we urgently needed a solution,” said a depound spokesperson. “With MarqVision's solution, we were able to take effective action against product pages tied to unauthorized sales. Because we could take action at the seller level, not just product by product, our response was more fundamental and faster.”

Color cosmetics brand rom&nd, which is hugely popular in global markets as well, struggled with cheap resale overseas. “Our official sellers were being badly hurt by resellers selling our products cheaply in Vietnam,” said Hyunjun Park, head of global content at rom&nd. “With Marq Commerce, we can monitor and quickly report sales that violate our pricing policy and infringe our intellectual property, so we not only defend prices for our official sellers but keep the unauthorized sales market from growing further.”

“Products from unauthorized sellers who had stolen our advertising images were showing up at the very top of open marketplaces,” said a spokesperson for Henkel, the global consumer and industrial goods company. “Marq Commerce handles everything from detection to reporting in one place, so we could respond quickly to IP infringement.”

As sales channels diversify, MarqVision has recently extended detection to standalone websites, social media and secondhand marketplaces, made possible by more advanced AI that allows more granular detection. By reliably stopping sales that infringe on brands through accurate, fast detection and enforcement, MarqVision is becoming a practical way to protect brand value.

Luxury brands struggle with lost brand value and side effects from resale, and respond with new terms

In luxury, resale usually means reselling genuine products above their retail price. If that intensifies, it inevitably erodes brand value and distorts pricing over the long term.

Some global luxury brands are already responding actively. Luxury watchmaker Rolex, for instance, limited its certified pre-owned program to watches made at least three years earlier, to stop resellers from flipping new watches at a markup as soon as they buy them.

Other brands have formalized their response with new terms. Nike introduced a “purchase code of conduct” that lets it act against abuse, and global fashion brand Zara recently added a clause to its terms that penalizes customers who buy products for resale.

Countermeasures matter, to stop the loss of brand value from resellers and unauthorized sellers and to protect consumers

Beyond resale at a markup, professional resellers selling genuine products at low prices are spreading, and brands are watching the market more closely and working on countermeasures.

If cut-price resale becomes the norm, the prices a brand officially sets on many considerations become meaningless and trust in its prices falls. Products that don't move through official channels are also hard to manage, which can affect quality assurance.

Most of these resellers are unauthorized sellers without the brand's official approval. They copy genuine product images from the brand's official website without permission and upload them to open marketplaces, creating confusion with official sellers.

The many problems that come with the growing resale market not only hurt brand value but are likely to end up harming consumers, so preparing for them matters more every day. It is hard to know exactly how resellers and unauthorized sellers obtained what they sell, and if counterfeits are mixed in, it is not easy for consumers to notice or get compensated, so in the end consumers bear the harm.