A brand authorisation certificate is a crucial document e-commerce seller would require if they intend to sell products of other brands. Several e-commerce sellers, like Amazon, Flipkart, etc., sell the products of established brands by availing the brand authorisation certificate from the brand owners or their certified distributors.
In the current era of digitalisation, it is quite a challenge to find commodities that are not available for sale online. Businesses reach a wider clientele when they opt to have their products sold online. However, these businesses that own well-known brands face many challenges in striking the optimum balance between their online and offline sales. Few e-commerce giants offer convincing discounts on branded products, and consequently, the respective brands have experienced an inexplicable depreciation in sales with time.
Several brands find it super tough to keep up with their profit margins when e-commerce sites offer their products at huge discounts. Also, another challenge is that the brands have to offer service while under warranty, as stated by these sites. These offers promised by e-commerce sites greatly dilute the brand value. For instance, there was a time when Toshiba and Lenovo warned their customers against buying their products at heavily discounted prices.
Sandisk, in turn, issued notices to control its distribution channel to authorize specific sellers to trade its products across. This highlights that large brands aren’t completely happy with e-commerce platforms. The brands keep their heads above the water when holding several things together, from cutting their profits to honoring the warranty. On the other hand, neither can they deny their products from being sold online as more than 150 million Indians prefer to shop online. Fortunately or unfortunately, the numbers will only rise in the future.
Legal Implications of Brand Authorisation for Online Sales
One might anticipate that an online seller or an e-commerce business holder should obtain certain registrations or follow a dedicated protocol to sell another party’s brands on their site. Surprisingly, this is far from true. The law keeps silent about such circumstances. Perhaps, none would have anticipated that a company would have to refrain from having its products sold online. Sadly, this needs to be resolved among the sellers, distributors, and brand owners. However, the law will deal with misrepresentation of the brand or a trademark infringement if it should happen anywhere.
For instance, if a website predominantly deals with APPLE products, it might push the customer to misinterpret that the respective seller is an authorised seller of APPLE. Therefore, the most prudent thing for an e-seller to do at this juncture is to get a brand authorisation letter from the brand owner to handle the crisis. Failing to do this might land the online seller in a series of lawsuits. Alternatively, an authorisation certificate is not required if the customer is purchasing the APPLE products from an authorised dealer or a distributor.
The Brand Owners Should Take Control of the Products
The brand owners have always held the reins of their profit margins until the online shopping culture started. Now, online sellers have started to raise the discounts as per their whims and fancies, much to the dismay of the brand owners. Therefore, several brands are now opting to withdraw their product warranties. There have been instances wherein the well-known brand Sandisk had warned Snapdeal, one of the prominent e-commerce retailers, to remove their product’s marketing at discounted rates on their website, as it was not under the list of authorised sellers then.
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When the Competition Commission of India (CCI) was approached, it held that the brand owners should hold control of the distribution channels and discourage unauthorised sellers from entering into the sale of products. It might be relevant to note that the only difficulty the brand owners have with unauthorised sellers is their ambitious marketing, involving selling the products with attractive discounts to attract customers.
Shockingly, the trend continues, and unauthorised sellers try their luck with huge offers and discounts. Nevertheless, there aren’t many cases where e-commerce brands were asked to take down the products from their display, except when their profits go down.
This proves that brands do not require sellers to have an authorisation certificate so long as the online marketplaces don’t affect their profit margins. The brand owners authorise a brand authorisation certificate to the vendors who intend to sell the products with the mentioned brand name.
Although it is not mandatory to have such authorisations, e-commerce sites now seek this kind of authorisation to stay safe from any prospective legal battles. For instance, Amazon had come up with a sophisticated program called Amazon Brand.
Registry formulated to help the owners protect their brands. This registration would enable the brand owners and the e-commerce portals to weed away any unauthorised sellers. This is particularly helpful when the brand wants to stay with the e-commerce business for longer.
Although brand authorisation is not mandatory, several e-commerce marketplaces now want sellers to get a letter before listing the products on their platform. These platforms provide the companies with a simple authorisation letter wherein the latter would sign and grant consent to sell their products on the online portals. Few of them even enter into authorised retailing contracts for this purpose.
Below is the format for the sample authorisation letter:
Individuals wishing to sell branded products online would not require any authorisation as such decades ago. At present, substantial steps have been taken by several MNCs to stop fraudulent sellers from selling their products on e-commerce sites.
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