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The Impact of MAP for an Amazon Seller
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The Minimum Advertised Price (MAP) is an agreed-upon price between manufacturer and seller to help maintain the value of a brand. Take Sony, for example, if retailers were allowed to sell their products for cheap prices, the Sony brand would become less well-regarded in the eyes of many. The question is though, how does MAP impact the Amazon seller?
MAP prevents price wars
A price war originates with the simple concept that low price is a deciding factor in who wins the Buy Box. One seller decides that if his price is just a fraction lower than the current Buy Box winner, he’ll be able to secure the Buy Box. But then a second seller responds with the same thinking.
A fast and furious race to the bottom ensues, as one seller after another reduces their price to undercut the competition. This leads to minimum, if any, profits all round.
When MAP is instituted however, the prices advertised by the sellers, whether in the Buy Box or on the Offer Listing Page (which features all items), cannot be less than a certain amount. Sellers are therefore unable to lower their items in response to the competition and therefore a price war cannot break out.
MAP and “showrooming”
Another reason for instituting the policy of MAP is in order to prevent “showrooming.” Showrooming is where a potential customer arrives at a brick and mortar store, checks the price on Amazon and realizes that Amazon or one of its third party sellers is selling the item for wholesale prices, leading the potential customer to shop online instead.
Since online sales account for a small percentage of total revenue for many manufacturers, they’ll decide to institute MAP because otherwise showrooming would lead to downward pricing pressures and minimal revenues all round.
Getting around MAP
The above example is of a MAP item. Instead of selling this TV for the MAP price, the seller wants to offer buyers a discount. And if he doesn’t advertise the price, than according to the rules of MAP, he can sell the TV for however much he wants.
The cheat here is to keep the discounted price hidden from buyers until after they place the item in their shopping cart.
As you can see, instead of a price being listed, it simply says See product details in cart under the Price heading. When a potential buyer clicks on the link, the seller explains that the product is MAP regulated and encourages the visitor to add the TV to their shopping cart to see the lower price.
This way the seller still has free reign to offer discounts on the MAP product.
MAP and the Buy Box
While MAP is obviously a useful concept, since it helps manufacturers maintain the value of the goods they produce, the question is; how does it affect the Buy Box? Does it impact how the Buy Box winner is determined, and if so, how?
The answer is that it doesn’t. It is important to understand that the Buy Box works in exactly the same way with a MAP item as it does with all other items.
The Buy Box is awarded to the seller who can offer the best possible experience to the customer. This best possible experience is a balance of high seller performance and low cost price.
High Seller Performance + Low Price = Win Buy Box
If the majority of sellers are selling at MAP price, then the only way to step out from the crowd and stand a chance of winning the Buy Box is to beef up your metrics.
And if the Buy Box winner has decided to get around MAP and not advertise their price because they want to sell it at a lower price, than no price will be listed inside the Buy Box, such as with the above example. The buyer will only be able to see the actual price once they have added it to their shopping cart.
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