As a brand selling on Amazon Marketplace, enforcing a MAP pricing policy is vital. It helps you protect your brand image, retail value, and your sellers’ profit margins.
This article will help you understand the importance of imposing a MAP pricing policy on your Amazon business, and how to effectively implement it.
What is a Minimum Advertised Price Policy (MAP)?
Minimum Advertised Price or MAP is a minimum price preset by manufacturers for authorized retailers to sell or advertise their products above. For instance, if a cosmetic brand sets a Minimum Advertised Price of $40 to its best selling skincare product, all resellers both online and in-store, are obliged to market this brand’s item at $40 or above. If they ever choose to sell below that price, they would be in direct violation of the company’s MAP agreement.
Why do MAP Pricing Policies exist?
The number of third-party marketplaces has recently increased, and the chances of having your products sold by thousands of resellers worldwide is high, making it hard to be always up to date or in control. Thus, having a MAP monitoring solution as a brand owner is crucial in the midst of this e-commerce growth, further accelerated by COVID-19 in the past few months.
It enables you as a brand, to have visibility into the prices set by all the resellers, and whether they respect MAP pricing. In case they do not adhere to your MAP policy, this will directly impact your business and the profit you make.
Why is MAP pricing hard to manage on Amazon?
Amazon sellers are infamous for "breaking MAP" policies, as they tend to sell below the pre-decided price to increase their Buy Box ownership, and boost sales and profit. Not following MAP Policy instantly creates bad blood between brands and suppliers on Amazon.
But what these resellers are not aware of is that following MAP pricing is in their favor.
Firstly, brands tend to inform those who respect the MAP pricing policy of new products before anyone else in good faith.
Secondly, it aids them to scale their business effectively, as MAP's pricing in product listings is less competitive.
Finally, by adhering to MAP policies, their relationship with brands becomes stable, and hence negotiating an exclusive contract becomes possible. For example, they can negotiate low pricing, which helps them spend more on PPC campaigns and boost sales volume, without a loss of profitability.
Does Amazon follow MAP Pricing Policy?
Amazon's main objective is to be the lowest price on the internet, and hence its nature is highly competitive and aggressive in terms of pricing. So as a vendor selling directly to Amazon, you will most likely be put in a situation where they do not agree to your MAP policy, as it merely takes one reseller to price below MAP for all the others to follow suit. For instance, if Walmart sells a similar product $10 below the MAP, Amazon will do the same on the spot.
However, you can do a few things that will push Amazon to follow your MAP policy:
- Control your distribution network to make sure nobody else is selling below MAP.
- Manage your overstocks to make sure Amazon doesn't have too much inventory. They will end up lowering the price under MAP in case they do, and it doesn't sell.
Does Amazon show the MAP Pricing on product listings?
The answer is no. That is because MAP pricing is an agreement between the brand and the reseller; it has nothing to do with Amazon. It is incumbent upon the brand to ensure that the reseller does not violate its MAP pricing policy. There are powerful automated tools that brands can use to monitor MAP compliance effectively.
How can you save your brand from MAP violations on Amazon?
The more your business grows on Amazon marketplace, the more likely you are to face MAP violations, and Amazon will not alert you. It is your responsibility to manage your brand's reputation and set a plan for punishing violators.
One thing that could save your brand against distributors violating MAP on Amazon is Brand Registry. It gives you access to tools that help you spot and report MAP violations, represent your brand explicitly, and maintain its integrity.
- You can further proceed by identifying all resellers with MAP violations.
- Reach out to all these distributors and notify them that you will robustly enforce MAP
- Send them constant reminders that they should respect the MAP; otherwise, they will be banned from selling all products.
- Send the distributor a warning before utterly banning him/her.
- Keep monitoring your MAP pricing policy across all channels.
What can brands do if they spot MAP violations on Amazon?
Amazon sells at the lowest price to capture the Buy Box with its algorithm, and sometimes that price is below MAP.
