When the dot-com bubble popped in 2000, Pets.com was one of its most highly publicized failures. As a result, pet products became a widely used symbol of the limitations of eCommerce. People buying pet supplies over the internet? What a joke!
But nobody is laughing at the idea today. In fact, eCommerce has become such a large component of retail sales in almost every industry, and it’s become so competitive, that pet product makers today face a new challenge. Online sellers driving their prices lower and lower are threatening these manufacturers’ retail partnerships and even their brands’ reputations.
Which is why, if you sell your pet products through a network of online and brick-and-mortar retailers, you need to take steps to create consistent pricing among all of your sellers. That means, among other things, drafting and enforcing a MAP pricing policy. In this post we’ll offer a few best practices.
Recommendations for Developing and Enforcing a MAP policy
1. Make your MAP policy’s guidelines and consequences clear
The point of MAP is to create a fair environment for competition among your resellers, and a consistent buying experience for customers across retail outlets and channels. That means every seller who reads your policy should easily understand what you’re asking of them, and what consequences you’re promising to impose if they go against the policy.
If you want to use the broader definition of “advertised price” to include the shopping-cart price for online retailers, write that clearly in your policy. (Note: You cannot extend your MAP pricing rules to the checkout price; this is widely considered the “sale price” and no longer part of the offer.) If you plan to cut off supply for 30 days for all first-time pricing violations, state that in plain language in the Consequences section.
A common mistake that manufacturers make is adding a bunch of legalese to their MAP policy. They assume this will make the policy look more serious, perhaps even legally binding on their sellers (which it isn’t). But your goal with this pricing policy isn’t to confuse retailers — it’s to earn their compliance with your guidelines for advertised pricing.
For help with this all-important drafting step, read our blog:
4 tips for crafting your MAP policy language.
2. Offer brick-and-mortar retailers incentives to help them compete
To remain on the right side of antitrust laws, a MAP policy must be applied equally to all sellers. That means, for example, that you can’t cut off a small retailer for a first-time pricing violation, but then let one of your larger partners off with a warning for an identical first-time offense.
But there are perfectly legal ways to help your brick-and-mortar sellers compete with their online counterparts. For example, you may offer rebates or discount pricing to all sellers who place your company’s physical product displays in their stores, grant you prominent shelf space, and/or who train their in-store sales reps on the benefits of your products.”
Assuming one of your MAP policy goals is to make sure brick-and-mortar stores continue carrying your brand, you’ll want to offer incentives that allow these store owners to sell your products at prices competitive with eCommerce sellers who have far less overhead.
To understand why these incentives are allowed under antitrust law, read our blog:
Can you treat different resellers in your channel differently?
3. Publicize your MAP policy
Once your MAP policy is written and ready to go, you’ll want to make as big a splash as possible introducing it.
This means drafting a press release to announce the policy and sending it to outlets like Pet Product News and Pet Business. It also means being ready to answer media questions about the policy — why you’ve implemented it, what you’re hoping to accomplish with it, and why it’s going to be good for your resellers and customers alike.
There are many benefits to publicizing your company’s MAP policy. First, you’re putting all sellers on notice that you’ve formalized your plans to rein in pricing violations. That will lessen the likelihood of retailers trying to sneak in a below-MAP price listing to make some quick sales, because they’ll know you’re more likely to be on the lookout for that sort of thing. It will also be welcome to news all of your reputable retailers — particularly those who operate physical stores — who worry about being unfairly undersold by their competitors.
A second benefit of publicizing your MAP policy is that it will make your brand more attractive to retailers not already selling your products. When they see that your company takes pricing consistency seriously, a new retailer will be more likely to want to work with you.
Bonus tip: don’t manage your MAP monitoring and enforcement alone
One final note: Once you’ve put your MAP policy into effect, you’ll have to monitor your brands’ entire online presence 24/7 to make sure everyone is advertising your products at the approved prices. Given how many online marketplaces and eCommerce sites your products could be appearing at any moment — perhaps hundreds of thousands — monitoring all of these prices at all hours just isn’t something you can do without help.
But with the right MAP policy software, you can automate the entire process. The right platform will catch MAP violations immediately, alert your team so you can take quick action, and document these violations for your records or to help you build a case if needed. It will even automatically begin the enforcement process by warning the offender and demanding they remove the violating ad or listing.
To see how TrackStreet helps pet product companies improve their MAP policies, read this Pet Business story: “How Grizzly Pet Products Ramped up MAP Enforcement.”