Oh to be the cool parent. Grab a skateboard, flip your hat backwards, and do as the Romans do. With a smug glance over your Wayfarers, maybe you let your oldest slide on a particularly nitpicky rule. “It’s all good, son.” Then your youngest catches wind and starts whining about it not being fair that he’s allowed to get away with it. “Well, errr …” Before you know it, your middle child is sobbing because everyone always forgets about her. “Well now, hold on, that’s not what I—” Finally your spouse enters the room demanding to know, “Just what the hell did you do?!”
Yeah, forget being the cool parent. You don’t want that smoke.
If enforcers don’t enforce, the rules have no teeth and won’t be followed. When it comes to minimum advertised price (MAP) enforcement, you’d be advised to throw any personal relationships you have with sellers out the window. Don’t try to be the cool parent.
Why? Your MAP policy is meant to protect your products from price erosion, preserve your sellers’ margins, and prevent your customers from being misled by fraudulent sellers and knock-off products. Done right, it’s a win-win-win situation.
But that only happens when you pair your MAP policy with MAP enforcement. Without enforcement, your pricing policy has no teeth, and problem sellers will freely abuse it. Your sellers need to know that there are real consequences for MAP violations and that you’ll actually follow through — just like the responsible parent you know you can be.
MAP enforcement is essential for ecommerce brands that sell products through online retailers and marketplaces. And while it probably sounds overwhelming to track down and pursue every MAP violation, it doesn’t have to be difficult.
In this guide, we break down:
- What MAP enforcement is
- Benefits of MAP enforcement
- Challenges to MAP enforcement
- How to enforce your MAP policy
To begin, let’s talk about what MAP enforcement really means.
What is MAP enforcement?
MAP enforcement is the ongoing process of ensuring your sellers comply with your MAP policy. And whereas MAP enforcement is your response to violations, MAP monitoring is how you identify violations in the first place. When a seller violates your MAP policy, you notify them of the violation, apply a penalty according to your MAP policy, and if necessary (and possible), terminate the relationship with the seller.
This consistent enforcement provides a wide range of benefits to your brand, your sellers, and your customers, but it presents a number of challenges as well. It’s not easy to track MAP violations 24/7, navigate the legal hurdles of MAP policies, and enforce your price.
But it’s well worth it.
Benefits of MAP enforcement
Without MAP enforcement, your MAP policy is a pretty meaningless document. Some sellers won’t respect it, the rest will have to violate it to compete, and you won’t reap any of the benefits of your policy. But if you show sellers that MAP violations carry consequences, the upside is worth it.
Eliminate MAP violations
Enforce your MAP policy well, and sellers learn quickly that it’s not worth playing games with your price. The cost of violating your price is no longer worth the risk of getting caught and receiving a penalty. The temporary gains brought on by the lower price are outweighed by the cost to their business.
As more sellers realize that you’re enforcing your MAP policy and taking violations seriously, violations decrease. Sellers who can only stay in business by underpricing products will stop selling your products altogether, and everyone else will simply stop risking your penalties.
Prevent price erosion
Price erosion is when the value of a product consistently decreases over time. In ecommerce, this often happens when the perceived value decreases, and a brand is forced to lower their price. Consumers no longer feel your product is worth the price it used to be listed at, so they won’t pay the regular price.
Have you ever seen a product available for a steep discount and then felt like the regular price wasn’t worth paying?
This is one of the biggest problems with unchecked MAP violations. One seller lowers their price, everyone else follows suit to compete, and the new low price becomes an anchor that normalizes in consumers’ minds. It makes your regular price seem too high.
MAP enforcement prevents price erosion by keeping your product pricing consistent. If your product is never available for lower than the MAP, the price is the price, and consumers continue to believe it’s worth paying.
Encourage sellers to compete in other areas
Done well, MAP enforcement “levels the playing field” so that sellers have to compete to provide quality experiences and service rather than simply cut prices. They can’t jump to the top of marketplace listings by dropping prices, and they have to compete to provide things like:
- More generous return policies and warranties
- More helpful product pages
- More responsive customer service
- Better perks and incentives
Ultimately, you want the sellers who provide the best customer experience to get the lion’s share of sales. MAP enforcement increases the likelihood that this will happen by removing price from the equation.
Protect seller margins
Another of the more damaging impacts of MAP violations is that they eat into your sellers’ margins — and yours. As the price decreases, so does your sellers’ slice of the pie. Some gray market sellers aren’t worried about margins. When someone’s entire company is one person in a basement, they have a lot less overhead, and they can afford to sell for much lower than a larger, higher-quality seller.
When margins get too low, high-quality sellers and retailers will stop carrying your products. It’s not worth it for them to deal with such low, inconsistent ROI, especially if they’re getting beat by a lower-tier seller anyways.
Protecting your sellers’ margins ensures that you’ll continue working with quality sellers, that both of you will actually benefit from selling your products, and that your customers are more likely to have a good experience with your brand.
