EP #339] [ENG] - How to protect your brand from bad actors on Amazon - Megan Harmon

EP #339] [ENG] - How to protect your brand from bad actors on Amazon - Megan Harmon Unknown Speaker: Welcome to The Ecommerce Lab By Ecomcy. This is the place for everything related to Amazon private label and e-commerce. Learn exactly what you need to start or scale your business. Get insights from the top industry experts who will discuss the latest trends and best practices in the world of Amazon. From choosing products and sourcing from a supplier to setting up your Amazon account and marketing your business, you will hear it here. Let's get started. Here is your host, Vincenzo Toscano. Speaker 2: Hello guys, welcome to another episode of the E-Commerce Lab by E-Commerce, the place where everything related to Amazon FBA, product level, and E-Commerce. My name is Vincenzo Toscano, founder and CEO of E-Commerce, and today we bring another special guest. Her name is Megan Harmon. She's a managing partner at Thorncrest, where they specialize on helping with everything around Brand protection. We all have seen as Amazon sellers and ecommerce sellers in general, how if you don't have, you know, the right appeal, the right techniques and tools in the back end to protect your brand, it gets very difficult, very fast to control, especially all those people out there that try to copycat and, you know, pick out of your success. So that's going to be today's conversation with Megan, understanding how you can protect and future proof your brand. So essentially you can keep scaling into this platform. So Megan, welcome to the show. Thank you so much for being here. How are you doing? I'm Gem Verica. Speaker 1: Thank you, Vincenzo, for having me. Appreciate it. Speaker 2: Thank you. A pleasure, pleasure. So before we dive into today's conversation, which I'm sure is going to be very insightful because, I mean, this is something I get every single day. You know, somebody's copying my packaging, somebody's copying my email, somebody's copying X, Y and Z. I'm sure there's going to be a lot of things people are going to get out of this episode, but just tell us more about yourself and the company so people can get to know you. Yeah. Sure. Speaker 1: Yeah, absolutely. Speaker 2: Thank you. Speaker 1: So you had already mentioned it and gave a great intro. Speaker 2: Thank you. Appreciate that. Speaker 1: So we are a brand protection agency that is a holistic. So what does that mean exactly? That's kind of a buzzword. What we mean by that is that we provide the software that runs, scrapes, monitors, Amazon, Walmart, and social selling sites. And we look at that software and we say, OK, are you having a problem with unauthorized resellers? Is there counterfeit issues? Is there trade dress problems, copyright issues, trademark, duplicate listings, etc.? So we basically take our software, we manage and analyze that for the brand so that we are a managed service. We've been around for over 10 years. How Thorncrest was founded was because we are from inside a brand. So being on the sales side, driving a brand's growth that was, I mean, triple digit year over year. Growth got out of control. It was great. It was exciting. Everyone was excited about that type of growth and that type of scaling. But what happens very quickly is that you start having You're fundamentals start to kind of pull apart, right? You're not tracking as closely all of the dealers that you're signing. You're not necessarily tracking every single PO that's going out the door. You're having some bulk orders come from your .com site and like, wow, this is great. It's probably a business or B2B, but you don't really look into it much further because the reality is, is your to-do list is incredibly long and the entire to-do list is full of growth. It's forward-looking. It's not full of policing what's coming in. Everyone's kind of on this growth high, right? And growth really shouldn't be painful. But we all know it is. Operationally, when you grow that fast, things start to break. Everyone's wearing more than one hat. Speaker 2: Right. Speaker 1: You sort of become a master of all trades as you're trying to push forward while also juggling. And what happens during that period is original contracts get delayed. Sometimes your authorized resellers don't ever sign them, but you have a handshake agreement and you're all on the same mutual footing, et cetera, and you're all running and excited about it. And so we felt this. This happened to us when we were scaling. Like I said, it was triple digit year over year. And what we didn't realize And we didn't realize how bad it was until our customer service just kept getting phone calls. Product was breaking. It was overheating. We were in a consumer tech space at the time. And so focus on quality control is major. We have to be very diligent with that. We found that, I mean, Double digit percentages of the returns were counterfeit product. They had