Product Diversion
What Is Product Diversion?
Product diversion refers to the unauthorized sale or distribution of genuine products outside the brand’s approved channels. These products are not counterfeit, but they are sold in markets, regions, or platforms where the brand did not intend them to be. Diversion commonly happens when distributors, wholesalers, retailers, or intermediaries redirect goods for higher margins, bypassing contractual agreements and harming brand strategy.
Product diversion damages pricing integrity, disrupts inventory planning, reduces market control, and creates confusion for consumers. It also increases compliance risks in categories involving safety, warranties, or regulatory tracking.
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Why Product Diversion Happens
Diversion usually occurs due to:
- Price differences between regions or markets
- Bulk discounts passed to unauthorized resellers
- Weak channel visibility
- Incentive-driven distributor behavior
- Lack of unit-level traceability
- E-commerce resellers exploiting gaps in monitoring
Without strong authentication and product movement intelligence, brands struggle to detect where and how diversion occurs.
Impact of Product Diversion on Brands
1. Pricing Erosion
Unauthorized sellers undercut recommended prices, affecting margins and retailer relationships.
2. Loss of Channel Trust
Approved distributors and retailers lose confidence when diverted products enter their markets.
3. Compliance Risks
Regulated industries face penalties when products appear in unapproved territories.
4. Warranty and Support Issues
Consumers who buy diverted products may face service problems, leading to dissatisfaction and negative brand perception.
5. Difficulty Tracking Product Movement
Diversion hides visibility into demand patterns, forecasting signals, and product availability.
How Product Diversion Occurs in the Supply Chain
- A distributor or intermediary acquires genuine inventory.
- Instead of selling through approved channels, they pass it to a third party.
- Products then appear in markets where the brand has no pricing control.
- Online marketplaces amplify the impact through anonymous, high-volume listings.
- Brands discover diversion only after receiving complaints, warranty claims, or revenue drops.
Industries Commonly Affected
- Agro-chemicals and pesticides
- Pharmaceuticals and medical devices
- FMCG and cosmetics
- Electronics and mobile accessories
- Automotive parts
- Nutrition and supplements
- Lifestyle and luxury goods
- Industrial equipment and tools
How Acviss Helps Prevent Product Diversion
Acviss reduces diversion by creating traceable, verifiable product identities and monitoring product movement across the entire lifecycle. The platform supports:
- Unit-level and batch-level serialization
- Authentication signals at every scan point
- Geo-fencing and route deviation detection
- Real-time distributor and retailer activity insights
- AI-driven diversion alerts
- Secure identifiers that prevent replication
Brands gain transparency, control, and actionable intelligence to stop unauthorized sales and protect channel integrity.
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