By partnering with flagship lines like La Roche-Posay, Vichy, and more, Amazon Professional Beauty aims to bring esthetician-level care to the masses. It’s a one-stop shop for skincare products that normally come courtesy of a dermatologist—customers can search by product, brand, skin type, or concern, seek out expert advice, and locate skincare professionals in their area.
Though many companies avoid working directly with Amazon and the like, counterfeit and diverted products still pop up online. “Any brand that’s popular and in-demand will turn up on mass-market sites at one time or another, with the supply source being initially unknown,” says Karen Asquith, director of education for G.M. Collin Skincare. Some of those unauthorized vendors are buying products from trade shows to resell, but anecdotally, representatives say that leaks are most likely to come from authentic outlets gone rogue.
“Surprisingly, it’s normally approved, legitimate clients who decide to sell product outside of their agreed terms and conditions,” says Mark Wuttke, president and CEO of Babor North America. It’s a difficult problem to manage and one that’s often compounded by online retailers’ reluctance to get involved with agreements between brands and distributors. “Unfortunately, we’ve encountered this issue a handful of times, primarily with Amazon,” says Nik James, president and chairman of YG Laboratories. “Large online retailers have no legal obligation to tell us who the seller is, and often the seller purposely maintains their anonymity, because they’re aware that it’s against our policy to sell YG-branded products online. We have a number of services that allow clients to make our products their own by changing things like product name and brand logo, but we do not allow our products to be sold through these mass retailers.”
For companies that aim to support their spa-world allies as much as possible, the proliferation of these unauthorized vendors represents a deeper betrayal. “Because we have been spa-focused since our founding and worked to maintain a small and controlled online presence, we were very upset by unauthorized third-party venders selling Luzern products,” says Luzern founder and CEO Jennifer Herbert-Coste. “As a company, we work very hard to maintain excellent client and customer support, and with unauthorized sellers, we have no way to control quality of product, pricing, or customer support.” Still, she says, her brand’s main concern is for its associates. “The larger issue is product being sold that is very old and sometimes discounted, which could undercut our spa partners.”
To stem the flow of counterfeit-product sales, FarmHouse Fresh refuses to replace or compensate buyers for purchases from Amazon or other unauthorized sellers, and other lines heavily emphasize the importance of by-the-book channels. “Our aim is to continuously educate consumers about authorized resellers and the risks of purchasing products from unauthorized third-party marketplaces,” says Will Alexander, director of digital experience for Eminence Organic Skin Care. Unfortunately, education only goes so far, and some companies have assigned dedicated teams to combat product diversion to third-party marketplaces while others have been forced to seek help from the law.
“On the rare occasion we’ve been able to identify an unauthorized seller, we’ve contacted and informed them that if they wish to continue purchasing our products, they will need to cease and desist all online activity with YG-branded products,” says James. Such tough love is imperative, as is recruiting an extra set of eyes whenever possible. “We ask existing partners to report back when they see something suspicious, so we’re on constant lookout,” says Wuttke. “Once the perpetrators are identified, their supply agreement is either immediately terminated based on breach of terms and conditions, or if it’s a genuine error or a poor decision and we believe the apology, they’ll get one last chance.” In some cases, according to Shannon McLinden, president of Farmhouse Fresh, illegitimate sellers are honest and upfront when they’re told they’ll no longer be receiving their orders; in others, the conversation rapidly devolves into verbal abuse and threats—sadly, not an irregular occurrence. When Privai contracted with a wholesaler who turned around and sold expired products on Amazon, things got ugly, according to founding partner and CEO Christina Stratton. “Brands have no recourse, really,” she says. “We threatened to sue, and they didn’t care. They were selling more than two-year-old product of ours at, like, 60 percent off. It can be very difficult to control, so brands need to have an ironclad contract that threatens legal action and compensation if retailers breach that contract.”
