TAKE CONTROL OF YOUR BRAND!
Loss of control is easier than it may seem. There is a greater risk of losing control over your brand when there are more wholesalers/resellers distributing your product. This can happen for a number of reasons. A common cause is that wholesalers decide they want to sell the stock as quick as possible. When they notice a high amount of supply from other wholesalers, they lower the price on their inventory in an attempt to do so.
Another common occurrence is for resellers to feel that Manufacturer’s Suggested Retail Price (MSRP) is too high when receiving stock at a good wholesale price and so they price lower than MSRP. Also, resellers may use MSRP as a price promotion tool. For example, resellers may display the MSRP of a product and then sell the product for less so that customers feel that they are getting a good deal.
In turn, this can lead them to sell products for a lower price than brand owners would like. This can negatively influence the perceived quality of a product and have a knock on effect on brand image and sales.
TIP – CONTROL THOSE RESELLERS!
Cut down on wholesalers that are not adding value to the brand and introduce a Minimum Advertised Price (MAP). MAP is a great way to gain more control over the supply chain.
WHAT IS MAP?
1) MAP sets a minimum price for what a product can be sold for online
2) It is legally bound and must be adhered to
3) MAP policies do not violate antitrust law and help promote fair competition among resellers
Minimum Advertised Pricing (MAP) is the lowest price that a retailer can advertise and sell a product for on online marketplaces. MAP is a legal policy under U.S. antitrust statutes.
Since MAP is a policy for ‘advertised price’, it does not set a minimum price on how much a retailer can sell a product for in their store. A retailer can sell below MAP in-store if they wish. It does however set the lowest price that a product can be advertised at and sold for across online marketplaces.
MAP is a pricing policy that provides legal protection for brand owners and sets a level playing field for resellers. Brand Owners have the legal right to restrict resellers from selling their products if they do not abide to MAP. For example, in Amazon, resellers can get blacklisted for breaches in MAP.
A common process for this is that brands use software like Keepa to alert them of anyone selling under MAP. From here, they can alert Seller Central of the issue. Seller Central then send a warning to the reseller and if they still do not comply with MAP, their account will get blacklisted.
CONTROL MEANS GROWTH
Greater control over the supply chain can reduce short term fluctuations in price and sales. This protects brand image and leaves brands in a better position for stable, continual market growth.
SUMMARY OF BENEFITS
- Resellers of different sizes can compete fairly, as larger resellers cannot use better margins from discounts on large orders to lower the price
- Smaller resellers can effectively provide brands with the values they want to implement, as they are not being ‘out priced’ by larger resellers with better margins
- MAP acts as a barrier to price wars, protecting brand image from fluctuating price and leaving fairer margins for resellers
- With pricing at a level playing field, customers tend to reward resellers with the best metrics more. For example, resellers with better customer service or faster delivery
- Relationships between brands and resellers tend to improve as the issue of pricing is eliminated. Brand image and reputation is protected, allowing for stable growth
LETS DISCUSS THE WAYS THAT OUR TEAM CAN TAILOR STRATEGIES TO EXPLODE YOUR BRAND’S SALES AND GROWTH ON AMAZON