This is a very important policy and concept for brands that requires sellers to abide by minimum advertised prices for the products they sell. To enforce this correctly (or at all) you will have to have ALL sellers follow this policy. The trouble enforcing this can be tough at times and figuring out which sellers are not following your MAP policy can be confusing. We hope to shed some light on this area and help you understand some of the critical components for how to have a successful MAP policy moving forward.
Here’s some of the main takeaways to consider:
- Having ~5-10 approved experienced sellers allows you to enforce your MAP policy if a seller were to break the policy
- Having strategic “MAP Holidays” that allow sellers to sell through overstock of product at certain times of the year (preplanned) can prevent sellers from lowering their prices to get out of too much inventory
- Removing sellers who are NOT approved to sell the product
- Controlling the supply of product so that items are not being sold to a seller who turns around and sells to another seller (i.e. transshipments)
- Put penalties in place for all sellers who don’t follow your MAP policy
- Avoiding selling large quantities of items to Amazon directly as a seller or don’t sell MAP SKU’s to Amazon altogether (if they can’t follow MAP)
- Reason being is that they often don’t follow MAP policies and price items at any level to keep up with inventory turn which often leads to other sellers matching their new price
To elaborate on some of the above items, having an over-abundance of sellers, (or having Amazon themselves selling the products) will provoke certain sellers over time to start lowering prices. This happens due to the fact that sellers are competing heavily on price to be able to move through their units.
If one seller starts to lower their price this results in a chain effect where other sellers are either forced to lower their price to compete or maintain their current prices and have reduced sell through. This obviously creates a problem and in a lot of cases, sellers who otherwise would follow MAP policies are forced to make a decision to lower their prices even if they wouldn’t normally do so.
It is important to note that due to the fact that Amazon as a seller doesn’t generally abide by MAP policies (in most cases), this will push other sellers to abandon the policy as well. The customer ~9/10 times only sees the lowest price on the listing. This is why we emphasize the fact that:
Your MAP policy is not being followed in all reality, unless ALL sellers are following the policy. You need to keep an even playing field for MAP to be successful long term!
This is why having fewer sellers makes managing your MAP policy a lot less work as there is just simply less to keep track of and companies that could be violating your policy. If you can’t call up or email one of your sellers and have them adjust their pricing within one business day, you are working with the wrong Amazon sellers, if MAP is a top priority for your brand.
Amazon as a seller is one of the biggest merchants on their own platform and many brands either already do a very large business with them or are considering adding them as a seller. There are a lot of benefits that come with having Amazon carry your product on their platform such as, listing creation for new products, exposure, and the amount of business (large orders) that they can do. However, having Amazon as a seller and running an effective MAP policy from our experience with other brands, do not go hand in hand. Most brands want the best of both worlds, the aforementioned positives of working with Amazon and at the same time, running a tight MAP policy. This isn’t a realistic expectation as most brands seldom take the extreme action required to get Amazon to follow a MAP policy consistently.
A very effective way of getting a seller to MAP is threatening to end the business relationship with them if they do not comply. This does not work well for most brands dealing with Amazon. Amazon is usually one of their biggest accounts, which often means Amazon has more power over the brand than the brand has over them. We have seen this with the vast majority of brands we work with. Before going any further, we need to debunk a common misconception brands have about Amazon’s “pricing algorithm”. We have told many brands that Amazon is a primary reason they can’t get an effective MAP policy working and they mostly seem to avoid painting them as the primary issue by saying Amazon only lowers their price to match the lowest priced seller. This mentality would lead a brand to believe that if they could get every seller other than Amazon to MAP, Amazon would then follow MAP without an issue. This is not necessarily the case. Although no one outside of Amazon can for sure say how their pricing algorithm works, we have seen many hundreds of cases across many products and brands that disprove the previously mentioned notion.
Whether an item is covered under a MAP policy or not is irrelevant when proving that Amazon can independently price the lowest on a listing (island pricing as we refer to it). This is NOT uncommon to find. If you put the time into researching their pricing across products from many brands whether they be on-MAP or off-MAP, you will see Amazon pricing the lowest, if they need to. We speculate that this is mostly related to the sales velocity on an item. If it’s too low in relation to the amount of product they bought, Amazon can independently cut pricing to move the product more quickly. This obviously creates a problem when juxtaposed with the above comments on MAP and that the policy is only as good as the lowest price on the listing.
As mentioned before, keep in mind that a MAP policy is only valuable and in place if ALL sellers follow your policy. That means that you need to include Amazon as a seller in your policy to have it be effective.
Lastly, various brands usually have a 3-strike policy when it comes to MAP (we recommend this policy should also be on an annual basis), with each strike resulting in a more severe shipping hold period, with the final strike ending in termination. If most brands held this plan of action, they would not be working with Amazon (as a seller) anymore. From our experience, most brands aren’t holding Amazon to any penalties as sellers, so there really is no reason for a company as big as Amazon to bother following the policy when they can sell more by simply not following it. In general, various brands can get a hold of someone (who can make the appropriate changes) at the companies of their other sellers so the likelihood of the non-Amazon sellers being at MAP or adjusting to MAP quickly if something was slightly off price is much higher.
We have talked with numerous brands reps, national sales managers, and vice presidents/presidents from various companies and none seem to have an answer to get Amazon under control or even get into contact with a person who can make these changes happen. Can your company call Amazon today and get them to adjust their pricing to abide by your policies? This is the question you need to be asking. What many brands do not realize is that holding the majority of your sellers to a MAP policy very strictly and allowing Amazon to break it is only increasing their dependency on Amazon, as a seller in the long run.
In closing, consider the following:
- The sellers you can get to follow MAP will not be able to compete for the buy box on products Amazon is breaking MAP on (if they break by a significant margin). These retailers will sell less on Amazon and start to purchase less product from you.
- When Amazon breaks MAP they will have little to no buy box competition from your other sellers that are sticking to MAP. This will allow Amazon to sell much more product and in turn order higher quantities based on their higher sales velocities.
- With Amazon purchasing more from your company and other retailers purchasing less and less, the brand will become more reliant on Amazon as a source of business. This essentially creates an “all your eggs in one basket” scenario. Allowing one company to do such a large portion of your business will give you less control over them and could potentially make your MAP policy null and void.
- Amazon as a seller also negatively effects pricing stability for MAP items due to their likelihood to break MAP and non-MAP items with their heavily discounted pricing for long periods of time.