You may have heard of MAP — or minimum advertised pricing — if you’ve been selling on Amazon for a while.
Amazon MAP pricing might seem like a simple concept, but there’s quite a bit below the surface that many sellers are unaware of.
To learn more, check out the following breakdown of Amazon MAP pricing.
What exactly is MAP?
To put it simply MAP is an acronym for Minimum Advertised Price or the lowest price that a seller may use to advertise a given product. This price or MAP is always set by the manufacturer and is federally mandated.
Keep in mind that the MAP is the lowest price the product can be advertised at, rather than the lowest price it can be sold at. A seller may still sell a product for a lower price than the MAP, as long as it is not advertised this way. As an Amazon seller, it is important to be aware of this differentiation.
Amazon MAP pricing is an important topic because as many as 92% of online shoppers compare prices when choosing a product. Seasoned Amazon sellers and newcomers alike need to understand what Amazon MAP is all about if they want their business to keep its edge.
Just like other concepts such as tax, stock count, or product details, staying current on MAP policies is crucial to an Amazon seller. Those who do not take the time to understand MAP pricing risk negative effects on their brand.
How does MAP function?
To better understand Amazon MAP pricing consider the following example. Imagine a particular company sets a price of $32 for its best-selling hairdryer, then resellers, such as Amazon, are required to advertise that hairdryer for a price of at least $32. If a hypothetical reseller decided to run a sale offering that hairdryer for $25, they would be violating the MAP agreement.
Given the math involved, and the other complexities, it’s entirely understandable that MAP policies might be confusing. Fortunately, you can still stay ahead of the competition while adhering to Amazon’s MAP pricing policies.
Usually, a seller can determine the MAP of a given product by reducing the most up-to-date MSRP (Manufacturer Suggested Retail Price) by 20%. If we return to the hairdryer example, imagine that the best-selling hairdryer has an MSRP of $40. Now, we can reduce this price by 20% to get the MAP of $32.
The formula to determine this is:
- $40 x 20% = $8
- $40 – $8 = $32
MAP agreements keep pricing consistent which protects the intellectual property of brands and establishes a clear sense of the product’s value to consumers.
How MAP benefits distributors
Amazon MAP pricing provides several benefits to distributors such as:
- Limiting competition from bottom feeder sellers: Without MAP policies unauthorized sellers could undercut all other sellers to divert sales.
- Less price erosion: When sellers are pushed to lower their prices to compete with unauthorized sellers, price erosion can occur. Adhering to MAP policies helps prevent this.
- Stronger connection with distributors: By adhering to MAP policies authorized sellers can show distributors they are trustworthy and reliable. This deepens the relationship between resellers and distributors, increasing the likelihood of a long-term, mutually profitable business relationship.
- The playing field is more likely to be even: MAP pricing policing means that both small business owners and large businesses can compete at the same price points more often. Without MAP, larger businesses might have increased opportunities to undercut smaller enterprises.
- The product’s value remains intact: If a product is advertised at a range of prices, including very low prices, customers’ opinions of the product’s value may be decreased. By maintaining a minimum price point, MAP policies keep a given product from losing its perceived value.
Now is a good time to remember that Amazon MAP pricing is not meant to dictate the price a product is sold for, but rather the price it is advertised for. For example, Amazon sellers may still sell at a price lower than the MAP if it is decided in private conversations or negotiations.
What are the consequences of violating MAP policies?
Wondering what happens if you do not stick to MAP regulations? The downsides can mean considerable damage to your business.
- Your products can lose value: After repeated Amazon MAP pricing violations, a product will seem less valuable to customers, and the amount they are willing to pay for that product will decrease.
- The reputation of your business could suffer: By violating MAP pricing regulations, your business could lose the trust of distributors. This means that your access to the products you need could be limited, hurting your sales.
- Business relationships could end: If a distributor monitors product listings and discovers a violation of MAP policy they may permanently terminate their relationship with the offending seller. If this happens, the seller would be prevented from ever selling that distributor’s products.
6 ways distributors can optimize MAP policies
- Ensure your products have serial numbers to track.
If you create a serial number for a given product, you can order that product from a suspected violator and cross-check the serial number. This will give you a way to track who is adhering to MAP regulations and who is not.
- Track your sellers.
You can set up systems to monitor and track sellers to make sure they are not violating MAP agreements. You can also encourage sellers to reach out to you with concerns and questions, strengthening the relationship.
- Develop a MAP policy that serves your company’s requirements.
Each company is unique and this means your MAP policy should be aligned with your company’s individual needs. Taking the time to customize your MAP policy to your goals is well worth the effort. Having the MAP policy reviewed by an attorney can also be a worthwhile investment.
- Ensure your company’s MAP policy can be understood.
Finally, consider how intelligible your MAP policy is and avoid using unnecessary jargon. Keep in mind that you want retailers to thoroughly read and understand the full policy. This will give them the best chance of adhering to the regulations and keeping both of you happy.
- Treat each reseller equally.
When implementing your MAP policy, show each of your retailers consistency and fairness. No matter their size, each retailer should be given the same treatment and any unauthorized resellers should be confronted via the correct channels.
- Enforce your company’s MAP policy consistently.
Amazon itself will not engage in MAP policy disputes which means that you must enforce your policy yourself. This may seem like a daunting task, but by staying on top of MAP policy enforcement your business will be better off in the long term. If you need assistance, the software is available to help you monitor and enforce MAP pricing.
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