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(This post was last published on April 8, 2019. We've updated it to be more accurate and complete.)
While most consumers turn to Amazon for its low prices, sometimes they get a better deal than they should. Many brands and manufacturers struggle to ensure that their products don't sell below a fixed amount, or their Minimum Advertising Price (MAP).
While it can be difficult to enforce your Amazon pricing policies, doing so is essential to the health of your brand. That's how you protect your margins, brand equity and relationships with your distributors and retail partners.
Unfortunately, managing MAP policies is a sales reality in a competitive market like Amazon, but our team atAMZ advisorsaims to help sellers overcome their challenges. Use our top tips to enforce your MAP on Amazon, recoup the price of your products, and keep everyone, including you, happy buying and selling your product.
What is the minimum advertising price on Amazon?
MAP is a manufacturer's policy that dictates the lowest price at which its distributor or reseller can advertise products online or in marketing materials, but does not dictate the price at which they can sell it in physical stores or in private transactions.
For example, the manufacturer may enter into a contract with a reseller that cannot advertise this product for less than $99 or the minimum advertised price. If the distributor or reseller sells the product for less, the manufacturer can terminate the contract.
There is a clear distinction between MAP prices andprice support agreements, which are illegal because they dictate a minimum price to sell something.
The MAP price is valuable for several reasons. By setting a lower limit, you avoid the "race to the bottom" of pricescompetenceand protects the margins of a brand. It also allows smaller retailers to compete with larger retailers who can sell for the lowest possible price.
MAP policies also help maintain a brand's value. If the product consistently sells for less than its true value, consumers will expect that price. They may also have trouble distinguishing your product from a similar fake or substandard item.
Why is it so difficult to manage MAP pricing on Amazon?
MAP pricing affects sellers and brand owners differently on Amazon.
As a seller, you may not even know these policies exist if the dealer doesn't tell you about them. And they might not even apply to you, depending on how the manufacturer assembles them.
If you are the brand owner or manufacturer, MAP prices can be tricky to monitor andmanage through a large distribution network.You should keep track of all the sellers of your product on Amazon and watch out for advertised prices that drop a lot. This is difficult for Amazon US as they don't disclose legal business entities on their storefronts. Amazon UK is a little easier as each seller's showcase includes nice information about who the seller is.
Additionally, for any violators of your Amazon policy, it is solely up to you as the brand or manufacturer to deal with them:Amazon refuses to monitor advertised minimum price agreements and does not recognize agreements.
However, if you do not take action against violations, your dealers may continue to lower prices, often in an effort towin amazon buy box. Pricing that is too low reduces your margins, drains your profits, and obscures your brand's true value.
(To use: In the first place,Amazon required third-party sellers to agree to its price parity policy, meaning brands couldn't sell their same Amazon products in other markets at lower prices. A long-standing seller complaint, Amazon finally removed this requirement in 2019.)
How can I enforce my MAP prices on Amazon?
If you want to successfully enforce your MAP policy on Amazon, you will likely need to make significant changes to the way you currently do business. But, the time and effort is usually worth it. When done right, you can increase your margins, build stronger relationships with your distributors, and create a partner monitoring process that works for your business.
Here are some of our tips on how you can streamline and enforce your MAP pricing policies on Amazon:
1. Identify key retail and distribution buyers to track
Review your current distributors and retail partners to identify which ones are most important to your business. You can start by looking at the amount of business they do with you, and then review all contracts to see if there's a MAP pricing policy in place.
Once identified, you can establish baseline numbers for each distributor and retail partner to monitor changes in their buying patterns. Noticeable increases in volumes and buying frequency could indicate that someone is slashing MAP prices. If this happens, you can quickly reach out to discuss potential issues.
Pro tip:Consider terminating contracts with distributors that do not significantly contribute to your bottom line. This will help reduce the number of potential MAP policy violators.
2. Sending a cease and desist letter
When identifying a violator, you can send a strongly worded cease and desist letter. The letter should identify the policy that is being violated and indicate what options are available to remedy this.
Pro tip:It may be helpful to have a lawyer prepare a template for you to use with any MAP price violators.
3. Product Serialization
You can also add product serial numbers to your products to help track violators on Amazon. If you find a seller on MAP, you can try to buy the product and check the serial number of the shipments that were shipped. This will indicate which retailer received the product.
Pro tip:This method may require you to redesign yourpackagingor the manufacturing process of the product, which can be expensive.
4. Offer a product guarantee
Another less expensive option is to create a non-transferable manufacturer's warranty. The warranty shall only apply to products sold by a retail partner to which you distribute directly. So if they resell the product after you buy it, you could void the warranty.
This strategy can be more difficult to implement. For example, a customer may need to register their warranty online. But you can do something similar like 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.
Please note that this may cause additional problems in your trading process. If you have a retail partner like Walmart or Target, it will be easier for you to agree that they don't sell their products inamazon market.
On the other hand, a small distribution or retail business will be looking to generate additional sales from more than just their website or brick-and-mortar stores, so they may not be as willing to sign a contract with a specific restriction.
6. Enroll in the Amazon Brand Registry
A great way to apply your MAP policy is to sign up forAmazon Brand Registration. Through the trademark registration process, you can restrict the number of Amazon sellers that can sell your trademark.
You can also ask potential sellers to send you invoices to sell your product. This makes it easy to identify who is supplying the seller with inventory. So it's clear when you need to contact the dealer to enforce MAP's pricing requirements.
7. Use a price monitoring solution
A price tracking solution can alert you to new MAP price violators on Amazon almost instantly. Many solutions check prices every 15 minutes. Popular solutions are:
Ongoing MAP Compliance at Amazon
It's never too late to enforce or create new Amazon pricing policies for your brand. Applying the advertised minimum price will always be an endless battle. However, you can find better ways to manage it and regain full control of your brand.
Read more ways to protect your brand on Amazon:
- 10 Things You Should Never Do After an Amazon Seller Account Is Suspended
- How Amazon Payments and Blackout Balances Really Work
- 6 Ways to Speed Up Billing as an Amazon Seller
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