Wiser’s former head of enterprise sales and strategy Brian Schulman moderated a discussion, “Protecting Your Brand: How to Automate Price Policy Enforcement”, at Fashion Digital New York. The conference was chock full of eCommerce professionals who discussed different ways to optimize their respective businesses. The two notable representatives who were on the panel were Jonathan Lelonek, the executive VP at Stuart Weitzman, and Kyle Losik, a brand protection specialist from Skullcandy headphones.
The discussion with Lelonek and Losik revolved around the efficiencies of price monitoring, and how their respective brands automate the process uphold their prices in the eCommerce landscape. But what were they protecting their brand from, and what were they using to protect it?
Manufacturers use Minimum Advertised Price (MAP) to protect brand image, maintain retail value, and keep margins ideal for resellers. However, for the manufacturer that produces and distributes thousands of products, policing the retailers who sell your products can be a time-consuming challenge. As a result, a majority of resellers violate the MAP at least some of the time.
From talking about Amazon’s impact on the fashion world to how to react to a MAP violator, Losik and Lelonek discussed how to protect your brand, and what automated price monitoring has done for their protection efforts. Their answers provided great insight for the benefits of automated price monitoring, and their cases have helped laid the foundation for brand protection standards manufacturers should follow when offering their products through a reseller network.
When discussing Amazon, Lelonek confirmed that the retail giant is a customer of Stuart Weitzman. Amazon hosts many 3rd party vendors who utilize Amazon as a selling platform. The company does an excellent job respecting suggested retail prices on popular items but is known to drop prices on old inventory to keep it moving. He also mentioned that they were able to spot any third party vendors who violated MAP with Wiser’s price monitoring solution for brands and manufacturers and successfully identify and rectify those situations.
Amazon does not currently have a way to enforce MAP through its marketplace, and there are many loopholes that vendors on the site use to get away with MAP violations. But the retailer itself appears to be very respectful of MAP policies. Price monitoring can spot violations as soon as they occur, even on Amazon, and can resolve any problem that might occur.
But sometimes your products end up in the hands of retailers much smaller than Amazon. So small, that you actually didn’t know that they were selling your product. We call these sellers “gray market sellers.” These are unauthorized resellers of your product so you would have no idea if they were violating your MAP. Luckily, automated price monitoring can help prevent a sticky situation.
Losik discussed that Skullcandy actually had a major gray market seller problem. Manually searching the web for gray market sellers provided the company with unimpressive and inaccurate results. Once they implemented automated price monitoring, they were able to discover unauthorized sellers in a much faster and efficient way. And instead of sending a simple cease and desist, Skullcandy actually made deals with these retailers to become authorized sellers, improving the brand’s reach to consumers.
Due to the competitive nature of the eCommerce industry, many retailers continuously undercut each other, and when one drops their price, many follow. This creates a domino effect across their network. As soon as one retailer violates MAP, others may follow, resulting in a network-wide violation. This can severely damage brand value, and make a price increase that much harder to implement.
Automated price monitoring can keep the first domino from ever falling. Real-time violations can allow you to automatically send screenshots of a violation to the retailer in question, and can quickly resolve the situation a retailer put themself into. This stops the chain reaction of abuse from happening in the first place.
But how do resellers react when they’re caught red-handed? Do they continue violating anyway? What do they have to lose? Will they believe you and ask for proof? Luckily with automated price monitoring, you can catch violations in real time and send proof in the form of a screenshot to the retailer.
When you’re a brand as large as Stuart Weitzman or Skullcandy, you have a lot of leverage in the situation. Your brand is a huge name, and a retailer has a lot to lose if they stop selling your product. But that isn’t your problem. You can willingly cut ties with any retailer as you see fit. An automated system will keep track of how many violations have occurred with each retailer, and you can decide if they are worth doing business with. A retailer who does not respect your business may not be worth working with in the long run.
Lelonek and Losik also discussed how they built their MAP policies, enforced them, and identified loopholes in their policies. Finding MAP loopholes is not an easy task, but can be identified by simply going onto a retailer’s website. If they offer buy-one-get-one deals or heavy discounts on individual products, they’re more than likely violating MAP. Building a MAP policy isn’t too difficult, and neither is enforcing it.
The best way to build MAP policies is by looking to the competition. What price are they applying to their products? Once this price was established, Lelonek and Losik discussed how automated price monitoring was the best way to go about protecting your brand. Manual monitoring is inaccurate and incredibly tedious, and Wiser simplified the whole process.
Editor’s Note: This post was originally published in October 2015 and has since been updated and refreshed for readability and accuracy.