counterfeited our serial number. They had counterfeited the physical product itself. They were putting things in the product, in the components where the chipset was, where the battery was, that did not belong in that product to make it heavier, to weigh it so that it felt like a quality premium solution. And at first it was, wow, this is, I mean, we've made it. Someone copied our product because they knew they could profit off of it. But in the end, it was, I mean, it became almost 20% of our returns. And we're having to ship out replacements for free. We're seeing mixed being commingling, which now Amazon is doing away with, which is excellent news. So we're super happy to see that because that we found happening all the time. And beyond counterfeits, it was unauthorized resellers. Our dealers were starting to also sell on Amazon. Well, they can't sell on Amazon. Well, why, why not? And then all of a sudden you look at your authorized resale agreement. I sent it, but it never, they never signed it. Right. You just, you just had too much to juggle. Too much is going on because you're looking forward. And we, you know, we, we sold that brand and, you know, we scaled it fast, sold it. We fixed as many problems as we could, but basically at a hodgepodge of systems, we had fast systems, we had some IP trademark systems. So basically we were logging into three or four systems trying to control all of these facets independently. We moved to another brand and. The whole purpose of moving over there was to scale and build that brand. It started scaling and building and all of the cogs started to break again. I mean, it was the same joints that we saw originally. And so we went to our trusted partners and said, okay, this was the software stack that worked for us before. Let's use it again. It just was too much. I mean, there was a need to have a consolidated solution, especially for brands that are scaling fast, you know, logging into multiple software system, which you're probably already doing, and then logging into three different ones for brand protection, which isn't on your first page. Speaker 2: And constantly keep doing it, keeping the consistency. And that's it. Speaker 1: If you take your eye off of it, they sneak in. They do. And if you're not constantly diligent about it, it's like, well, we'll just drop the price at midnight. It's not going to impact the brand. We'll drop it real quick. We'll capture a couple hours of sales. They won't notice. And then all of a sudden you start seeing your number start to deplete. Well, because people are starting to see promo history. Well, wait a minute. If they're dropping it at night, I'm going to start purchasing at night or really early in the morning because there tends to be better deals. And if you're not at the office yet and you're not checking it, so that's what Thorncrest, that's the gap, basically the coverage that we decided we needed to build was for scaling brands for sales teams and for legal teams as kind of a supplemental support. We need to build an all-in-one where you have one contact. You have one software platform and you have a team that's doing it so that you don't have to, right? We track KPIs. We quantify what we're doing and the ROI that we're providing. So basically, we make you the champion. Speaker 2: It's like an insurance at the end of the day. It's making sure that you're safeguarding the brand. Speaker 1: It is. It really is. I mean, would you really go into business without business insurance? No, certainly would not. Speaker 2: It's better to be proactive than reactive. Like every single time, we see that every single day. If you're reactive, you end up most of the time being much more expensive and the issue is not really resolved, which brings me to, I guess, a question with everything we've been Discussing so far, which is a timeline of when these things should be even done in the first place, because I'm sure people listening to this episode today are asking themselves, like, when do I know when these things should be implemented? Is it from day one? Should I do when I'm kind of semi-big? Like, what is your experience? Because I'm assuming this is something that people ask you all the time or so, yeah? Speaker 1: Yeah, yes, certainly. Unfortunately, we get more reactive inquiries, right? Speaker 2: I mean. Speaker 1: The reality is is if $100,000 loss hits you in the back of the head of sales, you're like, yeah, okay, I have to do something, right? So you now we have to do it now. I should have done it earlier, but now I have to do it. So that's that's the unfortunate. That's usually the phone calls we get are like, ah, we need something now. Proactive, always better, always cheaper, because you don't get hit in the back of the head with $100,000 loss in 24 hours, right? You are being proactive with it. I'd say the moment that you If you want to launch and decide you're going to be an omni-channel brand, you need to look for insurance, brand