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High brand value is one of the most important intangible assets a company can have. It’s something the founders give their heart and mind to create, work nights and weekends to improve and stay awake at night praying they can protect.
This is especially true for leaders in consumer product brands that have been sold primarily offline for the past 50 years. These leaders have invested immense sums over many years (often decades) to create a brand that captures the hearts and wallets of a consumer base in an offline world.
Then, almost overnight, the Internet turned the traditional branding path upside down and created total chaos for leaders who now seem unable to stand in the face of the cancer-like plaque of rogue marketers. which metastasized to digital channels and online markets.
In this new reality, brands that refrained from selling their products outside of their “safe” ecosystem are discovering that their products are being sold everywhere anyway, often well below the advertised minimum price (MAP). – eroding the value of the brand and leading to what is known as the death spiral of profitability.
This tailspin is the nightmare in which many brand leaders find themselves. Fortunately, there are ways in which brands can regain control or even mitigate these risks completely. And, once it has been freed from the turbulence caused by brand erosion, a real acceleration of the brand is possible. Here’s how to get and keep control of your brand:
Related: 67 fascinating facts about e-commerce versus brick and mortar (infographic)
Don’t be afraid to be the first to go digital
Many brands are reluctant to be the first in their industry to enter an online marketplace. They care about degrading the value of their brand and helping other brands gain an advantage. However, if the brands don’t make the leap, one of their competitors or buyers will.
This is especially true for brands that make premium products. Take, for example, elite cycling companies. You won’t see any of them selling their bikes in most online markets.
The problem is that one of these elite cycling companies will end up listing their products on Amazon. There is too much money to be earned so that at some point they do not gather in the markets. When this happens, the brand or marketer that first enters an online marketplace will gain all the traction of search engine optimization (SEO) and become the dominant player in the space while everyone else tries to put it. if the day. Also, if a buyer of products from a cycling brand enters an online marketplace before the brand does, they can earn the Purchase Box, which further erodes the value of the brand.
A well-known game theory, the “prisoners’ dilemma, ”illustrates the difficulty some brands may face in deciding whether or not to enter an online marketplace. Imagine that the police are interrogating two suspects in different places. Each suspect has the option of confessing and implicating the other or keeping quiet.
Both suspects individually know that they will receive favorable treatment if they confess when the other does not, even better treatment than if they both remained silent. If one suspect confesses, the other must do the same to stay away from the severe punishment assigned to the detainee. This is the prisoner’s dilemma. In this situation, confession is the dominant strategy for both individuals.
Brands debating whether or not to enter an online market face a similar dilemma. If a competing brand starts selling its products in an online marketplace, and you don’t, your brand will lose the advantage of the first one that happens.
Also, if a reseller starts selling your branded products in a market without your permission, and you still resist it, that reseller is likely not to adhere to MAP. This will take potential customers away from your current sales channels (retail, direct consumer websites, etc.), causing erosion of brand value, which will put your brand in the death spiral of profitability. . Thus, as with the suspects of the prisoner dilemma, the dominant strategy for any brand is to take the first step.
Related: What I would like to know before starting my e-commerce business
Don’t believe the myth of the discount
Whether they realize it or not, every brand and seller has a strong incentive to keep prices down and meet the manufacturer’s suggested retail price (MSRP). If a seller decides to discount their price on a particular product, all other sellers must follow the same to compete. It becomes a race to the bottom.
Because? Most Amazon customers buy items from the shopping cart that appears on a specific product page. Winning the shopping cart means your price is the lowest at any given time. The shopping cart is constantly changing, depending on which seller has the lowest price.
So if your brand makes golf balls and sells a box of three balls to Amazon for $ 20, but another dealer sells the exact same box for $ 19, you will win the box purchase. This will encourage others to offer a deeper discount to repurchase the shopping cart. The discount continues, sometimes below the wholesale price. This is the spiral of death in a nutshell.
While there is a certain level of discount in online markets, you will often be more profitable without discounts, as long as you are in control of your brand. I know brands that have never discounted a penny, but have seen their online revenue grow from tens of millions to hundreds of millions of dollars a year. This is where maintaining brand value and gaining control over rogue sellers is key.
Related: 4 Tips to Bring Your Brick and Mortar Store to the Kingdom Online
Ask for help, and quickly
Having an e-commerce presence on global platforms means that your brand is accessible to everyone, including bad-act marketers who would want nothing more than to capture short-term profits from your products at your expense.
Fortunately, you don’t have to fight alone. There are consultancies that can help you create a strategy to mitigate the risk of rogue sellers and law firms specializing in the application of online sellers and intellectual property infringement. In addition, e-commerce accelerators have created technology to track MAP compliance and identify delinquent or counterfeit vendors. If you have already lost control, collaborating with one of these entities can help you regain and maintain it.
Losing control of your brand is like having a termite infestation in your home. Once there is the problem, it is difficult to get rid of it. It destroys the structure of something you’ve worked hard to build. The sooner you identify the problem, the better. Conversely, the longer you wait to correct the situation, the harder it will be to regain control.
Related: 10 reasons why your e-commerce store doesn’t make any sales
Selling online is essential today. If you avoid markets and other digital channels, you are basically throwing away revenue and hindering the growth of your brand. The dominant strategy for any brand is to move forward quickly and quickly to list your products in all markets where your products can be included. And if you work with the right partners soon, you can create a strategy to control and grow your brand.