Price competition has been one of the most decisive factors in the development of e-commerce. Even before Amazon arrived on the scene as an online bookseller in the 1990s, shoppers have always thought of the internet as a place where they might be able to find bargain prices. This is the reason why early e-commerce giants such as eBay and Overstock.com surged during the early part of the 21st century.
Amazon is well aware that pricing is one of the foremost reasons millions of shoppers flock to its website each month. Most of the time, online shoppers will have an idea of how much their desired items cost. By the time they get to Amazon, they’re hoping to find better deals, particularly from third-party marketplace resellers.
Naturally, price competition between marketplace sellers is convenient to shoppers and to Amazon. If you are an e-commerce entrepreneur introducing new products to the marketplace, competitive pricing may not always work in your favor.
Beware of Amazon Pricing Schemes
You should not think of Amazon as an e-commerce platform where the standard of manufacturer suggested retail price (MSRP) prevails. Quite the opposite, the marketplace has proven to be a cutthroat bazaar where even Amazon is known to undercut sellers. In November 2017, the Wall Street Journal reported on a surprising feature called “discount provided by Amazon,” whereby shoppers took advantage of prices lowered by the company without previous notification delivered to marketplace sellers, a clear violation of minimum advertised pricing (MAP) policies.
Even though Amazon promptly paid the full price difference owed to third-party merchants in the aforementioned situation, retail analysts were rightfully concerned about the future of MAP enforcement on the marketplace. On one hand, Amazon has vowed to operate its third-party platform in a manner that gives sellers full control over their brands and products when applicable; on the other hand, it is clear that the company wishes to increase sales volume by any means.
MAP Agreements on the Amazon Marketplace
If you wish to exert full control over branding and pricing of your products, Amazon offers programs such as Brand Registry and Brand Gating. At some point, you may want to expand your retail footprint by partnering with resellers and offering them MSRP discounts; at the same time, you will want to implement MAP policies to avoid undercutting and cutthroat pricing.
Even after your Brand Registry and Brand Gating applications are processed, approved and implemented, Amazon will leave MAP enforcement up to you. A reseller agreement with a MAP clause will not prevent pricing violations. If for some reason rogue sellers want to dump inventory acquired from you at extremely low prices, you should confront them before notifying Amazon.
Keeping resellers in line with regard to MAP policies is something you can do with a subscription service such as Brandlox, which you can configure to notify at the precise moment a pricing violation occurs; at this point, you can contact the merchants or escalate the situation by means of a cease-and-desist legal notice generated by Brandlox.
Amazon has its own policies in place to deal with non-compliant resellers. You can contact Amazon seller support with the evidence gathered by Brandlox so that they can handle the matter, which in some cases may involve seller suspension and deactivation. If you have introduced 10 or more new products to the Amazon Marketplace, Brandlox is for you. Learn more by contacting an e-commerce consultant today.