When you receive unexpected sales from dealers that aren’t on your authorized seller list, it can seem like you’ve gotten lucky. Certainly, the first bump in revenue is a welcome windfall, but it’s after that, when you factor this additional cash flow into your forecasts for the future, that the risks begin to grow. The moment you begin to rely on unpredictable revenue from unauthorized sellers, you increase your chances of inaccuracies for two main reasons:
If you’ve got a strong minimum advertised price policy in place, you’ve taken the first step in protecting your brand online. You might think you’ve taken the appropriate action and things seem to be running smoothly. But by waiting for your retailers to report MAP violations to you, or by simply checking major sites like Amazon a few times a week, you’re actually missing a lot of the bigger picture.
Unknown sellers of your products – these anonymous dealers can sometimes add a pleasant surprise to your actual sales numbers. As long as you’ve still got all of your authorized sellers too, what’s not to love about more companies selling your products?
If your business is meeting its revenue goals, you might not think that having price differences across various channels is a cause for concern. After all, you’re making a profit and things are going well. But it’s never good to get complacent, and inconsistent prices can actually pose a threat to your brand, with trusted retailers dropping selling your product, and your bottom line.
You’ve probably heard the term “showrooming” in your industry before – it’s the practice of getting one’s information in a brick-and-mortar store from a sales associate and then leaving to make the actual purchase online. Consumers do this with regularity, often taking up valuable time that employees could have spent with other paying customers, only to find a cheaper deal on the Internet.
There’s no doubt that showrooming can be a big problem, both for the owners of the physical stores that experience it and for the manufacturers of the products – because if enough retail partners have this problem, the manufacturer will lose those partnerships to the online dealers who are selling the items so much more cheaply.
Establishing a minimum advertised price (MAP) policy is an important step toward taking control of price discounting problems in your industry. With MAP in place, you have legal grounds to enforce the minimum price at which retailers advertise your products. If you are just beginning the process of creating a MAP policy, the following tips will give you a good place to start.