MAP integrity is key for any brand that is positioning itself as a NON commodity brand. This is much easier said than done. Especially since some online marketplaces allow 3P sellers that may not be known or authorized and therefore may not have knowledge of a brand’s MAP policy. For this post we are going to use Amazon as the online channel example and why it is so important to have ALL online and traditional brick and mortar sellers comply with your MAP policy.
Why is Amazon currently the most important and visible channel to get in MAP compliance? Simply put, Amazon is by far the most influential marketing channel—capturing 3x the search traffic as Google, and 10x more than the brands’ website.
Unfortunately, many brands take a traditional approach to Amazon and this channel is anything but traditional. Even though Amazon only represents a minority percentage of most brands’ overall sales (5-20%), it’s influence far outweighs its current sales percentage. The current sales trajectory is growing faster than most likely any other distribution option. But it’s current influence on the customer’s purchasing decision is what needs to be focused on (whether the sales transaction occurs on Amazon or not).
Did you know the following current stats about Amazon?
- Nearly half of all online product search starts on Amazon.
- 9/10 US shoppers will reference Amazon at some point in their buying process.
- The majority of the sales on Amazon come from 3P sellers and not from brands selling direct to Amazon.
- There are parts of the world that Amazon sales come 100% from 3P sellers and not Amazon direct. In a country like India, it is illegal for Amazon to sell goods that they purchased. Therefore 100% of all sales in India come from 3P sellers.
- Most brands wish they could get Amazon to gate their brand on Amazon, but this is nearly impossible to obtain (even brands like Nike and Adidas were not able to negotiate this). Amazon says it is a free marketplace and they let the market set the selling price and the seller base. But have you ever paid attention to an Amazon owned brand? That’s right they gate many of their own brands and private labeled ASINs.
Therefore, it is critical that the Amazon channel is in MAP compliance. Without compliance, sales will shift away from other channels that may be more important and profitable for your brand’s long-term health and viability.
MAP is, in theory, created to insure your retail and promotional pricing is uniformed and to level the playing field for all retailers. Without compliance from all sellers (traditional and online), a seller obtains an unfair and unhealthy sales advantage over the competition.
Below are the 5 basic steps that should be understood when dealing with the importance of your brands MAP integrity.
Understand the basics of Amazon’s buy box algorithm
There are many factors to determine which 3P seller is in the buy box. All brands need to understand the basics. The buy box is determined by the following factors (Prime vs non-Prime selling option, total selling price (including delivery, before tax), seller ranking and ratings, inventory amount as well as location and length of time in inventory, and many other factors of diminishing contribution to the algorithm.
Know who all your sellers are
If we are talking about your traditional brick and mortar sellers, then your brand most likely knows nearly all meaningful sellers and most likely has a high MAP compliance from those sellers. But for your online channel (especially Amazon), does your brand know 90%, 80%, 75%, 60% or even a lower percentage of your meaningful sellers? Since many seller names are DBA’s and the brand doesn’t even know who the seller is, it is hard if not impossible for the brand to determine if the seller is a meaningful seller or not. And if the brand doesn’t know who the seller is, then a MAP agreement can’t be in place or enforced.
Specify price-cent endings in the MAP policy
The buy box on online channels like Amazon, can come down to even $0.01 pricing difference. All brands should determine what their MAP policy is down to the price ending. Does your brand care if the price ending is $.00, $.99, $.98, $.95 or something else? These price endings mean everything to an Amazon seller so make sure your dialed in on what is allowed, cause if you’re not, then the 3P sellers will determine it for you and will adjust it downwards to maintain or obtain the buy box advantage.
Appoint a narrow 3P reseller network
How many 3P sellers maximize your sales? Is it best to have an exclusive 3P seller or a few selects authorized 3P sellers or as many as possible 3P sellers? From our experience, more sellers don’t add up to more sales but rather more problems on Amazon. The Amazon system doesn’t give reports to your brand or other competing 3P sellers what each sellers assortment is or how much inventory they have. Which leads to a channel that is nearly impossible to forecast. And the more sellers your brand has on Amazon the more overstocked or under-stocked of inventory your brand will experience. Which will lead to sellers more likely to break MAP.
Understand that the Amazon channel is open 365 days a year and 24/7. It is a unique channel and therefore MAP needs to be constantly monitored to be enforced well. There is most likely a good percentage of your existing sellers on Amazon that tweak their selling price on Amazon when your office is closed (after hours and/or on weekends). Your brand should be monitoring MAP compliance consistently and constantly for this tactic.
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