Shades of Gray: MAP Avoidance Tricks, Gray Market Sellers, and How to Beat Them

grey-market

*Originally published on the Quad Analytix Blog

Resellers often want to offer products at competitive prices, and for good reason. Being the low price leader is a quick way to see an uptick in sales. But this can come at a steep cost down the line for their brand value and that of their suppliers. True or not, low cost is often conflated with low quality, and a reseller that focuses on low pricing risks damaging their reputation.

Not all resellers can see this forest for the trees, however, and will seek to undercut their competitors, even if it violates the MAP policies agreed upon with the brands they are selling. There are a few gray area tactics that resellers often try to use to get around MAP compliance. What you need to be on the lookout for:

  1. Add to Cart Pricing – Customers won’t be able to view the price for an item until they get to the checkout page, where they’ll be treated to a below-MAP price.
  2. Price Available Upon Request – Customers are encouraged to email in for a price quote.
  3. Buy One, Get One Free / Bundling –  BOGO deals and other promotional discounts offer items for far less than MAP.

These strategies that retailers often use are tricky because they aren’t technically violating MAP (unless explicitly stated in the MAP Policy). The low price that shoppers pay hasn’t technically been advertised, but it could still be tarnishing the brand’s name nonetheless.

While these issues might be more common on webstores, they’re still important to be aware of across all of your selling channels, including marketplaces. Brands should make sure that their MAP policies include clauses to cover as many of these loopholes as possible.

What Is the Impact of Gray Market Sellers & How Can Brands Keep Up With Them?

MAP violators can come from out of nowhere. Even your best resellers might break your policy from time to time when they’re left with too much inventory. Authorized retailers violate MAP 31.2% of the time but this jumps to 54% for unauthorized retailers.

Gray market sellers are unauthorized resellers of your products. Since they don’t have an official relationship with your company, they certainly don’t know about your MAP policy.

It is possible and probable that they are selling your products at prices that would make your CEO cringe. Monitoring reseller pricing is a necessary part of maintaining and strengthening brands for both authorized and unauthorized resellers.

Solving the Problem: Skullcandy

Gray market sellers were a big problem for headphone manufacturer and lifestyle brand, Skullcandy. Through manual price monitoring, they found numerous gray market sellers.

However, they found it time consuming and inaccurate to manually attempt to keep track of them. To address this, they implemented an automated price monitoring system. Skullcandy now receives timely alerts when unauthorized sellers list their products below MAP. Click here to read the full case study.

MAP Protection

There are Three Steps to MAP Protection that Brands can Take:

Monitor

Being aware of who is violating MAP and by how much is necessary to learn what you should look out for in the future.

Automate

Manual MAP monitoring is a difficult, tedious, and inaccurate process. Automation is often a necessary step to make monitoring scalable and free up employees to work on other important projects. This is especially the case is you are distributing a large number of SKUs.

Gain Insight

Automated MAP monitoring captures data that can be analyzed to understand who the most egregious violators are. Once armed with that data, brands are empowered to ask violators to stop selling their products or convert them to authorized sellers and formalize a relationship. This has the potential to improve both profit margins and brand image.

Quad Analytix helps brands track their prices across all their retail channels.
Sign Up for a free no-obligation demo to learn more.

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Min-Jee Hwang

Min-Jee is the Marketing Director at Wiser, a dynamic pricing and merchandising engine for online retailers. She has extensive experience working with SaaS companies and holds a BA from Carnegie Mellon University and an MBA from NYU Stern.