MAP Violation: Top Tips for Preventing Pricing Violations

ECommerce has exploded. Everyone shops online. While it was well on its way to mass adoption already, the Covid-19 pandemic accelerated everyone’s purchasing habits into the digital space, blessing retail brands with borderless shopping and expanding customer bases.

But such a boost in online shopping comes with its pitfalls: a surge of unauthorized sellers and MAP violations.

A partial explanation is the rise in third-party marketplace shopping, where background checks for authenticity tend to be lacking, as well as authorization to sell certain products. In 2019, a Forrester survey indicates online marketplace sites in the U.S. made up 46% of online sales, and 61% of global e-commerce sales – and this was before the pandemic struck.

With marketplaces increasingly gaining market share, more brands and manufacturers are coaxed into selling through these platforms. But, while beneficial for reaching consumers, marketplace sites are generally breeding grounds for unauthorized sellers and counterfeiters.

In this post, we will go through what a MAP violation is, why it is necessary to monitor MAP pricing violations, and some top tips for avoiding MAP violations across your channels in the future.

What is a MAP violation?

MAP, or Minimum Advertised Price, is the lowest price a manufacturer or brand allows its resellers to advertise for their products.

A MAP policy is the document that sets this threshold for the advertised price. It provides a pricing guideline for resellers, so they have a starting idea of how to approximately price the product – they’re not shooting blindly in the dark.

It’s also a strict rule, with a cascading list of protective benefits for both the manufacturer and all the resellers involved in the distribution channel. The policy specifies the scope of the policy on the internet (IMAP), electronic (eMap), and physical stores.

So, a MAP policy violation, or simply a MAP violation, is when a retailer breaches its agreement with the manufacturer, by advertising the product below the price set by the manufacturer in the MAP policy.

MAP pricing violations are not unusual. A recent study by Harvard Business Review on manufacturers who use MAP policies found unauthorized retailers had violated the policies 50% of the time. Authorized retailers had a policy violation rate of 20%.

Just last year, Costco’s price violation with the popular shoemaker Birkenstock leaked into the public eye when Birkenstock told The Business Insider Costco is selling its shoes for one-third of the authorized price – and that Costco isn’t even an authorized seller.

In the competitive online space, MAP violations are more likely to strike when there are numerous sellers cluttering the market, and someone’s eager to scoop up more customers for themselves by lowering prices and offering discount coupons and codes.

MAP violations are also common among non-compliant sellers who use automatic repricing software to stay competitive. These tools briefly violate MAP policies in a flash by automatically comparing the sellers’ prices to the competition, and then strategically dipping the price low to outcompete rivals.

These kinds of pricing violation tactics trigger price wars among a manufacturer or brands’ resellers. Nobody ultimately wins.

Why pricing violations should matter to brands

With the explosion of eCommerce and third-party marketplace sites, numerous sellers are advertising and selling the products of brands and manufacturers online – whether authorized or not. The risk of price non-compliance is rising.

As such, it’s important for you to track your MAP policy for violations across all your online channels.

But what’s the point?

Not tracking MAP violations can cause some serious problems.

Pricing violations divert customers

While the issue isn’t limited to eCommerce, online shoppers compare prices on several retailer sites and marketplaces to scout for the best deal. They’ll even sign up for price drop alerts – it’s a part of the job of today’s savvy online shopper taking advantage of the online format of a new eCommerce-driven shopping world.

Resellers violating the brand’s lowest pricing threshold, then, increase the chances of lost customers; customers wandering off from the brand’s store, and the stores of its complying resellers, to resellers offering prices below the MAP price – or, worse, unauthorized resellers who shouldn’t be selling the products at all.

Pricing violations damage brand identity

From a customers’ perspective, cheaply priced products are not always attractive. And, in today’s digital shopping sphere, consumer impressions spread like wildfire – including the negative opinions that present your products as cheap, perpetuating a false impression of your brand image.

When consumers see products of a brand at a very low price, it may bring into question the quality of the products, and have an impact on the customers’ perception of the brand. Low prices may poorly represent the brand value, and may even be a sign of a counterfeit or “gray market” in the eyes of consumers.

A manufacturer or brand builds a pricing policy to protect their brand image and value in the marketplace. MAP policies stabilize the valid price of your products across individual reseller and marketplace sites.

Tracking MAP violations helps protect your business from a damaged brand identity because low prices can indicate to customers poorer quality products. This is particularly a concern among brands seeking an air of luxury and premium quality, like Birkenstocks.

Many brands will use website monitoring tools, like Visualping, to automatically monitor sellers' price changes on marketplaces, individual seller websites and price comparison sites. When prices drop, the brand gets notified and can continuously stay on top of sellers' discounts and promos that violate price policies.

Price violations eradicate trust with distributors

Your distributors are important. Brand owners are dependent on their distribution channels and, often times, choose retailers carefully.

Your pricing policy protects your compliant retail partners from having to lower their prices to keep up with competition and, in the worst case scenario, engage in a price war. Your retail partners don’t want a price war.

Your pricing policy, then, if properly enforced, helps prevent that from happening. It protects your retailers’ margins by ensuring no one has to sell at cost to stay competitive.

As such, when you don’t stay on top of your pricing policies, then violations are likely to crop up, and you risk potentially damaging the relationships in your brand’s partner network.

Non-compliant distributors and unauthorized resellers trouble all stakeholders in the distribution chain, weakening the trust you’ve built with your carefully selected retailers, and causing you trouble down the road.

Price violations shrink brands’ profit margins Protecting against MAP violations also insulates your profit margin, and the profit margin of your loyal authorized retailers, who wouldn’t have to worry about lowering their prices at cost so they can compete with the competition.