Maintain your brand integrity
Inconsistent pricing makes your brand look bad. As customers shop around and compare their buying options, the variance in pricing makes it harder for customers to differentiate between your actual products and the cheap knock-offs. In effect, it makes your brand look cheap.
So while you may present your brand as the top-tier choice in your product category, MAP violators can make your brand look like the bottom of the barrel.
MAP violations also tend to drive sales to lower-quality sellers, since they’re the ones most willing to violate your price and most comfortable eating into their margins. They may cut corners on shipping costs and damage more products. Or they might flake on customers who try to track, return, or get help with a purchase.
This means a larger percentage of your customers wind up having a low-quality experience when buying your products. Bad sellers reflect poorly on your brand. Because while the product itself may be the same, customers associate their experience with a seller with the product they purchased. And the next time they see your brand, they’ll think of their negative experience with that seller.
MAP enforcement helps your customers develop a consistent perception of your brand’s quality through consistent experiences when they purchase your products.
Satisfy high-quality retailers
Your best retail partners actually want you to enforce your MAP policy. MAP violations hurt them too because they can’t afford to drive their margins as low as some random gray market seller, so they wind up losing sales to a one-person operation. Even if they truly believe in the value of your product and know there’s demand for your brand, it’s not sustainable for them to sell your products when their competitors can kill their margins on a whim.
You may even find that high-quality retailers will advocate for MAP enforcement, so they can return to competing on service. MAP enforcement builds trust in your brand and helps retailers see that you really care about your products, your customers, and your partners.
Challenges to MAP enforcement
Unfortunately, there are some significant obstacles to all the benefits of MAP enforcement. You can’t just check your product pages every few days and call it done. Without a serious MAP enforcement system in place, ecommerce brands of all shapes and sizes constantly let MAP violations slip through the cracks, which undermines their MAP policy and prevents them from enjoying the benefits mentioned above.
There are particular problems brands run into when trying to enforce their MAP policy.
Scope
Even with a small product catalog, MAP monitoring can feel like an overwhelming task. The more sellers you have, the more sites you have to monitor, and the more SKUs you have, the more product pages you have to monitor. Checking pricing on a handful of products seems manageable until you have to look at all of those products across a hundred online storefronts and marketplaces. For brands with hundreds or thousands of individual products, it’s simply impossible for a human to manually monitor that many places.
Not to mention, the gaps between the moments you actively monitor pricing represent opportunities for MAP violations to slip through the cracks. If you only check a website once a week, that leaves six out of seven days a week that a seller could be in violation without your knowledge. And with advanced tools like repricing software, it’s effortless for sellers to commit short-term violations that you’d never even notice by checking once per day.
This puts brands in the uncomfortable position of deciding which SKUs to actually worry about, letting their brand integrity dwindle by applying inconsistent standards across their catalog. (This also runs the risk of appearing to show favoritism to some sellers.)
As we’ll discuss below, this problem is immediately remedied with quality MAP monitoring software, which automatically checks the prices of all your SKUs everywhere they appear so your MAP enforcement efforts aren’t limited by your ability to manually review prices.
Consistency
Another major obstacle to MAP enforcement is consistency. If you don’t treat every seller the same and apply your policy equally to every case, you’re showing favoritism and opening the door to antitrust lawsuits.
This is especially challenging when it comes to appeals and replies. Whether you’re speaking to the CEO of a major retailer, the owner of a mom-and-pop shop, a seller you’ve never spoken with, or some random employee, you have to treat everyone the same.
This is especially challenging when you or an executive at your company has a close relationship with a particular retailer. If your golf buddy or tennis partner is violating your MAP policy, you can’t call them up to discuss the problem unless you’d do the same for every other seller.
This is what makes templated MAP violation letters so important. (Well, that and the fact that you have to send a million of them.) It ensures that everyone is on equal footing, and you have a formal system for handling this process.
“The Gray Market”
It’s nearly impossible to enforce your MAP policy if you can’t contact the violator. Gray market sellers — the ones who acquire your product through a third party and are least likely to care about your brand or respect your policy — are notoriously difficult to contact. And that’s by design. They’ll let the violation letters pile up in a P.O. box and change identities at will. Marketplaces that allow these sellers often have little if any contact information available, which leaves brands to turn to other proprietary seller lists (such as PriceSpider’s) to unmask and contact gray market sellers.
Gray market sellers introduce a new layer to MAP enforcement: closing the back door. Their existence means your supply chain is leaking. Someone who isn’t supposed to have your product in bulk is getting it from one of your distributors, and you need to cut them off.
How do you enforce a MAP policy?
So, how do you overcome the challenges of MAP enforcement and ensure your sellers comply with your policy? There are a lot of pieces to enforcing your MAP policy, but thankfully, there are automated tools that can do the heavy lifting for you.
Enforcement starts with your MAP policy
A good MAP policy lays out the precise penalties you’ll apply and action steps you’ll take when a seller violates the policy. In fact, if enforcement isn’t baked into your MAP policy, it’s not much of a MAP policy at all. This document needs to clearly articulate the stakes to your sellers. And in that sense, the policy itself serves as a deterrent to violations.
