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How to Prevent MAP Violations

Doctors tell us that to stay healthy we need to exercise, eat right, and get enough sleep. Not to oversimplify things, but maintaining healthy online prices isn’t very different. The preventative measures are obviously different but the concept is the same. To stay healthy online, brands need to price right and sell right in their ecommerce marketplaces.

We’re not saying it’s easily accomplished but there are some pretty good ways that we’ve found and helped our clients to develop. Here are some of the top ones:

  • Pricing – "To use MSRP or not to use MSRP?", that is the question. Product pricing strategies are as much about margin as they are about perceived value. If the MSRP is set too much higher than competitive products but does not have demonstrably higher value, it will almost certainly be discounted. Sometimes it’s best to sell for a solid profit then let the market determine the price. Once that price is found, a Minimum Advertised Price (MAP) policy or formula can be chosen.

  • Margin Reduction – Unless they’re using the loss-leader strategy, resellers want to make as much money as possible. That’s why they request discounts, payment terms, favorable drop-ship programs, and, in terms of Amazon, pre-ticketing and shipping to Amazon DCs. Be careful. Online retailers that get these kinds of margin incentives can discount products and still make money. Brands should make sure they’re not enabling undesired behavior.

  • Customer Vetting – While checking credit can be a time-consuming process, most smart companies don’t extend terms without doing it. The same thing goes for online reseller vetting. Make sure resellers apply to be authorized by disclosing information about what platforms or distribution channels they sell on, their online store names and web addresses, etc. Especially important is to have verifiable contact information. If a brand wants to work with professional resellers, then yahoo.com emails, Google phone numbers and PO Boxes don’t cut it.

  • Smart Policies – Best practices employed by brands today include the use of various policies. If the customer balks at them, or refuses to sign agreements they’re probably not worth the risk. Brands should make sure they have MAP policies with clear details on pricing violations, Authorized Reseller policies and, if appropriate to their sales strategy, signed distributor agreements (which include provisions for customer disclosure).

POST-SALE & PRICE MONITORING

  • Monitor – Once upon a time, brands could monitor their products online manually. Between that and relying on retailers to tell them about violators, they felt covered. But new tech allows sellers that once only sold on their own websites to easily open more stores. With a few clicks, a company can now be selling on Amazon, eBay, Walmart, and dozens of other platforms that can result in a price war within a single brand. In order to maintain consistent pricing and a unified brand presence, an automated MAP monitoring system needs to be adopted. Staying proactive is essential because even a healthy body can get sick if left unattended.

  • Identify – Even with the best pre-sale practices, unauthorized, unknown sellers will end up listing products often at lower prices than other authorized sellers. Sadly, many of those sellers could be companies and/or people that the brand actually knows but are hiding their true identities. It could even be employees. If the brand is having trouble figuring out who they are, they need to enlist the help of sales reps, wholesale distributors, and even other retailers. Contracting with an outside investigative service is also recommended.

  • Enforce – When policy violators are identified it’s absolutely essential to take fast and decisive MAP enforcement action. Unfortunately, if the sellers are known entities, that will sometimes mean terminating long-time customers. When they are unknown entities, it could entail sending Intellectual Property Rights violation notices or hiring an attorney specialized in antitrust law to help send cease and desist letters or file lawsuits. Companies like MAPP Trap can help with enforcement processes, as well as providing advanced, effective tactics to remove unauthorized sellers.

The best way to fix a problem is to never have that problem in the first place. The same goes for the problem some brands have with hyper-discounts of their products in ecommerce that may impact their bottom line. Of course, developing and implementing a MAP policy is a necessity, but who wants to enforce violations? Just like catching the flu, it’s best to avoid them in the first place.

Want happy retailers with healthy margins? That's what MAPP Trap is all about.

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