Online marketplaces offer brands high incentives as it gives them access to millions of customers. However, high volumes of traffic come with a price as they are often attracted to items sold by unauthorized sellers, often referred as grey sellers.
And without official authenticity checks being implemented, grey sellers are at liberty to put whatever the price they want to appeal to Southeast Asians high aptitude to look online for low prices.
To understand how grey sellers impact authorized sellers and the brand’s official stores on marketplaces, data analytics platform BrandIQ draws comparisons between the top three sellers for Samsung on Lazada Thailand.
This data shows that Samsung only controls less than 2% of total SKUs direct or through authorized third party sellers.From a numbers game of SKUs, grey sellers dominate the distribution of Samsung products on marketplace with a total of 51,925 SKUs or 98.1% of all Samsung products available on Lazada Thailand.
On Lazada Thailand, Samsung has several official stores; Samsung Official Store (managed by Lazada), Samsung Official Shop (managed by Samsung), Samsung Official eStore – Consumer Electronics, Samsung Official eStore – Mobile; as well as authorized sellers.
Multiple stores leave Samsung unable to create a unified brand experience confusing consumers as to which channel is more reliable given there is overlap on the product offering. Each channel also offers a different policy on payment and delivery.
How about price differences?
Taking a look at the price points for several products, BrandIQ data shows that grey sellers actually offer lower prices on average compared to the official Samsung channels. They can vary between 4% to as high as 63%.
From the consumer point of view, experiences from grey sellers offer a varying standard of service unsurprisingly but looking at ratings from three Samsung smartphone products show the official store still has the more favorable opinion from consumers compared to unofficial sellers.
However, it still remains a lose-lose situation for Samsung because consumers with a negative experience from grey sellers impact the Samsung brand and if they have a better experience with grey sellers, they will continue purchasing from them, causing Samsung to lose market share.
What does this mean for brands?
It becomes important for Samsung to create a unified brand experience in order to gain more market share on marketplaces like Lazada, especially with the numerous grey sellers flooding the site with their products.
Provided that marketplaces also suffer from counterfeit issues and grey market sellers, popular brands can work with Lazada and Shopee to boost its presence on the website through front page banners and onsite ad placements offered through Shopee’s new feature Shopee My Ads.
Consumers don’t want to think twice, and usually don’t even care, about differentiating between channels as long as they get the right product at the right price.