Gating: A New Challenge for Sellers
By CJ Rosenbaum, Esq. and Robert Segall of Amazon Sellers Lawyer
As many sellers area aware, in August Amazon started "gating" certain brands. Gating means you cannot sell unless Amazon opens the "gate" to you. You are locked out.
The change adds "brand obsession" to Amazon's omnipresent "customer obsession" and is a new challenge for Amazon sellers. You are not dead in the water, you just need to use your business acumen and react and pivot to continue making money.
What is Brand Gating?
Amazon started charging non-refundable fees ranging to sellers who wanted to continue to sell certain brands on the Amazon platform. Sellers not only have to pay fees for products they were already selling, they also have to provide things that are difficult to obtain: permission to sell the products from the manufacturer, evidence of a continuous relationship with the manufacturers or authorized suppliers and additional performance checks.
These new anti-seller policies are allegedly to combat counterfeit products. Supposedly the fees are going to be used to investigate counterfeiters. We don't see how punishing good sellers is going to help anyone….except big brands.
With the new "brand obsession" and gating, big business seems poised to reap great benefits by Amazon knocking out the smaller sellers and limiting competition.
From our perspective, Amazon's new policy flies in the face of its focus on customers and obtaining the lowest prices for its customers. When there are fewer sellers, there is less competition and prices go up.
While an official list has not yet been released, sellers have reported that brands such as Nike, Adidas, and Asics require a $1,500.00 fee to sell, while toy products from Hasbro, Lego, and Pokémon require a $1,000.00 fee.
What should sellers do? We suggest that sellers, large and small, start being a bit more careful in their inventories. Do not put all of your eggs in one basket….or brand. You do not want to be caught with a tremendous amount of inventory in a brand that suddenly gets gated.
If you are over-invested in one or several brands, we suggest more aggressive sales tactics. We do not suggest you have a fire sale or lose money in a panic sale, but be a bit more aggressive so that if your products get gated, you are not left with a ton of inventory you have no place to sell.
We suggest increasing your diversification. If you are selling one or a few brands, diversify. Your skills are in being entrepreneurs…not selling a particular brand. Use the skills you have and find other products to sell.
Also, you should know that there are over 500,000 brands. It seems doubtful that Amazon is going to gate a significant percentage of all of the brands that exist.
Finally, if you are not already doing it: go private label. Create your own brand. Any product can be improved. Find a way to make what you are selling better and have it made for you. Follow your interests, personal and professional. Use your experience and your passion to create your own brand….then you too can seek gating.
About the Author
Sellers Lawyer is a legal team that is dedicated to defending
sellersí rights by applying legal strategies to protect their
accounts and handle account suspensions, complaints and policy
violations. Founder, CJ Rosenbaum started his practice in 1994 where
he represented entrepreneurs who operate both online & brick &
mortar businesses. CJ is also a courtroom lawyer and litigator. CJ
has represented various people across the United States, has taken
countless depositions and tries more cases each year than most
lawyers do during their entire careers.
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