What to Do If You Have Gray Market Sellers Breaking MAP
Where’s the MAP? No, we don't mean Dora the Explorer’s talking, overly self-exuberant map. In the eCommerce world, MAP is an acronym for “minimum advertised price.” If you’re selling online and aren’t quite sure where—or what—yours is, you might be in trouble.
What is a MAP policy?
A MAP policy is an agreement between the manufacturer and their retailers that spells out the lowest price at which the retailer can advertise the manufacturer’s products. AKA, if the manufacturer says their socks have to be show up on Amazon for $12 a pop, the retailer has to abide by that agreement or be at risk of violating it.
However, retailers can be sneaky in trying to get around MAP. Rather than blatantly violate MAP, some retailers will use tricks like bundling or giving discount rates at check-out to get around it.
It may not seem too bad to have retailers selling your product for a dollar or two less online, but they can really add up if you’re not careful.
What happens if I don’t have a MAP policy?
First and foremost, said Whitney Gibson, Leader of Vorys Online Seller Enforcement, you face margin erosion—often in your brick and mortar channels as well as online.
“Manufacturers end up with a lot of unauthorized, gray market sellers who are selling their products on the marketplaces at really cheap prices,” Gibson said.
Those cheap prices online eventually push down product prices everywhere because retailers argue for the same cheaper prices—or even refuse to carry the MAP-violating products at all.
“During that process of pricing erosion, the brand is the one that suffers. So it’s all about protecting their price and essentially their margin,” said Melanie Alder, Pattern Founder and CIO.
Another consequence of not having a MAP policy is losing control over your brand, said Jared Mason, a Director of Brand Management at Pattern. Consumers expect certain quality and prices with certain brands. When those expectations are violated, it can decrease trust in the brand itself. Getting sellers compliant with MAP policy can ensure brand equity.
“With eCommerce, people love the fact that they can find a good deal, but if that good deal is negatively impacting every other channel—if it is negatively impacting even other online channels—then compliance is important to make sure your brand can be consistent,” Mason said.
How do I create a good MAP policy?
When creating a good MAP policy, two things are most important. First, you want to make sure that your sellers are aware of your policy. Second, make sure that your policy is enforceable.
However, enforcing MAP can take additional time and money if your legal partner isn’t accustomed to MAP compliance. At Pattern, we partner with Vorys (experts in eControl) to help our brands seamlessly create and enforce a viable MAP policy.
When all is said and done, we understand how tough it can be to enforce MAP, ‘cause we’ve been there.
“We’ve been in the client’s shoes,” said Nicola Hollow, General Manager of our UK office. “The difference for us is that we help people develop their strategy but we’ll also help them implement it.”
Let us show you how we can help you create or enforce a MAP policy by filling out the form below.