protection immediately. So if you're not just going onto Amazon exclusively, if you're going to Walmart as well, if you're going to be selling on TikTok, if you're going to be social selling, this isn't just retail and online, it's omni-channel within the e-commerce industry too, right? I mean, social selling is very different. From selling on Amazon, from selling on Walmart even, right? Different tactics, different strategies for some brands. So the moment you decide it's not just Amazon and your own D2C, that's when you should call a brand protection agency and just monitor your product. You don't need enforcement yet, but if you can monitor it, which is much less expensive, we can immediately flag when we start seeing issues. Speaker 2: That's right. Speaker 1: And it's like, wait, we've got leaks. Something's happening, right? Let's check with D2C. Are they seeing bulk orders? Amazon, what is your, what's your business side of Amazon look like? Are you allowing more than one or two purchases? How big is your discount on Amazon business? Because we see that a lot happen as well, where brands didn't They didn't check that. They're like, well, we just did a blanket 30%, but we didn't give them a max purchase or we didn't require certain elements to be within that business purchase. And then you see those business purchases are really just the same sellers with another account. That's right. They're just the same, just under a different account. So proactive, I mean, just monitor, monitor and know what's happening on the back end with your trademark. Do you have a trademark? Speaker 2: You should. Speaker 1: With your trade dress, if you are going into retail with packaging, if packaging is a big thing for you as a brand, depending on what your strategy is, and do you have an authorized reseller agreement? Are you allowing other people to sell? It's a good idea to reset once you decide to expand and say, where do I want to go with this? Because if you can set up a foundation early, a digital authorized reseller agreement, so you're not floating paper, right? This is a click through, easy to do. If you can set up standards like that when you decide to go beyond one or two channels or one or two e-tailers, if you will. That's where you're going to see your foundation is going to remain stable throughout your growth, right? Rather than having the train fall off the tracks. Speaker 2: Cool. So now I guess a question I have for all the different kind of, you know, attacks I guess you can receive as a brand. Which one are you seeing are the ones that are being more common lately? Does it have to do with resellers? Does it have to do with a kind of a, as we mentioned, counterfeit that, you know, replicate your product, your packaging? What is the ones you get the most calls lately? And what do you think is the root cause and possible kind of solution moving forward to avoid that from happening? Speaker 1: You know, it's it is different by category. So so I would say on the consumer in consumer electronics, we see reseller activity is incredibly high unauthorized reseller activity. We also see that in music, music and audio space. Reseller unauthorized reseller activity is really high. We're not seeing I mean, we do see counterfeits there as well. But I'd say your unauthorized reseller activity tends to be the highest and And the most advanced. So, so the sellers that we're seeing are. We are purchasing your inventory in very clever ways, which makes it very difficult to track. Speaker 2: Very sophisticated, I guess. Speaker 1: Very sophisticated. That's right. I mean, this is typically with consumer electronics brands. We have to pull back like their distribution network and look at, you know, PO's and we'll do that level of analysis. Like this PO history is not in line with standard PO history for this partner. Right. So that's beauty. We see trade dress packaging. Unknown Speaker: Major. Speaker 1: We see that we see packaging popping up at both the supplement and the beauty space on e-commerce, but also social sites, social sites tend to be where we see trade dress issues the most. So you can have a trademark. And you can have a copyright, let's say, but when someone's on TikTok and the packaging looks almost identical, the color scheme, the gradient, the type font on the front, almost identical to what your brand is, people are looking at that. Speaker 2: I know what Aldi and Lidl does. I don't know if you know Aldi and Lidl, supermarkets in Europe, they do the same. They use the same package, the same thing. They say in terms of hands, they might use their own brand. It's exactly the same. Speaker 1: And people don't see it. They're like, oh, that's it. I'm going to buy it. I had no idea. Right. So it is exactly that. And we've seen that with brands. I mean, we had a brand in the beauty space that we within 60 days, we took down 300. Wow. Trade dress and copyright violations just within TikTok network. Speaker 2: Which is revenue