- Sakshi Ragini
Amazon MAP compliance Policies: Winning Fair as an Amazon Seller
Updated: Feb 5, 2021
As an Amazon seller, your playfield is highly competitive. Maintaining a strong brand identity plays a crucial role in preserving appeal among customers. One such area that requires your attention is the minimum advertised price. Sellers who violate the Amazon MAP compliance policies can taint your brand image, thus, affecting your ROI in the long run. Let us look at what it means and how to counter its ill-effects.
What is the MAP or Minimum advertised price?
Manufacturing brands use several means to protect their brand reputation. One of them is the minimum advertised price. In online marketing, you advertise your product for a specific value. Right here, MAP compliance policies come into the picture. These policies prohibit you from pricing your product under a particular predetermined value.
In short, the product price you display should always be above MAP. Although you can sell the product at a price lower than the minimum advertised price. As an illustration, let us say that a brand X has a MAP on its product Y at $100. Any seller who values this product at lesser than $100 violates the MAP policy.
Whereas in sales cases, you can sell the product at a lower price yet, and you cannot value it below MAP. One such real-life example is the above figure. After incurring all the bulk-buy discounts, the valid price becomes $26.38, which is lower than the MAP. But at the same time, the advertised price or the VSP adheres to MAP policies.
Why is Amazon MAP compliance essential?
To gain a competitive advantage in the online marketplace, retailers use promotions and other unfair means to lower product prices. However, manufacturers were distressed because product prices speak loads about a brand’s value. Therefore, manufacturers believe MAP enforcement is essential to protect brand value and position.
MAP policies help brands prevent underpricing. Furthermore, it has helped in leveling the marketplace by promoting fair competition between sellers of all factions.
Who commits MAP violations?
It is crucial to understand that the Amazon seller network is a gray area. You will find varieties of sellers: counterfeit sellers, unauthorized sellers, and authorized sellers, to name a few.
Authorized sellers are the ones who are a part of the manufacturer’s retail network. They invest in getting the selling rights. Consequently, they have the manufacturer’s permission to sell those products. The unauthorized sellers are not a part of the manufacturer’s retail network. Hence, they obtain these merchandise by illegitimate methods and sell them without permission.
As a reality-check, all sorts of sellers, indulge in unfair means like MAP violations. A Harvard Business Review study dug into pricing violations. There is a 50% instance of MAP violations by unauthorized sellers. Even the authorized sellers violate MAP compliance policies about 20% of the time.
Many times, small retailers commit MAP violations to avoid being eaten up by large retailers. But, the biggest menace in this area are unauthorized sellers. They use fictitious businesses to sell on Amazon. As an addition, it is difficult to manage them as they are highly sophisticated.
Why should you focus on Amazon MAP compliance?
MAP compliance policies are mostly a thing between the manufacturers and retailers. That is why even the leading names in e-commerce like Amazon are hesitant about MAP enforcement. To manage so many retailers and manufacturers is a humongous job. Also, there is an increasing fear that such measures can decrease Amazon’s ROI.
Why should you focus on Amazon MAP compliance?
This impact is disadvantageous for the sellers as it leads to indirect lobbying by more prominent retailers or MAP violators. Hence, it directly affects your product listing on Amazon. Additionally, a blot on your brand’s reputation can affect your ROI. In many such instances, recovery becomes difficult. Therefore, investing in MAP enforcement is highly advisable.
Challenges of Amazon MAP compliance
Amazon is a large platform and is filled with all sorts of retailers. That is why Amazon policy compliance is difficult, and so is MAP compliance monitoring. Due to a lack of Amazon MAP compliance policies, this responsibility falls on your shoulders.
Only by active management, you can cultivate customer satisfaction and reach your sales goals.
1. Menace of third party sellers
As an Amazon seller, you can sell in three ways: as 3P or a third-party seller, as 1P or in close contact with an Amazon retailer, and lastly, as IP-DTC or directly as a manufacturer.