You may sell your product on your own site. With resellers breaching your pricing policies, that deteriorates your ability to compete and lowers your profits from your store, as well.

Diverted customers, reputation damages and non-compliant distributors are ultimately causing revenue losses too.

Top tips for preventing MAP violations

In order for the brand to protect itself against the above threats, MAP violation monitoring is essential. Ensuring pricing compliance requires staying on top of your resellers, and properly enforcing your MAP policies when there is a violation.

Staying on top of your resellers for pricing violations requires technology-based tracking solutions, such as Visualping, to diligently monitor all your resellers, at scale, and help you respond as soon as possible when a violation occurs.

Communicate actively with distributors

If your response to a price violation is to do nothing, then your MAP policy is essentially useless.

For upholding compliance, you need to keep in touch with your sellers. Authorized sellers need to be made aware that your brand actively and continuously enforces its MAP policy – that’s ensuring your resellers actually agree to the policy and, if a violation occurs, to make a point to remind them of the policy.

As shown in a research taken out by Harvard business review, it becomes apparent that sending a notice to resellers, where jurisdictions allow, when they are found to violate MAP policies improves compliance.

Secondly, demonstrate your willingness to act by enforcing rules through penalties. Otherwise, sending notices is not effective and might be perceived as empty threats.

But you have to balance a fine line between laying out MAP violation penalties in such a way that they won’t come across to sellers as empty threats. But you also don’t want to come across as penalizing them too hard, unnecessarily – that you’re just blowing smoke to make them think you’re big and bad.

Kellogg Insights recommends a softer touch: Create a warning policy or nominal penalty. Hit them with a heftier fine on second offense, and threaten to sever ties with that vendor.

But it only works that way if you actually enforce your pricing policy. If there aren’t any consequences for not following your policy, the worst violators will lead even your best retail partners astray — because they’ll have to violate your policy to compete. Sending MAP policy violation letters will help curb this behavior and begin the MAP enforcement process.

When it comes to telling resellers about MAP policy violations, remember: less is more, and keep it professional. You don’t have to tell them every SKU they’ve violated—just give them a few, tell them how many days they have to correct the issue, and let them know what you’ll do if they don’t comply.

Monitor your resellers

Monitoring your resellers for price violations can’t be an afterthought. You need a system for it. Some brands assign a team member responsible for manually keeping an eye and tracking resellers’ prices online. Others suit up an entire task force of employees to manually updating Excel spreadsheets and manually monitoring the internet for violations.

But many companies do not have a workforce to delegate MAP violation tracking in-house. Even if they do have the resources to do so, this work is manual, tedious and constant; even with just a few resellers to look after, your product could still appear in numerous places on the internet.

Prices are also ever-changing, and humans can’t help but take lunch breaks, and even make errors; having an employee or team manually try to stay on top of price violations may not be the most efficient and robust approach. Brands are increasingly coming to the conclusion these employees are better suited for getting paid for more creative, analytical work that they were actually trained to do.

There are better ways to navigate the ocean of Big Data that is the web: using price monitoring tools, available online.

Track MAP violations at scale

To say the internet is huge would be a dramatic understatement. Every day, 2.5 quintillion new bytes of data are created, according to IBM. Sifting through this data in constant search for MAP violations is like searching for the needle in the haystack.

And to make matters worse, some of the biggest online retailers, such as Amazon, are hesitant to enforce MAP policies for fear of losing revenue, according to CPC Strategy contributor Tara Johnson. In other words, brand manufacturers are on their own.

Even a team of vigilant individuals working around the clock would be incapable of sniffing out MAP violations in a timely manner.

By automating MAP monitoring through the use of a tool like Visualping, brand manufacturers can swiftly identify infractions and deal with them quickly and effectively.

MAP violations need to be tracked at large scales to be efficient. The best way to do so is by working with advanced technological solutions that can scan large amounts of data across marketplaces and platforms.

Next step: MAP violation tracking

To get started with a MAP monitoring tool that will alert you as soon as price changes amongst your resellers occur, simply navigate to Visualping’s homepage, and copy and paste the URL of the page you want to track.

Next, you customize your monitoring settings, such as the part of the page you want monitored, how often you want the page checked, and the email address you want the alerts sent to.

And you’re done!

Step-by-step instructions on how to monitor for pricing violations

Step 1: Search your page. Copy and paste the product URL you want to monitor into the search field on Visualping’s homepage. Click Go.

Step 2: Once the page appears in the viewport, select the part of the page you want monitored. For tracking products, this is the part of the page surrounding the price.

Step 3: Specify the frequency you want the page checked – every 5 minutes, 30 minutes, hourly, daily, etc.

Step 4: Type the email address you want the alerts sent to. Click Start Monitoring, and that’s it! You’re set to get notified of deals.

Step 5: Visualping will send you an email, asking you to make a password for your account. Don’t forget to do this. The password completes your account, and allows you to login to your user-dashboard, where you can view all your Visualping monitors and email alerts in one location.

Perform these steps as many times as you wish to monitor many resellers at one time, and create a watch list.

Visualping takes automatic screenshots of the page at regular intervals – every 5 minutes, 30 minutes, hourly, daily, etc – and compares each image to the last to check for changes.

Level up your MAP violation monitoring capabilities

Monitoring for price violations is critical to your long-term success as an ecommerce brand. Protecting your price doesn’t just benefit you. It serves your customers and your sellers, too.

Visualping is an easy-to-use website monitoring tool that can track price changes, in real-time, amongst your resellers for you. The user dashboard makes it easy to view pierce change alerts all in one spot, and to go back and view changes over time to detect any patterns and associations.

With Visualping, MAP monitoring is made much more manageable.

Get a demo to see Visualping in action.

Happy MAP violation monitoring!