Picture this: Fred purchases a brake master cylinder online at a deep discount. The price appealed to Fred, but the online retailer didn’t offer any customer support. As a result, his product questions didn’t get answered — and it’s possible that the online retailer didn’t even have the expertise to answer them. Fred then went to BeepBeep Experts, the local retailer in his town, to get the advice he needed.
The online retailer selling the part at a lower cost — without having to make the investment in learning about the product line — is, in theory, selling at the same margin as BeepBeep Experts, which adheres to the minimum advertised price (MAP) policy and has product knowledge.
Does this seem fair?
Manufacturers are using MAP policies more frequently as the automotive and powersports parts and accessories category continues to grow online. In fact, 2015 sales are projected to increase 17% from 2014 and exceed $6 billion.
So how does MAP work, and why is it so important for e-commerce retailers in the auto category? Let’s explore the lay of the MAP land.
MAP: The Benefits to Retailers
Manufacturers often deploy MAP policies to protect the margins of retailers selling their products. Many retailers invest a lot of time and resources learning about the product specifications, applications and proper installation.
Online shoppers can compare pricing quickly, and many naturally gravitate to products with the lowest price. This eventually drives prices down to the point where there’s very little or no margin left for the retailer. But with a MAP policy, advertised prices can only be lowered so much.
How Manufacturers Enforce MAP
Some manufacturers are enforcing MAP with tools like Brand Protection Agency, Wiser and Bridge Under. These solutions allow manufacturers to upload MPN and MAP values and monitor pricing, then crawl the internet for listings on marketplaces, comparison shopping sites and websites that are advertised below MAP.
Pricing for these solution providers can range from a couple hundred dollars a month for smaller manufacturers to tens of thousands of dollars for very large manufacturers. Pricing is a function of the scope of SKUs, number of domains and the frequency of monitoring. Frequency can be daily, weekly, biweekly or any other variance.
How Marketplaces Approach MAP
Sears allows manufacturers to load MAP information into the Sears platform. If a retailer’s pricing is below MAP, the price will not list. Sears offers two levels of its MAP policy: strict and non-strict. For strict MAP pricing, the price, or any discounts applied, won’t be displayed on the product page for the consumer to see until the product is added to the cart. For non-strict MAP pricing, the sale price won’t be displayed on the product page, but a discount will be. The consumer will only see the original price once they add the item to their cart.
Learn more about Sears’ MAP policy here.
Newegg also allows manufacturers to load MAP values into its platform. If a listing price is below MAP, however, the price will error out and not list. The manufacturer can also provide a list of authorized resellers to ensure that only certain brands are listed.
There isn’t a way for manufacturers to communicate MAP policies on Amazon, so Amazon errors out any listing that falls below its own policy. Amazon states that it has the right to set its own prices independently, but if the price is below MAP, Amazon can’t show consumers until they add the item to their cart.
As far as we can tell, eBay doesn’t have an official position on manufacturers’ MAP policies. If prices fall below MAP, the manufacturer can file a Verified Rights Owner (VeRO) complaint for intellectual property infringement asking eBay to remove the listing.
Challenges for Retailers Adhering to MAP
Say you’re a retailer that’s created listings for hundreds of brands. How can you keep your listings up to date?
For many retailers, knowing which manufacturers have MAP policies can be challenging, but there are resources for getting this information, such as the manufacturer’s website, distributors, DCi and the SEMA Data Co-op. If you’re using our partner DCi, then the MAP is fed into your ChannelAdvisor account via our integration.
The Bottom Line
Yes, a central location for MAP policies would simplify a lot of manufacturers’ and retailers’ lives. But no single entity currently has the critical mass to provide this centralized service. And even if it did, there’s still some complexity to the process — in that there are many different ways to roll out a MAP policy.
It’s a fast-moving industry we’re in, so it’s not out of the picture that MAP policies may take on a more robust organization sometime in the near future.
In the meantime, MAP policies exist for a reason, so it’s crucial that you follow the rules to protect your business.
Blog post by Curt McDowell, business development manager for Automotive and Powersports, ChannelAdvisor