Minimum advertised pricing, or MAP, is probably familiar to anyone who has sold anything on Amazon (or any other marketplace). For your convenience, we’ve produced a concise analysis of this regulation, which may reveal more than first appears.
What does MAP mean?
In advertising, MAP stands for “minimum advertised price.”
Minimum advertised pricing (MAP) is the price below which a manufacturer will not allow a reseller to advertise its items. It is determined by the manufacturer and is required by law. There is no requirement to be sold at that price, but the advertisement must not go lower than that. Being aware of this is critical to running a profitable business on Amazon.
With up to 92% of online shoppers making price comparisons, MAP is a hot topic. MAP is an important concept to understand, regardless of whether you’re a first-time Amazon seller or a seasoned retail veteran. This vital policy, together with the product list, stock count, price, tax, and so on, is essential to keep up to date. As a seller or a distributor, it could harm your business if you don’t.
Put another way; MAP is a reference price provided by the manufacturer for retailers. The product cannot be advertised at a lower price by resellers.
What’s the Deal with MAP?
Suppose a corporation sets the price of its best-selling lasagna pan at $27. In that case, any reseller (including Amazon) is required to advertise the cost of that pan for $27 or more as an example of MAP pricing on Amazon. The reseller would violate the MAP agreement if they offered that lasagna pan at a $20 discount.
Policy on MAP can be a complex subject, involving a lot of arithmetic and other factors. Fortunately, there are strategies to keep up with the competition and stay ahead of the game to continue to sell your items.
In most cases, you can determine MAP by subtracting 20% from the most recent announced (or established) MSRP. In the lasagna pan example, let’s say that their best-selling pan costs $40. In this case, the MAP would be $32 ($40 divided by 20% = $8; $40 divided by $8 = $32). The MAP formula used by each distributor may differ somewhat, so use this information with caution.
As long as a product or service is consistently priced, it helps safeguard intellectual property and communicates a message to buyers about the product’s value.
Violations of the MAP can have serious consequences.
When MAP infractions go unpunished, it can lower a product’s perceived value among its customers. For example, customers will automatically think the product must be worth only that price if a reseller is regularly advertising (and selling) for less than the MAP, which is inaccurate.
It can damage your professional reputation. When MAP violations occur, merchants and distributors have a strained relationship, resulting in fewer products and less money to be made for both parties. It even has the potential to end a relationship with your distributor.
Attempts by third-party merchants to gain access to Amazon’s buy box have included pricing their products below the minimum advertised price on distribution channels (MAP). It’s possible that the distributor could cancel their contract if they monitor products and listings and discover that the store has been illegally reselling their products.
Distributors Reap the Benefits of MAP
As a distributor, you can reap various rewards from imposing MAP pricing:
There isn’t any competition from unlicensed bottom-feeders.
A single or two competitors will no longer be able to undercut their rivals and draw the most sales if all resellers are subject to MAP rules.
It keeps the price stable.
Sellers must drop their pricing to adhere to their distributor’s MAP to compete with unlicensed vendors.
With the support of your distributors, you may build deeper relationships.
Developing and sustaining relationships with authorized resellers is critical to the success of a business collaboration. MAP-adherent vendors are seen as trustworthy by distributors. This trust typically leads to a desire to continue working with them as resellers. Maintaining MAP will demonstrate to distributors that you are trustworthy as an authorized seller. As a result, distributors are more inclined to maintain their association with you. They may even offer you first dibs on selling new items.
The playing field is leveled.
When a distributor’s MAP is followed, small and large retailers can compete on the same level playing field. Thus, MAP promotes fair competition in the corporate world.
Product value is protected by this method.
Because of MAP regulations, products cannot be advertised at various prices on multiple marketplaces.
Again, MAP’s purpose is not to regulate the actual selling price of things but rather to regulate what they are advertised for. Amazon brands can sell the goods below the minimum advertised price if the declared cost is above or equal to the MAP in private discussions or negotiations with customers.
How to Maximize Minimum Advertised Pricing for Distributors
The first rule of selling is to stay on top of your customers.
Ensure your MAP regulation is followed by setting up a method to track and monitor dealers. Allow them to contact you if they have any questions or concerns.
