This article originally appeared in the Doba Education Center.
MAP, what is it?
MAP is an acronym for Minimum Advertised Price (also known as “minimum resale prices” or confused as “manufacturers advertised price”). MAP is a price set by manufacturers as the lowest price you can advertise for a particular product. Manufacturers set MAP prices for several reasons:
- To protect distribution channels.
- To prevent retailers from hurting others with predatory pricing strategies.
- To keep the value of the product from becoming diluted.
- To level the playing field level for all retailers.
Now that you know what MAP is, another question that may be asked is, “What price do I pay as a Doba member?” The simple answer to that question is that you pay the wholesale price. As a retailer, you are required to follow the MAP on the product you are selling. The minimum advertised price is determined by the manufacturer, not by Doba.
How does the MAP affect me and my online retail business?
The problem with a MAP from a retailer’s perspective is that you can usually find an online retailer offering the same product for less than the MAP. This begs the question, “How can I possibly compete if I play by the rules and nobody else does?” In the following section, we answer this very pertinent question.
How do I deal with MAP restrictions?
Being a successful retailer is all about beating out the competition, and for many less successful retailers, that means selling products for less than the other guy or gal. But competing on price alone is one of the biggest mistakes that retailers make. It drives down prices for everyone, including you, leaving you with profit margins that make running a retail business not worth the time and effort.
So how do you compete? Read “Giving Away the Store, Part II: Competing on something other than price,” for some ideas.
- Offer free shipping. By removing the shipping charge, you can meet the MAP and, in many cases, offer a competitive overall price. This strategy works most effectively with items that have higher shipping charges.
- Include “free” accessories or gifts. Add value to your listing by offering to include free accessories and/or gifts.
- Offer bundles. Bundling the product with accessories, supplies, or related items can add a perception of value that makes your bundle more appealing than what your competitors are offering. Bundles do not necessarily have to be great values, they only need to create the perception of value.
- Advertise that you’ll accept reasonable offers. eBay has a feature called “Best Offer” that allows bidders to send you an offer to buy. The seller can then accept, counter, or outright refuse the offer. Because you’re advertising the product at MAP, you’ve fulfilled your obligation to the manufacturer, while advertising that you’ll accept reasonable offers tells buyers that you’re willing to work with them on the price.
The four tactics above can work for you both on and off eBay. Just because an item has a MAP that seems too high doesn’t mean you can’t sell it successfully. It just means that you need to get a little more creative with your marketing. Remember that determining your pricing strategy has a direct effect on your bottom line and as such deserves more than just a passing thought. The wrong pricing strategy can lead to ruin, but the right one can lead you to glorious success.
Can I simply ignore the MAP?
When you visit any comparison shopping site, you can quickly see that not all retailers honor the MAP. Some simply choose to ignore it. We strongly advise you against taking this approach.
As mentioned at the beginning of this article, the U.S. Supreme Court recently ruled to enforce minimum resale prices; taking necessary action towards those caught selling products below the given MAP. Possible actions could include losing the supplier or wholesale supplier from which you acquired the product and being banned from selling in a given market.
The purpose of this article is not to scare you, but inform you the importance and seriousness of the subject as well as clear up any confusion related to MAPs. With a better understanding of what a MAP is, how it affects you and how to deal with MAPs, you will be better be prepared to abide by the law while retaining your competitive edge.