that now goes to you. Speaker 1: Exactly, revenue that goes to you. Supplements, we see counterfeit a lot, and that's really dangerous and upsetting for all of us who are buying supplements. Buy from the brand, not from a seller. But yeah, it's different by category. And I would say that AI has Exaggerated, easier, made it easier, I guess, so much easier, so much easier for everybody else to copy what you're doing. You know, if you're a clothing brand, copyrights. I mean, almost don't matter anymore because they're just taking your shoe and they're tweaking a small element of it and it's enough to where it won't be taken down. Now, some sites will take it down still and we still do it and try to, but clothing, apparel, shoes, they're getting hit very hard with this because bags, handbags, right? All it has to be is just a minor tweak on the image. Speaker 2: And that's it. Now, talking about taking down your expertise when it comes to working with all these marketplaces, which one would you say is the most effective? Because we know, especially myself, that I specialize the most in Amazon, but we also do Walmart and other marketplaces. We see Amazon now releasing more and more tools like with brand registry and things like that. They're really trying to close that loophole, but we still see people gaming the system. Do you see from your expertise like Amazon getting better and better or you still see like a lot of things happening that shouldn't be happening? What has been your experience? Speaker 1: I'd say Amazon has more tools in play, which is helpful. So things like Like you said, brand registry. Yes, certainly. But also, I mean, no more commingling. I mean, they're adding more and more tools, which is helpful. It has not stopped the problem. I think it's just made the barrier for entry for some of these sellers a little bit higher, right? So basically, you either are going to sell thousands of these or hundreds. But selling two is almost not worth it much anymore, right? Where we did a lot of that before. But Amazon, if it isn't a copyright, a true copyright infringement, if it isn't an exact trademark infringement, Amazon won't touch it. There is no gray. They've put the tools in place, but they're also very black and white when it comes to any decisions, which is challenging because that means that you then have to go back to the brand and we've got to pull apart. We've got to figure out where the supply chain leak is. I would say Walmart is very receptive. They, they probably, I mean, for enforcement purposes, they respond quickly, they act quickly, and they really, they almost lean on the side of the brand. Versus the seller. And so, but I think when it comes to Amazon, I mean, that third party network for them is massive. And that is, that's where they're making lots of their money, right? So, you know, I think they have to kind of look at it as a black and white things like patents, they won't even touch that has to be dealt with in the court system. So it's, you know, TikTok is also very receptive to removals, Walmart, most of the social sites, frankly, even Aligroup and DHgate and Made in China, which is where we see a lot of phishing, counterfeit phishing happening. They're very receptive. So it's, you know, I'd say the biggest, the biggest fight is probably on Amazon. We have to be. Speaker 2: But most of the money realistically also is, that's right. Speaker 1: Yeah, we have to be the most persistent. We have to be, you know, we escalate more often on Amazon. But we also, you know, Thorncrest, we're tied to a law firm. So it is those types of emails and cease and desist. Being sent out, have a little bit more weight, feel a little heavier when you receive an email from a lawyer or if you get, I mean, we physically send them to people's homes. Speaker 2: I was going to ask you that because some of these bad players sometimes are also international players. So are you seeing also handling that? Like let's say somebody is in China or some of these countries that they might think, yeah, Come and find me, right? Like I'm going to keep. Speaker 1: That's right. Unknown Speaker: And they do. Speaker 1: Well, it depends on what they've done. If it's a counterfeit, I mean, you can you can take action. Unknown Speaker: And we do. Speaker 1: I broke up a little bit there, but basically we file it. And we send action. If they're based out of China, they're unlikely to respond to those because it's a P.O. box. So we do see more enforcement ability with international partners. Actually, the ones who are the hardest to remove are the ones that have a local supply chain network. So it's the sellers that are doing a lot of business and they're buying from distribution or liquidation or whatever, or excess inventory that are being sold by pallets from retail. Speaker 2: Etc. Speaker 1: Right. Kind of bundled stock. Those are probably the hardest to the hardest to remove. But we do operate in 23 different countries. So