Toys are among the most competitive eCommerce product categories, and one of the fiercest areas of competition online is price. So how can you protect your brand from price erosion, and at the same time safeguard the interests of your most important retailers? Try these MAP policy tips for toy brands.
1. Limit who can retail your products
The first step in preventing sellers from offering your products at egregiously low prices online is to tighten up your retail channel. That means creating an Authorized Dealer Program, where your company sells inventory only to retailers that you have vetted beforehand and have found reputable and trustworthy.
As research from Northwestern University found, unauthorized retailers are several times more likely to violate a brand’s pricing guidelines than sellers who have an actual relationship with the brand.
That makes sense, of course, because authorized retailers have something to lose. If you catch them offering your products for lower prices than your MAP policy allows, they know you could cut off their inventory for a period of time or even terminate your relationship entirely.
Unauthorized retailers, on the other hand, have no relationship with your brand in the first place. They won’t think twice about selling your products at prices they know your official retail partners can’t match.
Which is why you’ll want to set up an Authorized Dealer Program, allow only reputable sellers in, and then put the word out to your distributors and your own internal sales teams that they may sell only to these authorized dealers.
Learn about the advantages of an Authorized Dealer Program
2. Explain that this policy benefits both retailers and consumers
A MAP policy is designed to serve the interests of all parties: your brand, your retailers, and your products’ consumers.
One way to increase compliance with your MAP policy, and diffuse potential frustration from retailers who think the policy is merely designed to restrict their freedom, is to explain right in the introduction that you’re putting this policy in place to create a fair resale marketplace that will be profitable for all of your brand’s authorized resellers.
Ultimately, when you create and maintain pricing consistency across all of your resale channels, your brand brand’s reputation is enhanced, which results in more consumer trust and confidence in your products — which benefits your retail partners.
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3. Don’t let the first domino fall
Imagine a retailer is able to violate your MAP pricing policy, even for a short time, without your company catching it. Now imagine one of your reputable partners finds the violation before you do. If they see this violation going unaddressed for any period of time, a couple of things can happen — none of which will be good for your company.
First, the reputable seller might decide your product is becoming too risky to continue carrying, if you’re holding them to MAP pricing but unauthorized sellers can just undersell them and get away with it. This could cost you some of your most valuable retail relationships.
Second, your reputable sellers might begin to wonder if you’re serious about your MAP and Authorized Dealer policy. Maybe some of them will list a few products advertised at below-MAP pricing themselves, just to see if anyone in your company is even paying attention. When this happens, you could start to see a trend where every retailer is driving down its advertised prices of your products, and that will lead to online price erosion.
Which is why your MAP strategy doesn’t end when you’ve published your policy — that’s only the beginning. The next step in protecting your brand online is to implement a vigilant MAP enforcement plan, one that never lets that first domino fall.
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How to draft and enforce a successful reseller pricing policy
Bonus tip: automate your MAP monitoring and enforcement
Tracking your brand’s presence for possible MAP violations across all eCommerce sites and digital marketplaces, 24/7, simply isn’t possible without software.
If you try to monitor your resellers’ pricing manually, you are bound to miss violations. Even if you do catch the violations, attempting to act on them by manually sending violation notices to each bad actor, based upon their previous violation history, is a task that simply doesn’t scale with humans. You must have enforcement systems, which can automatically escalate violation notifications to all violators, based on your specific enforcement protocol. Considering how much damage even a few unaddressed violations can do to your brand, you don’t want to leave this to chance.
Sign up for the right MAP policy software — to 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.