A minimum advertised price (MAP) policy helps protect your brand from price erosion and establishes a formal process for dealing with bad sellers. It’s essential to preserving your brand integrity.
If you’re new to the world of online sales or you’ve been getting by with informal processes, you might be wondering: do I really need a MAP policy?
Here are four signs you need a MAP policy.
1. Too many sellers on one marketplace
Some major online retailers like Amazon allow multiple sellers to list your products on their marketplace. That can quickly get out of hand. Some brands may find that there are 35 or more separate sellers listing their products on a single website! Even if it’s closer to 20, that’s still too many.
When you have too many sellers on a single site, none of them look like the official brand-approved seller. It’s incredibly difficult for consumers to spot fraudulent sellers, because there’s no clear distinction between the good ones and the bad ones. It becomes extremely difficult for any seller to stand out—no matter how well they represent your brand or treat their customers.
It’s a recipe for what we call “race-to-the-bottom” pricing. The best way for a seller to stand out among the competition is to offer a lower price. And once one goes lower, the rest will follow. In the fight to stay competitive, these sellers play leapfrog with your price, going lower and lower until they’re selling at-cost.
If you don’t have a MAP policy in place, it will be very difficult to hold your retail partners accountable.
2. Too much variance in pricing
While sellers will happily use your MSRP as an upper limit, without a clearly defined lower limit, your price is going to be all over the place—and it can fluctuate a lot.
When your price volatility is out of control, your brand integrity becomes so watered down that no one really knows (or cares) what your products are actually worth.
A MAP policy sets the lower limit and lays out the process for penalizing sellers that try to slip below it, giving you both the legal authority and the means to protect your price, your brand integrity, and the value of your products.
3. Too many unknown sellers
When you don’t know who is selling your product, it’s a huge liability. Some marketplaces may not give you contact information for sketchy online sellers, and there may not be anyone you can call or email when there’s a problem.
When you don’t have a relationship with a seller, they have no reason to care about your brand. There’s no way to hold them accountable, so all they’re worried about is making sales—no matter the cost. Not only are unknown sellers more likely to undercut your price and trigger race-to-the-bottom pricing, but when your customers have a bad experience with these sellers, they associate that experience with you, not just the seller.
You want retail partners who will work to honor your brand and support your customers. You need sellers who help ensure that people have the same experience with your brand whether they buy direct from you or from the seller.
If you have a lot of sketchy sellers listing your products, it’s probably time to establish a formal MAP policy, so that only serious retail partners are willing to carry your products.
4. Authorized sellers are complaining
You want to preserve your relationships with authorized sellers. These sellers care about your brand and the relationship they have with you, and they’re more likely to honor your prices. If other sellers are playing games with your pricing and driving down everyone’s margins, your best retail partners may simply stop selling your products—because it’s not worth trying to compete with the shady sellers you’re allowing to sell your products.Legitimate sellers should actually want you to establish a MAP policy because it protects their margins. If they’re complaining about unfair competition, you should create a MAP policy before you start losing your best retail partners.