Not protecting your brand and enforcing your policies on Amazon can quickly lead to you losing money. One common instance of Amazon violations are Minimum Advertised Price or MAP pricing violations. Establishing and maintaining a MAP policy can help you protect your profits and keep your distribution partners happy.
It is never too late to start enforcing or create the policies for your brand. As you start to grow, utilizing MAP will help you maximize your profits and prevent a race to the bottom to win the buy box. Our team at AMZ Advisers is experienced in dealing with MAP, and we are going to discuss what MAP pricing is, why it should be important to every Amazon seller and give you our tips to enforce your Minimum Advertised Price policies on Amazon.
What is MAP Pricing and How Does it Affect Me?
MAP is a policy that many brands and manufacturers require a distributor to adhere to if they want a contract to distribute their products. The MAP policy from the manufacturer dictates the lowest price the distributor or reseller can advertise the product online or in marketing materials – but it does not dictate what price they can sell it at in brick and mortar stores or in private transactions. There is a sharp distinction between price maintenance agreements (which dictate a minimum price something can be sold for and are illegal) and MAP pricing (dictating how you advertise the product price).
An example of a Minimum Advertised Price policy would be a manufacturer contracting a distributor or reseller to sell their products. As part of the contract the manufacturer could say you can’t advertise this product for less than $99 – the minimum advertised price. The result is that any distributor or reseller marketing the product for less than that can have their contract terminated.
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 does not inform you of them. Furthermore, they may not even apply to you depending on how it is prepared by the manufacturer. MAP pricing can create a lot of headaches for you as the brand owner or manufacturer. Having a large distribution network can make it almost impossible for you to track each seller of your product on Amazon and effectively enforce your Minimum Advertised Price policy.
Why is MAP Pricing so hard to manage on Amazon?
Managing MAP Pricing on Amazon is such a challenge for brands and manufacturers for one simple reason – Amazon refuses to do the policing on Minimum Advertised Price agreements and does not recognize the agreements. This pushes the onus back onto brands and manufacturers to enforce their policies. Identifying the company that is actually behind a product violating MAP pricing is nearly impossible on Amazon in the US because the legal business entities are not disclosed. It is slightly easier on the UK platform as each seller storefront identifies legal information regarding who the Seller is.
The size of your distribution network directly impacts the complexity of enforcing MAP policies. Utilizing many distributors can dramatically increase the number of resellers – and therefore the competition among resellers for the buy box. Dedicating time to managing and enforcing MAP pricing is important as it can have a detrimental effect on your relationships with other distributors and retailers. Luckily, there are some steps you can take to make the process as simple as possible for you.
How Can I Enforce my MAP Pricing on Amazon?
Successful enforcement of MAP policies on Amazon may require making significant changes to the way you currently do business. However, the reward for making the changes can lead to increased margins, stronger relationships with your distributors and a simplified MAP monitoring process for your business. Here are some of our tips on how you can simplify and enforce your MAP pricing policies on Amazon:
Identify Key Distribution & Retail Buyers
One way to start managing your MAP policies better is to review your current distributors and retail partners to identify which are the most important to your business. You should first start by looking at the amount of business they do with you and then reviewing all contracts to ensure that there is a MAP pricing policy in place. Consider terminating contracts with distributors that do not contribute significantly to your business’s bottom line. This will help reduce the number of potential MAP policy violators.
You can utilize the business numbers to benchmark each distributor and retail partner to monitor changes in their buying patterns. Someone undercutting MAP pricing on Amazon could be easily identified by increases in purchase volumes and frequency and allow you to reach out quickly to discuss any potential issues with them.
Sending a Cease & Desist Letter
Another potential remedy for dealing with MAP violations on Amazon could be to attempt sending the seller 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 the violation. It could be helpful to have an attorney prepare a temple for you to send to MAP pricing violators on Amazon.
Adding product serial numbers to your products can also help you quickly and efficiently identify what distribution partner is violating your MAP pricing. This could require re-designing your packaging or product manufacturing process which can be more costly. However, when a MAP pricing violator shows up on Amazon you can do a test buy of the product and check the serial number against shipments that were sent out to see which distributor received the product.
Offer a Product Warranty
Another slightly less expensive option could be to create a non-transferable manufacturer warranty. The warranty would need to only apply to products sold by a retail partner that you distribute to directly – and if they resell the product after purchasing from you the warranty would need to be voided. This strategy can be more difficult to implement – for example a customer may need to register there warranty online. But you could do something similar to product serial numbers and create different warranty identifiers for each distribution partner.
Prohibit Digital Sales on Amazon in Your Contract
Restricting where each distributor or retail partner can sell could also be specified in your contracts however this can also cause additional issues in your negotiation process. If you have a retail partner like Walmart or Target it may be easy to stipulate that they cannot sell their products on the Amazon marketplace. However, it is likely that small distribution company or retailers will look to drive additional sales from more than just their website or brick and mortar locations.
Sign Up for Amazon Brand Registry
Signing up for Amazon Brand Registry can also be extremely helpful when it comes to enforcing minimum advertised price policies. Through the Brand Registry process, you can restrict the number of Amazon sellers that are allowed to sell your brand. Requiring potential sellers to submit invoices to sell your product makes it easy to identify who is supplying the inventory to the seller. It then makes it simple to reach out to that distributor to re-enforce the MAP pricing requirements.
Use a Price Monitoring Solution
A price monitoring solution can alert you to new MAP pricing violators on Amazon almost instantly. Many programs check pricing as frequently as every 15 minutes. Being able to deal with the MAP pricing violations can help you stay on-top of the Amazon marketplace and drastically reduce the amount of time you need to spend addressing these issues.
Ongoing MAP Enforcement
Minimum Advertised Price enforcement on Amazon is a never-ending battle – but a battle that you can make much simpler to manage. If you are a brand owner or manufacturer you should consider adding a MAP policy to your brand today. MAP policies affect every seller of your products on Amazon, and you can start to smartly manage your selling relationships by effectively implementing MAP pricing enforcement today. Using our tips you can start to reclaim your products pricing on Amazon and keep everyone – including yourself – happily buying and selling your product.