Create serial numbers for your products to keep track of them and identify those who break the rules.
For online retailers selling below the MAP, you can order a product from the accused violator and compare the serial number with previous shipments if you have assigned each product a serial number.
Create a MAP policy that is tailored to your company’s specific requirements.
Your company’s objectives should determine your company’s MAP policy. Before executing your MAP, you may want to consult with an attorney.
Ensure that your MAP policy is unambiguous.
Your retailers will most likely fall asleep before they reach the second paragraph if you use too much business-speak. Keep good ties with the online retailers by making sure your MAP policy is simple, straightforward, and explicit about your requirements.
Provide the same level of service and respect to all resellers and online retailers.
Shoppers expect consistency from you. Let them realize that following your policy is to their best advantage. Maintaining healthy profit margins isn’t the sole benefit. If you encounter unlicensed resellers, take legal action to stop them from selling your items.
Enforce your MAP policy.
The problem is that Amazon does not enforce the MAP policies of its wholesalers. As a result, it’s up to you to monitor your Amazon MAP enforcement. It may be difficult and time-consuming, but the long-term payoff is worth it. There is currently software available to help monitor and enforce MAP pricing.
How to Enforce a MAP
Your MAP policy on Amazon will certainly necessitate adjustments in your business practices. However, most of the time, the work is well worth it. When done correctly, you may boost your profit margins, build deeper relationships with your distributors, and develop a procedure for monitoring your partners that work for your organization.
The following are some of our recommendations for enforcing your Amazon MAP pricing policies:
- Identify the most important buyers in the distribution and retail sectors.
- The most significant distributors and retail partners should be identified by reviewing your current list. Consider how much business they do with you. Then, check all contracts to see if there is an agreed-upon minimum-award-price policy (MAP).
- Once you’ve identified your distributors and retail partners, you can use benchmark figures to keep tabs on how their purchasing habits are changing. Increases in the number and frequency of purchases may suggest that MAP pricing is violated. You’ll be able to get in touch with them to talk about anything that comes up.
A word of advice: If your distributors aren’t making a substantial difference to your bottom line, you may want to consider canceling your agreements with them. As a result, fewer people will be exposed to the risk of breaking the MAP policy.
You can send a Cease and Desist letter to an offender if you identify them. Identify the policy in question and explain your alternatives for dealing with it in the letter.
Having an attorney create a template for you to use in the event of MAP price violations could be a good idea.
Serialization of products
Adding product serial numbers to your products might also help you catch Amazon sellers violating their policies. Consider testing buying the goods and matching the serial number to previous shipments to see if a seller is selling below the manufacturer’s suggested retail price (MAP). This will serve as proof of delivery to the distributor.
You may have to redesign your packaging or production process to implement this strategy, which might be expensive.
Provide a Warranty on the Product
Creating a non-transferable manufacturer warranty is another less expensive solution. If you distribute your items directly to a retail partner, then the warranty should only apply to those products. Afterward, you can cancel the warranty if they resell the product.
This is a trickier approach to put into action. Online warranty registration is one such example. However, you could use a product serial number to identify each distribution partner and produce unique warranty identifiers.
Include a clause in your contract prohibiting Amazon digital sales.
You can specify how and where each distributor or retail partner can sell in your contract.
There is a risk that this will complicate your discussions. The decision to remove your products from Amazon’s marketplace will be easier if you have a retail partner like Walmart or Target on your side.
On the other hand, a small distribution company or shop may not be as inclined to sign a contract with a defined restriction if they are looking to generate extra sales outside of their website or brick-and-mortar locations.
Amazon’s Brand Registry is a good place to start.
Signing up for Amazon’s Brand Registry is a wonderful approach to enforcing your MAP policy. You can limit the amount of Amazon sellers eligible to sell your brand by using the Brand Registry process.
Additionally, you can demand that potential sellers present invoices to sell your products. In this way, the seller may easily determine who supplies him with an inventory. Then, you know when to contact the distributor to remind them of the MAP pricing rules.
As a distributor or Amazon seller, you’ll have the opportunity to build your business and brand. You’ll be rewarded for your efforts. To ensure that your business is as successful as possible, it is necessary to adhere to all regulations, including MAP enforcement.