Farmhouse Fresh has also attempted to get the law involved, with mixed results. “We’ve had some luck employing a company solely to file a brand registry showing we are the trademark owner, and also to use their vast databases to cross-reference with ours,” says McLinden. “We were able to identify roughly 10 vendors using aliases and to cut off their supply. We spent a year employing lawyers to send cease and desist orders, but the efforts only helped shut down smaller sellers—the large, sophisticated sellers do not waiver, and unless we can identify which active account, or active account’s employee, is the perpetrator and cut off their supply, it seems there isn’t any other remedy.”
It may seem like a game of Whac-a-Mole, but this course of action is, in fact, just what Wuttke recommends. “Don’t knowingly turn a blind eye to the situation,” he says. “Many brands know, or at least have a good feel for, who the perpetrators are, but they’re unwilling to take a longer-term view to protect their brand in favor of short-term sales.” He swears by coding and scanning all products as they leave the warehouse, so when they show up in unauthorized channels, the company can track them. “Although there may be an upfront investment associated with coding your products, it’s worth it in the long run if you are truly interested in building a brand,” he says. “Plus, it totally confirms who the perpetrators are.” In a similar vein, McLinden says her company has “strengthened our language on unauthorized selling for current accounts and also implemented a personal-guarantee form that is signed by cash-and-carry customers purchasing multiples or volume, which is a red-flag indicator of unauthorized selling,” she says.
Though some brands are rightfully cautious about tying their fortunes to a mass-market retailer, most recognize that such alliances can bring positives as well as negatives. “On one hand, partnering with an online site would allow the brand supplier to ensure the products offered are genuine and do not exceed the expiration date, but if the site wants to have control of the brands they offer, that could be detrimental to the supplier,” says Asquith. “We encourage our spa partners to have their own websites to remain viable and competitive.” Synergie Skin did just that, launching an e-commerce site of its own in August, rather than signing on with the big boys—a decision Synergie Skin founder Terri Vinson says will integrate access to the entire product range, customer satisfaction, education, and selling at recommended retail price. “We will maintain premium branding while enabling our professional stockists to benefit directly from online purchases with incentives and rebates,” she says. “By managing the shopping experience, there will be no discounting to cheapen the brand image, ensuring consumers will be shopping online for the sole reason of convenience and not for a lower price.”
Striking out solo might seem tempting, but for many lines, partnering with the only company with the power to crack down on unauthorized vendors is the obvious solution. “We’ve tried it all,” says Herbert-Coste. “I have so many boxes of our products sitting at home that were purchased for the purpose of trying to identify Amazon sellers. Representatives of our company have even done drive-by visits to far flung addresses in order to find them. The few times we did unveil an unauthorized vendor, it felt like a great victory, only to have another pop up a month or two later.” Luzern is still in the process of setting up on Amazon Professional Beauty, but Herbert-Coste is hopeful that the budding partnership will pay dividends. “Essentially, we got to the point where we needed to make a decision that would represent the lesser of two evils for the brand and for our partners,” she says.
Babor chose to explore both options: a partnership with Amazon and an affiliate web solution for its spas. “We decided to protect our brand,” says Wuttke. “By partnering with Amazon Professional Beauty, they don’t allow anyone else to sell on Amazon without our authorization. This initiative has helped us retain the highest possible image and positioning of our brand by eliminating any unauthorized resellers on Amazon.” As for the affiliate program, the company gives its spa partners a “shop Babor” link to add to their sites, which funnels client traffic directly to babor.com while still providing a revenue share of each purchase to the site of the original click. That way, Wuttke says, spa partners can be open 24/7 and receive their full retail margin, minus fulfillment charges. “With access to the entire collection of 350-plus individual products, they’ll never run out of product, and they’ll be involved in every promotion without an upfront commitment to buy in,” he says, noting that clients who purchase through the affiliate are then linked to the spa partners, so even if they bypass that partner’s site for future purchases and buy directly from the brand’s site, the partners will still get that full retail margin.