How the Absence of MAP and Not Restricting Authorized Sellers Will Ensure a Race to the Bottom on Amazon
as well as put your offline retailer relationships at risk
If you care about how your product is marketed on Amazon and you want to avoid seeing the price of that product “race to the bottom”, there are 3 things you absolutely must have in place:
If you do not have all 3 of these in place, our data strongly suggests that price degradation is inevitable.
Since our founding, TLK has always focused being a Value-Added Seller and today we enjoy solid relationships with our Preferred Suppliers (who have MAP and limit the number of authorized online sellers).
Over the last year, in addition to servicing these Preferred Suppliers, we also bought products from brands that didn’t have MAP policies and made no effort to limit the number of unauthorized sellers. For the sake of simplicity, we’ll call these suppliers, “Suppliers without an Amazon marketing strategy” or SWAMS for short.
During the period of our study, we purchased products from 20 SWAMS brands. In 70% of cases, we were unable to place a second order beyond our initial order, with an average 1.65 orders per SWAMS brand.
In every case, the reason we were unable to continue to order product was due to the SWAMS product’s price “racing to the bottom” and eliminating any profit potential.
Over this same period, we purchased products from 14 brands that had a MAP policy (that they actually enforced) and had made a decision to actively limit the number of authorized resellers of their products on Amazon.
These products had price stability due to having an enforced MAP policy, combined with choosing to cap the number of authorized sellers,
For this group of companies, we’ve been able to consistently re-order products due to price stability.