we can if you've got problems in the UK or in Europe, we can also address those too. Now, pricing policies are very different in Europe. So you wouldn't know. That's not a discussion you would have in Europe. You would certainly have a discussion, though, about your channel. And, you know, in controlling that channel and counterfeits and, you know, and of course, copyright and trademark infringements, very valid. But you have to be trademarked, right? So you have to have filed that with the trade protocol. Yeah, that's absolutely to be protected. Yeah. Speaker 2: Now, when it comes to and now we're coming to the end of the episode, something I would like to conclude with is like how we prevent This in the shape of maybe at the manufacturing level because I'm hearing now people what they do is they might add a unique kind of sticker at the packaging level, a unique kind of a QR code that they're adding things that people will not be able to replicate or create a copy out of it. So what are some of these maybe you discuss with your clients and now by doing this, People just make it very difficult for them to copy your package, your product, or even at the images level, you might embed something on the image that make it very traceable. Speaker 1: Yeah. All of those are great ideas, frankly. So I think first, we would also say if you're manufacturing in Asia, we would recommend trademarking in that territory. That also helps upon export. When you've got possibly counterfeit product coming into the US, right? But so at the manufacturing level, if you can do QR codes tend to work quite well, actually, when you register. So brands, we're seeing a lot of them do QR codes on the back. Take a snapshot, register it, and we'll let you know if this product is legitimate, right, or if it's a fake and you register the number on that QR code and it's like, yep, we're all good. I mean, at the manufacturing level for brands, I'd say in your packaging, on the physical product, maybe in the box, If you have a QR code on the product or a holographic QR code or image, something to that effect. That way, if it is being copied, it may only be copied on the packaging. They might not be copying the product and therefore the product wouldn't have a registered number. Serialization for any electronic product. We would highly recommend anything with electronic components, anything that has a warranty policy. And we're here to help you serialize it and track the serial numbers from manufacturer to your door, to distribution, distribution to retail, and make sure you've got a partner that can track and trace that. Because if it does not have a warranty, especially on electronic components, it is a material difference. And that's something that you certainly can claim if the product has not been validated and doesn't have the right serial numbers. Speaker 2: Cool. I mean, Megan, thank you so much. I know this is the topic that, you know, we're going on for hours. There are so many things that we can definitely unpack, but I think... Speaker 1: Unfortunately, right? I wish it was a simple problem with one simple solution, right? Speaker 2: I know, I know, but it is what it is. But it's been a pleasure to have you. Thank you so much for sharing your, you know, your knowledge with us. I'm sure some people might want to, you know, have a deeper conversation, explore how they can work with you. So tell us how people can find you. Speaker 1: Thank you, Vincenzo. You can please go ahead and try and book a call where I do discovery calls often. So if you've got simple questions about policies that you're trying to implement or if you're Looking at Q4, which is now, and you're going, well, we're, we are gunning for sales, but we do have some of these issues. We often are able to clean things up within 60 to 90 days. So if we can clean things up while you're also running to the finish line, we can work in tandem and create a better Q4. So it's not too late. To implement a program, something is better than nothing. But please go ahead and schedule a discovery call with me and I'd be happy to talk with you about it and answer any questions that you might have. And thank you so much, Vincenzo, for having me on. I really appreciate it. You guys do great work. So I'm pleased to be here. Speaker 2: Thank you, Megan. It's a pleasure. I'm looking forward to having you on the next one. So have a good one. I appreciate your time. Thank you so much. Thank you. Take care. Bye bye. Unknown Speaker: Thanks for listening to The Ecommerce Lab By Ecomcy. Be sure to subscribe so you don't miss an episode. While you are at it, we would appreciate it if you could leave an honest rating and review on Apple Podcasts, Spotify, or wherever you listen. That will make it easier for others to find out about the show and benefit from it. Want more? Visit our website at www.ecomcy.com where you can get your first consultation for free or find us on Instagram, Facebook and LinkedIn at Ecomcy.