Transcript:


Ron: Hello and welcome to another episode of MAPP Trap’s LegalBriefs where we talk all things brand protection. Joining me today, as usual is Jeremy Richardson, partner in the law firm of Smith, Gambrell. He's an expert on all consumer product issues, IP policies and day-to-day issues that brand owners need to address. Also joining us today, is kind of a departure for us, is Todd Dittman. Todd is the Executive Director of Indie Pet, a nonprofit trade association whose mission is to empower independent and neighborhood pet retailers to work together as peers, for the well-being of pets and pet owners as they maintain a strong, sustainable and growing place at the heart of the pet industry. Todd's role is to implement the Board of Director’s Strategic Plan and run the operating committees who are initiating the plan. And one of the ways to help Indie Pet members is through education. So, Todd has a question about brand policies and how they affect independent retailers. Some specific thoughts and ideas. Todd, welcome.

Todd: Thanks, Ron. I appreciate it. And Jeremy, thanks for addressing these questions. The question I have today is I have a few retailers or a portion of retailers who utilize Amazon as a sales outlet. And there are times that Amazon will implement an Amazon discount that forces a MAP violation. Can you address? Is this legal? What can be done about this?

Jeremy: Hi, Todd. Nice to hear you again. And Ron, nice to hear you as well. Glad to be here, as always. Yeah, this is a really cool issue and something that I will admit surprised me when I first learned about discounts provided by Amazon. So, let's start by describing what this program is. Amazon will itself take a retailer’s product and lower the price with a discount that Amazon pays for. So, let's say the retailer on Amazon has a product that's selling for $10. Amazon will provide and pay for a $2.00 discount to lower the price to $8, and that $8 price often gets picked up by price scrapers and other software that goes to detect the advertised price.

We talk about this in terms of a MAP policy. It often will show up as a MAP violation, even though the retailer itself is not violating a brand's MAP price. So, it's a strange situation. It comes up as a MAP violation, but the retailer says I didn't do it. So, let's talk about how that gets addressed and whether it, in fact, is a MAP Violation.

I would say that it is really up to the brand owner and how it interprets its own MAP policy to determine whether that is a violation, and I personally think and would guide my clients to say “no,” it shouldn't be a MAP violation because this is not something that the retailers setting. This is something that Amazon is doing outside of the retailer’s control and therefore.

Ron: I have a quick question. I'm going to speak as the brand that knows about this Amazon provided discounts program. And this isn't something that retailers have to subscribe to. A retailer on Amazon can say no, I'm going to opt out of this program.

Jeremy: Yeah, that's exactly right. And that is why some brands will view this as a MAP violation. The rub here is that a retailer on Amazon can opt out, but it has to opt out across all ASINs, across all products sold on Amazon. So, in the case where Jeremy, the brand owner says, hey, this is a violation, I want you to opt out. The retailer is stuck opting out across all products Jeremy’s and Ron’s and Todd's not just Jeremy's. So, it's something that can be done. And it is certainly within the discretion of the brand owner to say it's a violation and so, they'd be right if they decided to take that position. But I think the other side is it's really sort of sticking it to the brand. I'm sorry to the retailer who's stuck in the middle, dealing with Amazon, where Amazon is providing that.

Todd: So, a follow up question. What about my retailers who have nothing to do with Amazon and they just get caught up in trying to compete with that price that's below MAP.

Ron: That's a great follow up, Todd, because obviously, Amazon is not just monitoring its own ecosystem. So, it sees the price off Amazon and that's why it imposes the discount to make Amazon and its sellers more competitive. But all of the other non-Amazon sellers out there with repricing bots, those repricing bots don't necessarily recognize this as an Amazon imposed discount. And so, all of a sudden, the entire ecosystem drops the price because Amazon decided in its own God-like position to drop the price. And so that's a big question, Jeremy, is there anything on that?

Jeremy: Yeah, Todd, you have, with that question, cut to the absolute core of what is a MAP policy and what is it supposed to do. And this is what we talk about all day long with brand protection. The whole point of a MAP policy is to protect brand image, to prevent a brand from being seen as a discount. As being cheapened by lower advertised prices that properly reflect the brand image, so it's a very tough question and you're absolutely right.

You know when Amazon provides that Amazon provided discount a $2.00 discount for an example, it's not just affecting the world of Amazon; it's affecting all e-commerce and even brick and mortar stores who want to chase that price down. So, what can you as a brand do? Maybe you do have to take that stronger position and now you know, maybe I'm going to reverse myself and going to think differently. It’s a real issue.

Something you might want to do because these often, I believe, are limited time offers, they're not continuing for months and months. Just select not to enforce the MAP violation where the Amazon provided discount applies. Treat it like a MAP holiday. Give your retailers who are and are not on Amazon the opportunity to chase that price for a period of time. But again, that's a tough decision because if other retailers drop their prices, Amazon is going to continue with that Amazon provided discount, I just don't know.

It may be that you want to do something to again differentiate the product that's on Amazon. So, it doesn't affect the outside of Amazon world, but these are these are tough questions and real struggles for business owners.

Ron: And I think practically speaking, this cuts to technology. Can a price monitoring company actually select whether or not it's an Amazon provided discount or not? The answer is yes, MAPP Trap can do that. We do that, and then the brand would issue MAP holiday on that particular item. It might be a bit onerous for the brand, but I think in a fair world, it's something that they could do.

Jeremy: Todd, I thought this was a really thoughtful conversation. I enjoyed it. Thank you. Is there anything else that you want to follow up?

Todd: No, you've really covered it all on this particular topic, but I'd like to take the opportunity to offer any retailers listening to this, if you have other topics that you want me to bring up to the team here, please feel free to reach out to me via my website Indiepet.org and I will put it on the list of questions for Jeremy.

Ron: Well, that's great, Todd, thank you for some great questions. And Jeremy again thanks for some great answers, and to you listeners, thanks for listening to another episode of LegalBriefs and if you have any recommendations for us, please send an e-mail to legalbriefs@mapptrap.com and have a good day. For more information about how MAPP Trap can help you with your online brand protection needs, visit www.mapptrap.com.