What is a Minimum Advertised Price (MAP) violation?

As manufacturers grow they may develop relationships with other product distributors.

Unfortunately, sometimes manufacturers discover they are being undercut by unauthorized one-off resellers which are not adhering to the Minimum Advertised Price (MAP).

A MAP price is a minimum amount that resellers agree not to advertise below.

For example, if a backpack company sets a MAP price of $50 for its best selling item than all resellers including brick and mortar stores and Amazon resellers are obligated to advertise this product at $50 or more.

If they advertise the product at a discount of $35, the Amazon reseller would be in violation of the backpack company’s MAP agreement.

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When a MAP agreement is violated, retailers can be left at a disadvantage because Amazon ultimately does not take a role in seller pricing agreements.

Typically, manufacturers require resellers to abide by MAP regulations but in the event no MAP agreement was signed – manufactures have little authority to enforce their minimum pricing.

It is important to keep in mind that while MAP agreements are one of the best ways retailers can protect themselves against price violation there are other options to shut down an unauthorized listing.

Manufacturers can terminate a listing by an unauthorized reseller without a MAP agreement if they can make a valid case to Amazon.

For example, if a reseller wants to sell a backpack as “new” then the backpack company must allow a transfer of the warranty to the reseller because all “new” items require it. If a reseller cannot provide a warranty for the new item, the backpack company will likely be able to terminate the listing.

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Why do Minimum Advertised Price (MAP) agreements exist?

MAP agreements:
    • Promote fair competition across all distribution channels
    • Maintain brand identity and value
    • Allow smaller sellers to compete with larger retailers
    • Prevent underpricing
    • Protect seller margins

 

Although MAP agreements protect seller margins, price isn’t the only concern. Brand identity is also a valued factor to retailers.

 

For example, if a pair of sneakers are always sold for $200 both online and instore, they may appear more valuable to shoppers than a different brand of shoes that can be found at varied cheaper prices.

 

Consistent and controlled pricing sends a message to buyers: If you want this brand of sneakers you’re not going to find it anywhere else cheaper, which ultimately gives the product value.

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Why are Minimum Advertised Price (MAP) agreements difficult to enforce?

Because of leaks in the supply chain, resellers can obtain authentic products and sell them online below their MAP pricing.

For several years, brands have asked Amazon to help them find and punish unauthorized resellers for their violations but unfortunately for retailers, Amazon takes a percentage of third party sales within their marketplace.

Amazon is extremely hesitant to enforce seller pricing agreements and risk losing revenue.

Manufacturers should always keep an eye for MAP pricing because they are responsible for reporting any violations.

Options for Manufactures involved in a Minimum Advertised Price (MAP) violation:

If manufacturers discover a reseller has violated their MAP agreement they can address the reseller directly.

To address a MAP violator (on a product by product basis) a manufacture should:

      • Identify all resellers with MAP violations

 

      • Send out a message to all resellers stating MAP will be vigorously enforced

 

      • Remind resellers that they must respect MAP or they will be banned as a seller for all products

 

      • Give one prior warning before banning the violator

 

      • Continue to monitor MAP pricing across all channels

 

In the event a manufacturer encounters a non-responsive or repeat violator, they should (or threaten to) proceed with contacting Amazon.

Ultimately, continued violators will receive legal notices based on copyright infringement and have their selling privileges revoked.

 

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Policing Your Brand on Amazon Sources

Amazon Seller Resources:

 

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Brand Policing Best Practices for Amazon Sellers

Proactive and Reactive Measures to Take When Enforcing Your Brand
 

About the AuthorTara graduated from the University of New Hampshire with a B.S. in Journalism / Business. Her passion for creative publishing and quality reporting landed her work opportunities at several companies in Massachusetts, New York and California. She is a leading voice behind CPC Strategy’s Blog. See all posts by this author here.