The biggest menace among the three is that of third-party sellers or 3P. Approximately half of Amazon’s sale comes from 3P sellers. In fact, one can find the highest number of unauthorized sellers in this category.
Several manufacturers try to limit their products from reaching Amazon listings. But, unauthorized sellers can circumvent such conditions easily. If such a seller delivers incorrect goods, then it hurts the manufacturer’s reputation.
2. Identifying unauthorized sellers
Unauthorized sellers swarm Amazon as fake businesses. They act in a highly sophisticated manner and dodge MAP enforcement easily. The most challenging part is identifying them. By the time you might notice unusual activity, they would have done significant damage.
3. Need for dynamic monitoring
The Amazon seller market is large and keeps changing every second. New products are added and removed, and their prices vary. Manual methods of preventing track of MAP compliance policies and enforcing them is complicated. One requires dynamic monitoring to tackle this problem. An able software that does this and reports to the client (seller or manufacturer) can do wonders.
Also read: Competitive Pricing Strategy: How Products Are Priced
Implications of unfair practices like MAP violation
Nowadays, manufacturers and Amazon sellers have become highly aware of MAP enforcement methods. After all, there is so much on stake. Therefore, when MAP violations are reported, severe implications follow.
1. Amazon’s MAP enforcement policies
Amazon doesn’t have MAP compliance policies. At the same time, they do respond to seller complaints in case of severe and repetitive allegations. As a result, you can be stripped of your seller rights. Furthermore, your account can be deleted too.
2. Legal action by manufacturers
There are a number of implications if an unauthorized seller is discovered. In case this information reaches the manufacturer, you may become subject to legal action. The terms of such legal moves are highly severe at times. They are definitely not worth a risk.
Also read: How brands can use competitive data to increase profits
How to exercise Amazon MAP compliance
There isn’t any direct method for MAP enforcement. But one thing that does work wonder is your active participation as a seller or a manufacturer. A few ways you can use to make a change are as follows:
1. MAP compliance monitoring software
Companies nowadays are using data analytics to enforce algorithms that work wonders in Amazon MAP compliance monitoring. Manual efforts in this area will falter because of the humongous nature of the task.
Data analytics-based software helps big time in such cases. It can perform multiple complex analysis of similar items from Amazon and other platforms. They can even compare additional information like price and review monitoring.
Subsequently, with more information, you can improve your appeal. Furthermore, with a responsive and suggestive algorithm, you can make changes to your product to improve your Amazon product listings.
2. Designing penalties to control violators
As a manufacturer, you can lead the change by floating the information about your MAP policies. Propagating the use and advantages of MAP compliance will make your retail network responsive. Such a reliable system helps you flourish as a brand.
A positive Amazon MAP compliance policy is necessary to protect the brand image—design penalties to address the violators that floats a concrete example. But don’t be too hard as it has its repercussions. Using warnings and mild penalties are the way forward.
3. Adopting a healthy violation reporting policy
MAP violators are gaining significantly by swallowing and feeding on the profits of other sellers. Only you can take action against such unfair practices you face. Once you come across MAP violators, you should report them immediately to the manufacturer. This step eliminates illegitimate competition and also helps you establish a strong network with the manufacturer.
This process takes time, but it can reap enormous fruits for you in the long run.
How can Datahut help?
Datahut is a one-stop solution for data-related solutions. In the case of MAP violations, our web scraping solutions can help you keep track of such developments. Our algorithm monitors and informs our clients on suspicious seller activities.
In good faith to level the playfield, you can report such activities, thus eliminating unfair competition. As a result, this helps you grow as an Amazon seller.
Try our Amazon MAP compliance monitoring services and lead a change in MAP enforcement. Allow us to understand your problems. Our data scientists are well-equipped to come up with reliable solutions to data-related issues in various domains. With the promise to help in whichever way possible, we welcome you to Datahut.