When it comes to e-commerce, pricing is important. Minimum Advertised Price (MAP) policies, designed to set a lower limit on the advertised cost of specific items, can go a long way in establishing consistency in pricing and helping brands in meet customer expectations (on top of ensuring reasonable profits).
These policies are only effective, though, if they are observed. When a manufacturer's goods are sold through 3rd-party marketplace sites like Amazon, sellers may advertise those goods below the MAP price, which can cause damage to a brand. Hence, it's important for manufacturers to monitor their MAP policies to ensure they are not being violated.
The act of monitoring presents a unique series of challenges to brands, however, and there are some methods that are more effective than others -- which I'd like to take the time to address today.
What Is A MAP Policy?
As I touched on above, a MAP policy allows manufacturers and brands to indicate to resellers what the lowest price they are willing to advertise their products is. MAP policies are set unilaterally by suppliers, and, by-and-large, must be worded as clear one-way policies (not agreements) in order to be considered legal.
With a MAP policy in place, manufacturers (in theory) have a means by which they may standardize the advertisement of their prices across outlets, while resellers retain some flexibility in applying discounts when customers are checking out online or through offering personalized promotions. Unfortunately, MAP policies are not always followed by resellers, which can present problems for brands whose products appear through outlets like Amazon.
Amazon Monitoring, Violations & Enforcement Challenges
Beyond simply being the biggest source when it comes to online shopping (it's estimated that Amazon is responsible for 40% or more of online retail sales in America) Amazon differs from many other e-commerce stores in how brands' products find their way into the item listings. An article I found on SGB Media sums it up well:
"Brands find their way to Amazon through three methods: sales of their product through a third-party seller (3P), pursuing a standard wholesale relationship with Amazon Retail (1P) and selling directly on Amazon (IP-DTC), like a third-party seller."
That first method, the third-party sellers, accounts for some 44% of all items sold on Amazon worldwide, and also presents a situation where a manufacturer's products can end up on Amazon against their wishes (Madison Reed, for instance, famously limited their products to their own site, QVC, Sephora and Ulta, only to have them end up on Amazon anyway).
Amazon's brand gating policy (which allows brands to approve/deny resellers of their products), established in late 2016, has helped to curb this in some respects, but it's a difficult for brands to achieve this protected status, and manufacturers who aren't listed in this program still suffer from the ill-effects of third-party sales. Namely, violations of their MAP policies:
"The biggest problem regarding MAP violations is sales through third-party sellers on Amazon Marketplace, where much of the unauthorized selling takes place. Unauthorized retailers often sell below MAP policy and those prices stand out to consumers with Amazon listing its price ranges per item from lowest to highest."
Beyond pricing concerns, though, these practices can create a situation where a brand's reputation is at risk, even if they are compensated for their goods at cost :
"The retailer sold it at a rock-bottom price. There was no infrastructure to deal with problems or returns or repairs... you now have unhappy consumers who are angry with the brand."
Monitoring their MAP policies on sites like Amazon and making sure they are enforced is the obvious recourse for manufacturers and brands, but this too is fraught with challenges. Manual monitoring is inefficient, to say the least. It can take hours to determine if just a single product is being advertised correctly. Combined with the fact that Amazon's system allows for resellers to adjust pricing for competitive reasons (which they do frequently) and that many brands might have multiple products floating around on Amazon, the prospect of tracking prices manually is too time-consuming to be feasible.
Furthermore, third-party sellers will make use of Fulfillment By Amazon (FBA), wherein Amazon will handle packing and shipping, allowing the third-party seller to disguise their identity and location. Beyond that, though, there are other means for unscrupulous dealers to skirt the system.
As reported by Digiday:
"I can go to Seller Central and resell the item, or if I'm a professional product diverter [someone who acquires products at scale outside of authorized distributors], I will use the new Vendor Express program."
Therefore, combating MAP violations, in my view, requires a software solution that goes beyond what manual monitoring alone can provide.
Effective MAP Enforcement
I already mentioned brand gating and manufacturers outright barring their products from being sold on Amazon, and that's one practice they can use to stay competitive and manage who their resellers are. Combining these efforts with monitoring software, like Trade Vitality, creates an even more efficient means of enforcing MAP. MAP monitoring software combs through online marketplaces to find instances where a brand's MAP policy is being violated then alerts them to the infraction instantaneously. This cuts down on the time investment associated with trying to perform such a task manually and allows brands to swiftly confront those skirting their policies with evidence of the violation(s) to boot. When used in conjunction with further steps, such as removing listings that break policy and clamping down on the sources of unauthorized goods (if possible), a clear-cut path to brand protection becomes apparent.