So what you can do is directly report the violation to the manufacturer or brand owner. Make sure to be as detailed as possible by including screenshots, dates, product ASINs, price, etc.
How do brands enforce MAP Pricing Policy on Amazon?
There is a lot you can do to enforce your MAP pricing policy on Amazon.
1. Identify seller information on Amazon as it is not always meticulous
- Begin with a google search on the seller's name, identity, website, and check if you can track down another listing of his on another marketplace.
- In case the first step doesn't work, then purchase your product from them as the shipping information contains more hints on the reseller's identity.
- You can also track that product through its distribution channel using product serialization.
- If none of these steps work for you, you can collaborate with a 3P investigation service to find a solution.
2. Communicate Violations
Please don't wait for Amazon to enforce your MAP pricing policy, as it wouldn't do much about it. Instead, directly communicate the violation to Amazon sellers, while including evidence. You can, later on, send warnings to authorized Amazon sellers who violate MAP, suspend distributions, and cancel the seller's authorized status.
3. Register your brand in Amazon's Brand Registry
Amazon Brand Registry isn't created precisely for MAP enforcement, but it might be of good use. Brands who are registered have access to Amazon tools that help them spot changes in their product descriptions, images, and trademarks, made by all Amazon sellers of their products on the marketplace, including counterfeiters and unauthorized sellers.
How can you protect your brand from future MAP violations on Amazon?
1 - Strengthen your distribution channels
Ensure you remain up to date with your sellers, their identity, and the channels to which they are supplying your products, as most MAP violation problems begin with a leaky supply chain.
2 - Put yourself in the shoes of unauthorized resellers
Start learning about all the common tricks that resellers use to violate MAP pricing policies. Some of these tricks might involve listing strangely high purchase quantities or low prices that you can't monitor. These resellers can also represent your brand differently, sometimes containing false information, and alter their Amazon product listings so that you don't catch their infringement.
3 - Provide an "authorized retailer" contract to all retailers
As a brand, you must put in place, along with each retailer selling your product, a MAP policy. If you are using distribution, then it should be limited, and you must eventually provide all the retailers selling your product (s) with an "authorized retailer" agreement.
4 - Use product serialization
A way for you to fight resellers marketing your product (s) under a different store name on Amazon, is through product serialization.
5 - Prohibit resellers/retailers from competing with you on Amazon
Amazon sales are high margin sales for brands, so make sure your retailers and resellers are utterly banned from competing with you on Amazon.
6 - Enroll your brand in Amazon Brand Registry
As stated previously, being part of the Amazon Brand Registry Program gives you access to more relevant brand representations with robust reporting and search tools, premium content, and other dynamic brand guardianships.
Amazon can help you protect your brand and its intellectual property once Amazon's brand registry team is always aware of it.
Does Brand Registry protect brands against MAP violations?
Amazon Brand Registry's main objective is to help prevent a false company or product information from entering the Amazon marketplace. The retail giant is more interested in keeping confusing information from sellers, product details that could mislead shoppers, and fraud from happening. It does not perceive a reseller listing your products below your company's MAP as alerting. More retailers listing for the same product is viewed as positive by Amazon, as it stimulates competition among sellers. And eventually, Brand Registry will not protect you from MAP violations or help you take down a listing that infringes your reseller pricing policy unless the reseller's product listing oversteps your intellectual property rights.
You can learn more about this topic in the following article, "The Ultimate Guide To Amazon Brand Registry."
Is MAP Price Policy legal?
Minimum Advertised Pricing Policy is legal in the United States under antitrust statutes, as it only links to "advertised" pricing, It and does not notify a seller how much they can sell it for in their store, which makes this practice legal, and acts as a means of insurance and security towards the manufacturers.
However, MAP pricing is illegal in the UK and Europe. It is perceived as anti-competitive, as it violates the Competition Act in the UK and the general EU provisions regarding competition law in Europe. This law requires that there should be free pricing by everyone competing in the market, and all attempts to set different pricing are caught by the competition law provisions.