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(This post was last published on April 8, 2019. We’ve updated it for accuracy and completeness.)
While most consumers turn to Amazon for their low prices, they sometimes get a better deal than they should. Many brands and manufacturers have to fight to ensure their products don’t sell below a set amount, or their Minimum Advertising Pricing (MAP).
While enforcing your pricing policies on Amazon can be difficult, it’s essential for the health of your brand. It’s how you protect your margins, brand value, and relationships with your distributors and retail partners.
Unfortunately, managing MAP policies is a reality of selling on a competitive marketplace like Amazon, but our team at AMZ Advisers aims to help sellers overcome its challenges. Use our top tips to enforce your MAP on Amazon, reclaiming your products’ pricing and keeping everyone – including yourself – happily buying and selling your product.
What is Minimum Advertising Pricing on Amazon?
MAP is a policy from manufacturers that dictates the lowest price their distributor or reseller can advertise the products online or in marketing materials — but it does not enforce what price they can sell it at in brick and mortar stores or in private transactions.
For example, the manufacturer could include in a contract with a reseller that you can’t advertise this product for less than $99 – or the minimum advertised price. If the distributor or reseller markets the product for less, the manufacturer can terminate the contract.
There is a sharp distinction between MAP pricing and price maintenance agreements, which are illegal as they dictate a minimum price something can be sold.
MAP pricing is valuable for a few reasons. By setting a minimum threshold, it prevents pricing “race to the bottom” competition and protects a brand’s margins. It also allows smaller retailers to compete with larger retailers who can better afford to sell at the lowest price possible.
MAP policies also help maintain a brand’s value. If the product is consistently sold at a price lower than its actual value, then consumers will come to expect that price. They also can have trouble distinguishing your product from a lower quality or counterfeit item that’s similar.
Why is MAP Pricing So Hard to Manage on Amazon?
MAP pricing affects sellers and brand owners differently on Amazon.
As a seller, you may not even be aware that these policies exist if the distributor doesn’t inform you of them. And, they may not even apply to you depending on how it’s prepared by the manufacturer.
If you’re the brand owner or manufacturer, MAP pricing can be overwhelming to monitor and manage across a large distribution network. You have to track each seller of your product on Amazon and watch for when advertised prices dip too low. This is hard on Amazon US as they don’t disclose legal business entities on their storefronts. Amazon UK is slightly easier as each seller storefront includes legal information regarding who the Seller is.
Further, for any violators of your policy on Amazon, it’s solely up to you as the brand or manufacturers to deal with it — Amazon refuses to do the policing on Minimum Advertised Price agreements and doesn’t recognize the agreements.
If you don’t take action against violations though, your resellers can continue to lower prices, usually in an effort to win the Amazon buy box. Too low of prices though decrease your margins, drain your profits, and muddy your brand’s true value.
(Note: At first, Amazon required third-party sellers to agree to their price parity policy, meaning that brands couldn’t sell their same Amazon products on other marketplaces for lower prices. A long-time complaint by sellers, Amazon finally nixed this requirement in 2019.)
How Can I Enforce my MAP Pricing on Amazon?
If you want to successfully enforce your MAP policy on Amazon, you’ll likely need to make significant changes to how you currently do business. But, the time and effort is usually worth it. When done right, you can increase your margins, create stronger relationships with your distributors, and create a process to monitor your partners that works for your business.
Here are some of our tips on how you can simplify and enforce your MAP pricing policies on Amazon:
1. Identify Key Distribution & Retail Buyers to Track
Review your current distributors and retail partners to identify which are the most important to your business. You can start by looking at the amount of business they do with you and then reviewing all contracts to see if there is a MAP pricing policy in place.
Once identified, you can set benchmark numbers for each distributor and retail partner to monitor changes in their buying patterns. Noticeable increases in purchase volumes and frequency can indicate someone undercutting MAP pricing. If this happens, then you can quickly reach out to discuss any potential issues.
Pro tip: Consider terminating contracts with distributors that don’t contribute significantly to your bottom line. This will help reduce the number of potential MAP policy violators.
2. Sending a Cease & Desist Letter
When you identify a violator, you can send a strongly worded Cease & Desist letter. The letter should identify the policy being violated and state what options you have at your disposal to deal with it.
Pro tip: It could be helpful to have an attorney prepare a template for you to use for any MAP pricing violators.
3. Product Serialization
You can also add product serial numbers to your products to help track down violators on Amazon. If you notice a seller below MAP, then you can test buy the product and check the serial number against shipments that were sent out. This will indicate which distributor received the product.
Pro tip: This method could require re-designing your packaging or product manufacturing process, which can be costly.
4. Offer a Product Warranty
Another less expensive option is creating a non-transferable manufacturer warranty. The warranty only needs to apply to products sold by a retail partner that you distribute to directly. Then, if they resell the product after purchasing from you, you can void the warranty.
This strategy can be more difficult to implement. For example, a customer may need to register their warranty online. But, you could do something similar as a product serial number and create different warranty identifiers for each distribution partner.
5. Prohibit Digital Sales on Amazon in Your Contract
In your contract, you can restrict where each distributor or retail partner can sell.
Be aware that this can cause additional issues in your negotiation process. If you have a retail partner like Walmart or Target, it’ll be easier to agree for them not to sell their products on Amazon marketplace.
On the other hand, a small distribution company or retailers will look to drive additional sales from more than just their website or brick and mortar locations, so they might not be as willing to sign a contract with a specified restriction.
6. Sign Up for Amazon Brand Registry
A great way to enforce your MAP policy is to sign up for Amazon Brand Registry. Through the Brand Registry process, you can restrict the number of Amazon sellers that are allowed to sell your brand.
You can also require potential sellers to submit invoices to sell your product. This makes it easy to identify who is supplying the inventory to the seller. Then, it’s clear when you need to reach out to that distributor to re-enforce the MAP pricing requirements.
7. Use a Price Monitoring Solution
A price tracking solution can alert you to new MAP pricing violators on Amazon almost instantly. Many solutions check pricing as frequently as every 15 minutes. Popular solutions are:
Ongoing MAP Enforcement on Amazon
It’s never too late to enforce or create new pricing policies on Amazon for your brand. Minimum Advertised Price enforcement will always be a never-ending battle. Nonetheless, you can find better ways to manage it and take back full control of your brand.
Read other ways to protect your brand on Amazon:
- 10 Things to Never do After an Amazon Seller Account Suspension
- How Amazon Payouts and Account Level Reserve Balances Actually Work
- 6 Ways to Streamline Invoicing as an Amazon Seller
For more tips on how to better manage your Amazon business, subscribe to the Payability newsletter to get insights sent straight to your email inbox.
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