Can the NFL Ban on Marketplace Sales Succeed?

By Ina Steiner
EcommerceBytes.com
April 12, 2016





The National Football League is taking a new approach to tackling the problem of counterfeit goods on marketplaces like eBay and Amazon. Part of its strategy: it's demanding manufacturers stop selling to marketplace sellers or to any retailer who sells on third-party marketplaces - or else.

"If the NFL determines that a distributor or retailer has violated this prohibition, the NFL will restrict sales of any NFL products by any NFL licensee to that distributor or retailer," according to a supplier in a notice to its merchant customers.

It's a tall order, since not only could it have a negative impact manufacturers' bottom line at least in the short term, but merchandise can often end up for sale further down the supply chain. Retailers and merchants who buy directly from NFL-licensed manufacturers and comply with the restrictions could end up selling to online sellers (knowingly or not) who might not feel compelled to comply with the original suppliers' restrictions.

The move is reminiscent of Adidas's ban on marketplace sales in 2013, when it told EcommerceBytes that the guidelines would ensure that its brands would be "presented in the right environment at all times." However, Adidas lifted the ban the following year after Germany's competition regulator initiated an anti-competition investigation into online distribution policies, according to Law360.com.

One online seller said the NFL did not provide enough advance notice: "how can the NFL just change the rules on merchandise that we have already bought and/or ordered? I never agreed to this when I bought the thousands of dollars worth of NFL merchandise that I have for sale."

Another said, "The timing of this announcement sucks as far as giving us sellers adequate time to build an alternative sales stream that can have the same kind of volume. Our suppliers will lose, our customers will lose, we will lose."

The major provisions outlined by one supplier, according to an online seller:

No marketplace sales. "The NFL has announced that they are restricting all 3rd party online sales. As a licensee we will not be able to sell to anyone who sells our NFL products online through any 3rd party portal. All sales of our NFL products must occur through the retailer's own e-commerce site. These restrictions include, but are not limited to, sales on amazon.com, buy.com and ebay.com."

Restrictions on website sales. "As a website owner you can sell our NFL products on your website but only if your website is in compliance with NFL guidelines." The guidelines include:

  • All NFL products must have an image of the product and the product description must indicate who the product is manufactured by.

  • Your site must be completely devoid of any non-licensed products that are being represented as NFL merchandise. Any counterfeit items present on your site disqualifies you from being able to sell licensed NFL products on your site.

  • You cannot have any NFL logos or team logos present on your site that are not part of an image of the product without express permission from the NFL.

  • You cannot have any images or verbiage on your website that indicates that you are an official representative or distributor for the NFL without the express permission of the league.

Advertising on Marketplaces is allowed. "You can use 3rd party sites, like Amazon.com or Google Merchant to advertise our NFL products as long as the final transaction occurs on a URL that you have sole ownership of."

An eBay seller told EcommerceBytes that suppliers believe the target of the policy is eBay, and said, "I hear that NCAA, MLB, NHL and NBA are not far behind and will do the same thing. It was the last straw for them."

The reader said their sales on eBay had fallen 25% over the past 3 - 4 years. "What's especially bad is all the counterfeit sports stuff that is all at the top of the search. It's a joke and I think this was the real driver for the NFL to take this action, as eBay and others were not being cooperative and they the leagues were sick and tired of playing "whack a mole" - taking down listings only for them to reappear the next day by the same seller ID or new IDs."

The counterfeiters have gotten creative, this seller said - "listing for one day, doing weekend listings only, creating 100s of selling accounts and rotating through them, all in an effort to not get taken down or seen."

"Some people might say (the NFL) is just getting greedy, but the reality of it is, counterfeits in this space continue to grow," Ron Guido told EcommerceBytes. He is President of LifeCare Services, LLC, a consulting firm specializing in brand protection services. "The entities behind this are not just small garage operations in China, there's some element of truth that these networks are linked to terrorist cells and other people who seek money through illicit trade of merchandise."

The counterfeiting problem has plagued not only Intellectual Property owners like the NFL, but manufacturers as well - and it's not a new problem. Bloomberg reported 10 years ago that Aminco International USA had discovered in 2003 that the factories it used to manufacture its own NFL licensed products began selling knockoffs at lower prices.

We asked Guido, whose clients include pharmaceutical brands, whether it's a good strategy to make licensees the enforcer. "It's a complex issue and part of a much larger strategy that should be employed," he said.

At the end of the day, there are two ways to authenticate products, he said. One is to put a secret marking on products. The other ways is to "track and trace" merchandise throughout the supply chain - you'd know from scanning the product that it's going from one legitimate source to the next. "But that takes time and money and requires cooperation from everyone, including the consumer."

And, he said, clever counterfeiters know how to falsify packaging - they can put holograms on packages better than legitimate manufacturers.

eBay has a VeRO program where brands can report listings that are in violation of their intellectually property rights, but the company did not respond to our inquiries, nor did the NFL.

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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