Your policy should define the number of “strikes” you’ll give a seller, any situations that may bypass the escalation process and result in immediate termination, and what kinds of consequences sellers can expect to accompany their first, second, and third violation. Generally speaking, the fewer strikes you allow and the steeper the penalties, the more effective your policy will be in eliminating violations, but it all really depends on your follow through.
Consider how you’ll monitor sellers
Your ability to enforce your MAP policy is only as good as your ability to monitor your prices. If you have more than a handful of SKUs and sellers, manual MAP monitoring simply won’t cut it. Ecommerce brands that take MAP monitoring seriously use software to automate the process. These specialized tools automatically track your SKUs across the web and notify you when a seller’s price violates your policy.
There’s a lot to consider when choosing a MAP monitoring solution, but the biggest things to consider are whether it can monitor the sites you need to track and how often it actually pulls pricing data. Some only pull that information once a week or even just a few times per day. This gives sellers a lot of room to violate your policy without being detected.
Prowl, PriceSpider’s MAP monitoring solution, provides you with actual real-time data, which is why we detect more than 500,000 MAP violations per day. And since sellers don’t always list your products by SKU or UPC, Prowl searches for products by product title and other metadata, too. Almost 2,000 brands trust Prowl to do the hardest parts of MAP enforcement for them.
Prepare a MAP violation letter
You can’t afford to manually write a response every time a seller violates your MAP policy. Any variations could get you in legal trouble, and with how many you have to send, it would be a tremendous waste of time. Ideally, you should have a template for every level of penalty you intend to enforce: first strike, second, termination, etc. (Take this MAP violation letter template as an example to get you started.)
Some may recommend that you start with a warning letter, but here’s the problem with that: if sellers don’t have actual consequences associated with the violation, they’re going to keep doing it. A warning letter says, “We’re watching you, but we’re going to let this one slide.” Your MAP policy should be all the warning sellers need. Sending your MAP policy to your sellers is communicating that there will be consequences. (Assuming you’ve included those in your policy, of course.)
Elevate appeals and replies to an antitrust lawyer
Any time a seller replies to your violation letter and attempts to appeal the process, you need to direct them to a lawyer. Period. You don’t want an employee to put your company at risk by not understanding the intricacies of antitrust laws. That’s too much responsibility for anyone who doesn’t wade through the codes and regulations for a living.
A lawyer will ensure your policy is applied consistently and according to any relevant laws, statutes, codes, regulations, court rulings, or special circumstances.
It doesn’t matter if a seller correctly pointed out a human error on your part or if the violation was an innocent mistake. Escalate the communication to your lawyer, prevent the appearance of favoritism, and keep it professional.
Follow through with your penalties
If your policy says you’re going to put a freeze on a seller’s ability to acquire or sell inventory for their second violation, freeze it. If it says you’ll terminate your relationship with them on the third violation, terminate it.
Leniency is not your friend when it comes to MAP enforcement. Good retail partners will respect their professional relationship with you and accept the penalty. Bad sellers will think twice about violating again, and they may even start looking for a way out of the relationship themselves (and good riddance).
Give a MAP violator a free pass, and they’ll continue to drive your prices right into the ground. Whomever you put in charge of MAP enforcement needs to have the authority to follow through on administering penalties.
Cut ties with problem sellers
In ecommerce, not all sales are created equal, and some do more harm than good to your brand. Your MAP enforcement strategy needs to include a pathway to terminating seller relationships (and again, this starts with your MAP policy itself). If a seller continues to violate your MAP policy, it’s time to cut them off. No more chances. No more warnings. No more dangerously low-priced sales.
When your other sellers see competitors suddenly stop carrying your products after violating your MAP policy, they’ll know you’re taking it seriously. And that serves to both encourage them that you value their relationship with you and discourage them from making the same mistake as their competitor.
Close the back door
On a similar note, sometimes the problem that’s causing MAP violations is upstream. Perhaps a retailer is struggling to move enough of your product, so they’re giving someone a bulk discount at a physical store, and voila! You have a new gray market seller who happens to be located in the same area code.
If you can’t communicate directly with an unknown seller or penalize them, the next step is to figure out where they’re getting their supply. If it’s not from you, there’s a hole in your supply chain, and you’re going to have to have a difficult conversation with the retail partner who is responsible. By selling your product in bulk at a discount and creating the opportunity for a third-party seller to cut in, this partner is hurting your brand and ultimately causing these MAP violations. If penalties aren’t enough to deter them from poking holes in your supply chain, you may need to let this partner go. Partners that don’t respect your brand, your relationship with them, or your reputation aren’t worth keeping around long-term.
Simplify MAP enforcement
Prowl is the world’s most advanced MAP monitoring software. If you want to be able to track everywhere your products appear and streamline the MAP enforcement process, you won’t find a better solution. Check out our guide to choosing MAP monitoring software to learn more about what to look for, or schedule a demo to see Prowl in action.
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