MAP and free shipping
A lot of the suppliers we work make us agree to MAP - minimum advertised price. On the surface this looks a lot like price-fixing but the technicality is that you can sell below MAP - you just can’t advertise it on your website. This is why sometimes you read a website that says “The price is too low, add the product to your cart to see the price” or “Call us for pricing.”In some ways MAP is ideal - you have semi-protected margins and if you are a good marketer you will probably win some market share. The problem with MAP is that sometimes it forces you to price your products above the level that you would price them at in a competitive environment - for this reason suppliers with MAP do not generally appeal to internet retailers that compete solely on price.One way to stay competitive when dealing with MAP is to offer free shipping to your customer - in essence you are discounting the price of the product by subsidizing their shipping which leaves you, your customer and your supplier happy. Some companies go as far as to offer 2′nd Day or Overnight shipping on high-margin products.
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From the suppliers perspective I don’t understand the concept of MAP - why does it matter to them what price their retailers are charging? And by keeping it higher don’t they expose themselves to the threat of end-users buying other brands that don’t intentionally charge more?
Comment by derek — March 19, 2006 @ 1:16 pm
I think the point of MAP is that you are protecting your most valuable customers - a retailer is going to feel a lot better working with a particular supplier if they know that they have a protected margin and some little guy with a yahoo store can’t come and sell the product at a 2% margin.
Comment by admin — March 19, 2006 @ 2:23 pm
My experience with MAP is that it is something that many multi channel merchants deal with on a regular basis. There are obviously pros and cons but some of the benefits that I can see are that it allows the manufacturer to help promote fair and open competition between both the online and offline retail chains.
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