In today’s e-commerce world, it’s common to see premium products available at drastically lower prices on secondary marketplaces, while the official store maintains a high price. For example, a lip balm brand might sell its product at €20 in its official shop, but similar-looking versions appear online for €5. Some buyers notice differences in quality, while others simply choose the cheaper option.
This raises questions: can the original manufacturer legally produce or allow lower-cost versions to be sold? And what are the rules for doing so? Let’s explore.
1) Why brands or suppliers might do this
-
Market segmentation: Reach cost-conscious consumers without harming the premium image of official stores.
-
Factory utilization: Extra stock or production capacity can be monetized through secondary marketplaces.
-
Controlled parallel market: Sometimes brands release affordable versions to prevent counterfeiting or reduce unauthorized copies.
2) Legal framework
Trademark & Consumer Protection
-
Brands own the trademark and can technically reproduce and sell their designs.
-
Important: Cheaper versions must not be misrepresented as premium quality, or consumer protection laws may be triggered.
Contracts with distributors
Intellectual Property
3) Risks for the brand
-
Brand dilution: Lower-cost products can affect customer perception of quality.
-
Distributor concerns: Authorized sellers may feel undercut.
-
Regulatory scrutiny: Misleading claims or unclear labeling could lead to fines.
-
Customer confusion: Shoppers may mistake the lower-cost version for the premium line.
4) How brands can implement legally
-
Clear labeling: For instance, “Outlet Edition” or “Budget Batch.”
-
Separate marketplaces: Offer affordable versions where premium buyers are less likely to shop.
-
Transparent quality differences: Adjust ingredients or packaging to distinguish from premium products.
-
Honest marketing: Avoid claiming identical quality to the premium line.
5) Takeaways
-
Legal if: Trademark owned, advertising transparent, contracts respected.
-
Risky or illegal if: Misleading quality claims, violating agreements, or using third-party IP without permission.
Selling lower-cost versions of premium products can be a smart business strategy to maximize revenue and reduce counterfeit risk. The key is clear labeling, transparency, and compliance with legal and contractual obligations. Misrepresentation or contract violations are where legal issues arise.
