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MAP (Minimum Advertised Price) Monitoring for Enterprise Businesses

Price ranks as one of the most critical elements of e-commerce for both the retail and wholesale sectors. Technology or software can keep track of a manufacturer’s minimum price across the multiple sales channels of distributors and resellers. Violations can trigger an alert or automated enforcement actions. Technology can even monitor authorized and unauthorized sales of a company’s products.

Why Key Decision-makers Must Monitor Minimum Advertised Price

Statistics show incredible competition in the B2B sector. Distributors, manufacturers and suppliers face disruptions that are caused by recalcitrant wholesale customers, greater marketing expenses and the near-universal erosion of wholesale prices. [1] Fundamental changes are necessary to protect a supplier from the myriad factors that lower prices affect drop shipments and devalue brands. One of the key tools for wholesalers is mapping the minimum advertised price they set for products sold for resale.

What Is MAP, the Minimum Advertised Price?

The minimum advertised price is the price that B2B customers agree to charge for a certain product when they resell it. Antitrust laws state that each company must set its own MAP without agreeing to keep prices high with other companies in the industry. [2] This could be viewed as price-fixing, so companies are obligated to monitor their prices to detect violations and keep their prices solidly in-house and free from both price-fixing and cascading drops in price.

MAP policies are agreements between a reseller and a distributor or manufacturer not to sell products at rates lower than the MAP price. MAP policies can vary state-to-state, but they generally don’t violate antitrust laws and help to promote fairness among resellers. For example, a manufacturer might set a MAP of $400 for an electronic device, which means the reseller can’t advertise a price lower than $400. If the retailer advertises a lower price, the retailer violates MAP policy.

In some cases, retailers can’t help but violate the agreement because of competitive e-commerce prices that make the price untenable. Giant marketplaces like Amazon routinely violate MAP agreements because retailers sell under different names, brands of sales channels. Amazon is not obligated to honor MAP prices of third-party sellers, and unless a given manufacturer establishes a good relationship with Amazon, there’s not a lot that Amazon can do. However, MAP monitoring generally provides big benefits to manufacturers and distributorships that include:

  • Building fair competition across different sales channels
  • Helping small companies compete with larger ones
  • Maintaining product prices in a cutthroat sales environment
  • Building a more consistent relationship with all suppliers
  • Developing a strong brand identity based on other factors than prices
  • Identifying unauthorized resellers, which resellers use to sell products at a lower price than the MAP
  • Showing Amazon that the company is monitoring its products and prices

The Value of a Map Enforcement Policy

The benefits of monitoring the MAP of resellers include fairer competition and protection of brands, but enforcement can be difficult without the right software or app to monitor the internet for violations. Prices affect more than profit; they can undercut a company’s brands, product names and slogans, which retailers can use to optimize online searches.

Map monitoring technology should be capable of finding contractual violations and unauthorized sales of products that are readily identifiable. The technology should be capable of finding the products that violate MAP agreements, determine how long the violations have been going on and identify how many retailers are also selling below the minimum price.

How to Reduce Future MAP Violations

Automated MAP monitoring and the triggering of alerts make the process easier. Once discovered, there are several outcomes available to manufacturers to mitigate the damage. Manufacturers can take the following steps to uphold their minimum prices:

  • Try Product Serialization
    Many retailers bypass MAP by selling the products on Amazon at lower prices. Manufacturers can serialize product numbers to prevent unauthorized sales.
  • Solidify Relationships with the Compliant Resellers
    Avoiding retailers that have a gray-market reputation is one successful strategy to keep company prices stable. The best strategy is to focus on selling to companies that respect their agreements and to choose companies as associates that are willing to share information about their sales channels.
  • Conduct Contract Reviews
    Companies should operate fairly and always require a MAP contract with each reseller. Each reseller should identify the distributors that it uses, and the distributors should identify any retailers where the products will be sold.
  • Explain the Company’s MAP Enforcement Plans
    If enforcement is not consistent, resellers are more likely to sell at lower prices. Enforcement policies should be clear.
  • Automate “Do Not Sell” Lists
    The right technology can automate weekly or monthly “do not sell” lists and violation notices.
  • Customize Steps to Streamline Policy Enforcement
    It’s important to build workflows to streamline or automate complex enforcement steps to ensure that the steps are taken for every violation.
  • Retain Proof of Violations
    It’s important to store screenshots proving violations to use in enforcement efforts.
  • Register Company Brands on Amazon
    The best way to prevent unauthorized sales on Amazon is to join the Amazon Brand Registry program. As a member, any company can publish premium content and use powerful search tools to discover violations. Telling Amazon about the company’s brand guidelines and pricing lets Amazon know that the company products are being carefully monitored.
  • Enforce Non-compete Clauses
    Companies can prevent resellers from competing against them on Amazon by adding non-compete clauses that prevent them from selling on Amazon

It’s critical to establish firm monitoring policies and enforcement actions to maintain prices. That depends on automated price-tracking software, a custom monitoring app or manual monitoring, which is not recommended because of the difficulty of tracking MAP manually.

The Manufacturer’s Dilemma

Manufacturers work regularly with resellers and retailers to market their products to a wider audience, but customers often violate the manufacturer’s trust by undercutting minimum price. The reasons to sell at a lower price can be compelling, but the approach can damage the manufacturer’s reputation, devalue the brand and upset resellers that follow the rules.

Eventually, price devaluation cuts into manufacturer profits even if the resellers paid the full wholesale price. The practice of setting high profit margins for retailers and resellers benefits them in many ways, but only if the manufacturer enforces its minimum price. The enforcement actions that might be taken include:

  • Initiating legal action based on a Supreme Court decision in 2007 upholding MAP policies
  • Including a firm set of guidelines identifying what resellers are allowed to do when selling company products
  • Monitoring the web and hidden websites for violations
  • Enforcing compliance with alerts, publicized lists of violators and other actions
  • Giving violators one warning before pursuing another enforcement actions
  • Banning frequent violators from selling the company’s products
  • Maintaining price, brand identify and company values to protect other resellers and associates.

An article posted at Forbes.com revealed that the average brand sells its products at 77 domains, but 23 percent of the products generate Map violations. [3] Consumer electronics suffer the most violations comprising 20.5 percent of all violations. Companies can control their brands by developing comprehensive monitoring programs that enforce their prices and brand standards. It’s difficult to refuse selling wholesale products in large lots, but the consequences of allowing MAP violations can generate even greater negatives than the loss of a little profit.

 


 

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References:

[1] 2.deloitte.com: Wholesale distribution disrupted
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumer-business/us-cb-wholesale-distribution-disrupted.pdf

[2] Econsultancy.com: What are minimum advertised price policies?
https://econsultancy.com/what-are-minimum-advertised-price-policies/

[3] Forbes.com: How To Protect Your Company’s Minimum Advertised Price (MAP) Online
https://www.forbes.com/sites/kateharrison/2018/06/30/how-to-protect-your-companys-minimum-advertised-price-map-online/#1cc959805536

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