Anytime you see a product listing on Amazon with the text “discount provided by Amazon,” it is a discount that Amazon has imposed on third-party sellers' listings without their prior knowledge. Amazon compensates sellers for the price difference, so the sellers are not at a financial loss. However, when this happens, brands may consider it a MAP violation as the new, lower price is frequently a violation of the brand's minimum advertised price policy. We recently covered this topic on Episode 10 of our Legal Briefs podcast as well if you're interested in hearing more.
How does ‘Discount provided by Amazon’ work?
Anytime you see a product listing on Amazon with the text “discount provided by Amazon,” it is a discount that Amazon has imposed on third-party sellers' listings without their consent or knowledge. This means that the price of the product is lowered without the seller having any control over it. Amazon compensates sellers for the price difference, so the sellers are not at a financial loss.
However, when this happens, brands may consider this a MAP violation, as it can sometimes result in the product being sold at a lower price than the agreed-upon minimum advertised price.
Why does Amazon do this? Amazon’s automated repricing algorithm detects that the same product is being sold at a lower price on other websites and automatically adjusts its own price to match. This is intended to help Amazon keep its platform competitive and ensure that customers get the best deal.
The impact on MAP compliance
The challenge with Amazon-provided discounts is that they can cause resellers to unintentionally violate MAP without intending to.
When Amazon drops its prices, this can cause other retailers to drop their prices in response. This can cause a ripple effect of MAP violations, as other sellers follow suit and lower their prices as well.
Some brands do not consider Amazon-provided discounts to be MAP violations, while others do. Regardless of whether a brand considers the discount to be a violation, the net result is that more sellers are likely to violate MAP as a result of the lower prices on the Amazon platform.
What to do when Amazon causes resellers to violate MAP without their knowledge
Fortunately, there are steps that brands can take to mitigate the impact of Amazon discounts on MAP compliance.
One option is to require sellers to opt out of the “discount provided by Amazon” program. Unfortunately, for the sellers, it’s an all or nothing proposition. If they don’t want to participate they must opt out for all of their products, not just select ones. This would obviously put them at a competitive disadvantage until the discount period ends.
Since the Amazon Provided Discounts are only offered for a limited time (Amazon determines this), brands that can identify this, can consider it a MAP holiday for those particular products. That would allow other sellers to remain competitive for the duration of the discount period.
Another option is to use a tool like MAPP Trap. Its MAP ecommerce price monitoring solution can tell a brand if a listing was caused by an Amazon discount so the brand can determine what, if any, enforcement steps should be taken. If they want, they can even exclude these kinds of listings from being included in their enforcement automation. This can help brands focus their MAP enforcement efforts on intentional violations rather than unintentional ones.
Amazon discounts can pose challenges to MAP enforcement efforts, as they can cause resellers to unintentionally violate MAP.
Brands should consider their stance on these discounts and take steps to mitigate their impact on MAP compliance. Using tools like MAPP Trap can help brands maintain better control over online advertised pricing.
By taking a proactive approach to MAP enforcement, brands can maintain their integrity and profitability in the marketplace.