1. Recommendations For Controlling Online Sales
Daren S. Garcia
Vorys, Sater, Seymour and Pease LLP

2. Vorys Online Seller Enforcement Group
Represents 150+ companies across the country regarding online brand protection matters.
Thought leaders regarding legal claims, distribution strategies, authorized seller policies and agreements, and more
Integrated graduated enforcement system
Technology
Investigation
Legal
SF ACC, DSA Annual Meeting, DSA Global Summit, Law360, Professional Pricing Society, Compass, Winner of 2017 Innovation Award, etc.

3. Bridget Sedlock Associate
Online Seller Enforcement Team
Whitney Gibson
Partner
Daren Garcia Partner
Adam Sherman Partner
Ken Rubin
Partner
Herbert Hedden
Partner
T. Blake Finney
Associate
Amanda Roe
Associate
Laura Erdman
Associate
Leslie Allen
Associate
Jordan Cohen
Associate
Maureen Kelly
Associate
Samuel Yamron
Associate
Bridget Sedlock Associate
Meredith Caplan
Associate

5. Third Party Marketplace Pain Points

6. Marketplace Price Wars
$65
$60
$55
$50
$45
$40
$35
$30
$25
$20
$15
$10
$05
$00
*Move to intro
Financial impact:
Marketplaces lower purchase prices from brand.
Lower # of higher margin sales online
Authorized sellers use lower-priced online sales to negotiate lower prices
Authorized sellers refuse to do business with company
Reduces profits
* Simulated results

7. Financial Impact of Uncontrolled Marketplaces
Marketplace negotiates lower purchase prices, eroding the brand’s margin
Marketplace refuses to sell certain products because they cannot make a profit.
Stunted growth - E-commerce team is not motivated to invest in advertising, SEO, etc. because they are losing buy-box to unauthorized sellers.
Marketplace cannot sell as a 3P or use a 3P reseller because of unauthorized third party sellers.
Authorized brick and mortar sellers refuse to do business with company, or promote brand aggressively because of low-priced unauthorized sellers.

8. Unauthorized Resellers Causing Negative Product Reviews
No quality controls by 3P sellers resulting in damage/defect/spoilage
Price related reviews driving low ratings
Counterfeit claims damage product and brand credibility

9. Strategy To Protect Your Brand On The Marketplaces & Position For Growth

10. Protect & Grow Your Brand On The Marketplaces
Select Marketplace Sales Method 5
Monitor, Investigate Enforce 1
6 - Grow Your Sales 4
Reseller
Policy 2
Grey Market Controls 3
MAP Policy

11. Select Marketplace Sellers

12. Authorized Reseller Policy:
No Sales on Online Marketplaces

13. Foundation For Claims Against Unauthorized Sellers
COMPANY
Reseller/MAP Policy
First Sale Doctrine
AUTHORIZED SELLERS
UNAUTHORIZED
SELLERS
(Unauthorized Channels)

14. Unauthorized Sellers Have a Higher Tendency to Violate MAP Policies
SOURCE:
15% of authorized retailers violate MAP policies
53% of unauthorized retailers violate MAP policies
Optional / customize as needed

15. Material differences don’t have to be physical
What Constitutes a Material Difference?
Material differences don’t have to be physical

16. Non-Physical Material Differences
. . .
Recall
Assistance
Report
Safety
Incidents
Online
Sales QC
Inspection
Obligations
Promotions
Customer
Service
Warranty

17. Online Quality Control Policy
Pre-approve Online Sellers/Marketplace Sellers
Exclusive Sellers on Marketplaces
Stops comingling
Allows company to determine source of reviews
Provide Approved Sellers Online Sellers Quality
Control Policy For Online Sales
Monitor Authorized Sellers For Compliance
Test Purchases
Address Quality Issues With Online Sellers
Track Review Scores/Sentiment

18. And the List Goes On…

19. Legal Claims Against Unauthorized Sales
COMPANY
Trademark Infringement, Tortious Interference
Reseller Policy
AUTHORIZED SELLERS
UNAUTHORIZED
SELLERS
(Unauthorized Channels)

20. Unauthorized Online Sellers Push Back
“What I’m doing is not illegal!”
“You can’t identify me!”
“You won’t actually do anything!”

21. Online Seller Enforcement Process

22. Marketplace Monitoring for Unauthorized Sellers and MAP Violators

23. Marketplace Monitoring

24. Online Seller Enforcement Process

25. Comprehensive ID Services
Open Source Intelligence
Investigative Databases & Research
Product Buys
Experienced Investigator
Subpoenas

26. Online Seller Enforcement Process

27. Cut Off Source, Put on ‘Do Not Sell’ List

28. Online Seller Enforcement Process

29. C&D Letters

30. Online Seller Enforcement Process

31. Draft Complaints

32. Online Seller Enforcement Process

33. Protect & Grow Your Brand On The Marketplaces
Exclusive Marketplace Seller 5
Monitor, Investigate Enforce 1
6 - Grow Your Sales 4
Reseller
Policy 2
Distinguish
Grey Market 3
MAP Policy

34. Example
Quality issues & others selling on marketplaces
Company decided to sell on marketplaces

35. Unauthorized Third Party Sellers Cannibalize Sales
Unauthorized sellers offering:
competitive prices
fast/free shipping
products diverted from Japan
No method in place to address unauthorized sellers.

36. Implementation of Seller Enforcement Program
Developed foundational policies for legal claims against unauthorized third-party sellers
Started using a marketplace monitoring service to track online sellers
Used a graduated enforcement system to step up legal pressure until seller removed its products
Selected enforcement targets based on likelihood that they were securing sales

37. of sales on marketplace go to company’s authorized seller.
As of January 2018…
an estimated
of sales on marketplace go to company’s authorized seller.
98%

38. Additional Example Results
Went from selling at 50% below MAP on Amazon to selling at MAP Compliance in 6 months.
Increased authorized sales on Amazon 100% in 3 months.
Went from 74% MAP compliance to 97% in two months.
50% stop after C&D
90% after draft complaint

39. Benefits of Controlling Sales On The Marketplaces
Stable Retail Pricing
Control Over Brand Equity
Better Marketing Opportunities
Better Buyer Interaction
Good Product Reviews
Faster Growth

40. Step 1: Consultation

41. Step 2: Policies,
Agreements, Procedures

42. Step 3: Enforcement