Now, it is a proven fact that prices are the major factor that defines the competition in the e-commerce world. What I mean by defining the competition is; many online retailers dynamically try to cut or increase the prices below or above the competitors to increase their sales and margins. So, this challenge brings out a fierce competition. And also, as e-commerce enthusiasts, we mostly see the entertaining part of e-commerce such as sprinkling product pages, attracting discounts, diversified payment and shipping options, dynamic prices… But, the spectacle is not just between retailers and online shoppers. What’s going on at the backstage of e-commerce world? How do e-commerce suppliers stand towards this dynamism?
E-commerce suppliers have definitely some concerns that affect their businesses and profitability. Some of the outcomes of that fierce competition in e-commerce may harm suppliers. Today, we are going to dig the most apparent of them – Minimum Advertised Price or in brief MAP.
What is MAP (Minimum Advertised Price)?
MAP is the lowest price a retailer can advertise the product for sale or agreed price a retailer agrees to sell a brand or product at. It is advised by manufacturers to online retailers through legal or non-written agreements in order to maintain their brand positioning and sustain their business in long run.
For example, if a sunglass supplier/brand sets a MAP of $200 for one of its sunglass, it means that online retailers must sell this product at $200 or more, if not it means retailer violates MAP policy.
As stated in the example, some of the retailers may violate MAP policy. Not some of them aim to violate MAP instinctively, in some cases they had no choice to lower the prices of your products to survive in ultra-competitive e-commerce landscape. This violation can be seen at high percentages in giant marketplaces such as Amazon.
It is important to keep in mind that while MAP agreements are one of the best ways suppliers can protect themselves against price violation. So that, you have to build a strict system that conducts MAP monitoring over your online retailers. You can see the positive outcomes by applying MAP monitoring such as;
- Building fair competition on different channels.
- Building great brand identity
- Having a consistent relationship with retailers
- Helping small and medium online stores to better compete with bigger ones
- Maintain stable margins
- Prevent lower prices
Why E-Commerce Suppliers Need MAP Monitoring?
The importance of the online price management is really clear. Everyone agrees about it. However, people don’t always realize that pricing is not just a way to get revenue. In addition to that, price is a powerful marketing weapon and brand identity. It has an incredible effect on brand value and when prices are so diversified on different marketplaces, they almost always negatively impact the consumer’s perception of that particular brand.
Think about a scenario that once your brand’s product has been listed at a lower price, the online shoppers will expect to see same prices at everywhere. Believe me, they have an enormous memory correlating the prices with your brand. And wait… I haven’t said the most ungrateful part yet. They will not blame marketplace or retailer, your brand’s name will come in their mind whenever they remember this experience.
When one online retailer sets a low price there is a risk of others follow lowering your brand’s prices to survive in ultra-competitive e-commerce landscape. This can create a dangerous domino effect. After the huge efforts of maintaining a valuable brand reputation, the last thing you would want is to have your brand get harmed just because of not monitoring your brand’s prices on retailers’ store. It may take tons of times and efforts to retain your brand’s reputation back again.
So, after considering the possible outcomes of violated prices, it seems obvious to start MAP monitoring.
How Suppliers Can Effectively Monitor Retailers to Prevent MAP Violation?
You have to routinize monitoring the retail prices just like a new habit. Prioritizing this act provides you a consistent and manageable monitoring practice. Unfortunately, the common problem here, brands set MAP price first but ignore or forget it because of not building a sustainable monitoring process.
You can do this research manually by adding all URL’s to a sheet and checking all product pages daily. But does it seem an effective or proper way to conduct it? Think about you are distributing large numbers of products to retailers. Tracking hundreds of prices manually will be tedious, time-consuming and not provide you an accurate data.
Instead of doing it manually, price tracking software is the fastest and most efficient way to monitor the prices that retailers are assigning to your brand. You may have signed a contract about minimum advertised pricing, but if you can’t check the prices properly whether or not they are respecting it, you are risking the future of your business due to lack of information.
By automating monitoring retailer’s prices, you monitor your products’ pricing across thousands of online retailers without hassle. Besides, you’ll be alerted when one of your retailers abused the agreement. Thanks to the automated price tracking software, you can focus more on brand retention and grow your business.
Prisync helps all sized e-commerce companies and suppliers to track the prices automatically online and increase the profit margins and conversions. Let us help you get it when it comes to online prices for your brand.pricing terminologysupplier relationships