Note: This is another installment in my ongoing Amazon Fundamentals series. -JD
What are MAP agreements?
As you continue your Amazon journey, you may start to develop relationships with product manufacturers or distributors, that allow you access to new products. However, many manufacturers require sellers to abide by MAP regulations. MAP stands for Minimum Advertised Price. A MAP is a price that all sellers agree to not advertise below.
For example, a sneaker company may set a MAP of $100 for its most popular product. This means that all sellers, those that sell in brick and mortar stores, through a catalogs, or on Amazon are contractually obligated to advertise this product at a price that is $100 or greater. Customers will never see this item advertised for $99.95 or $75 or any price below $100.
Why do MAP agreements exist?
Many brands and manufacturers use them to create a level playing field and promote fair competition between all distribution channels of their products. For example, Internet retailers can sometimes offer reduced prices than brick and mortar stores due to lower overhead. MAP agreements are also used to maintain level of a brand unity and identity. For example, a pair of shoes that are always $100 everywhere may be seen as more valuable and desirable than a pair that is $50 here, $75 there and $125 somewhere else.
MAP agreements can allow smaller sellers to compete with bigger retailers who have to abide by the same set of rules! They prevent repeated underpricing that eats into every seller’s margins.
As an Amazon Seller, why should I care?
MAP agreements allow for multiple sellers to share the Buy Box with less risk of being undercut. However, you must be vigilant and watch out for other sellers who don’t abide by the MAP! In this case, it’s your responsibility to report these unscrupulous MAP violators to your sales rep! Violating a MAP can result in suspension or cancellation of wholesale pricing.
MAP agreements can feel restrictive at times as you don’t have the ability to compete on price. However, there are ways you can help yourself. If it is allowed by your agreement, create product bundles. These can reduce your direct competition and allow you to offer combinations of products that appeal to your customers.
I’ll go more into depth on MAP restrictions in the future, but for now if you have any questions about this basic introduction, please leave a comment or find me on Twitter, @SellerEngine.