Serial entrepreneur with an industrial psychology education and over 23 years of creating, consulting, and operating businesses. Loves mountain biking, snowboarding, and surfing.
We have many manufacturers ask us about enforcing a pricing policy with their wholesale distributors. While this is not something we can easily enforce, I wanted to give some advice on how it might be encouraged.
First the problem:
The WDs have a lot of discretion in the prices they give their clients. We here at MAP Services Corp began as online sellers so we know a lot about this. We spent a lot of time negotiating with WDs in order to get better prices. The WDs generally do not want to give better pricing until you can do more sales. Which creates a chicken and the egg problem,
If we could get lower prices we would do more sales. But if we do more sales then we get better pricing. How best to deal with this?
Many sellers will sell at a loss or a tiny margin to get the volume they need to get better pricing. These practices definitely harm manufacturers without strong MAP enforcement.
In addition, manufacturers who want to enforce a WD pricing policy have no way to know what prices WDs are actually giving to dealers. The dealers certainly do not have any incentive to reveal their pricing.
So what is a manufacturer to do?
Maybe let your WDs know about U.S. Wholesale Outlet & Distribution Inc., et al. v. Living Essentials LLC, et al.
In this case, smaller wholesalers sued 5-Hour Energy claiming that Costco received better pricing than they did. The case went all the way to a jury and was extremely costly. Although 5-Hour energy ultimately won the case, I bet most WDs would be scared of a potentially expensive lawsuit, especially if they did not have someone like Costco in their corner!!
Let's face it, as a business owner, you want to maintain control over your pricing strategy and protect your profit margins. That's where a Minimum Advertised Pricing (MAP) policy comes in handy. It's like having a bouncer at the door of your nightclub, making sure everyone is playing by the rules. ...Read More
Sounds like a loaded questions doesn't it? One of the most overlooked or undervalued answers to this question is "Do you have the stomach to stop selling to a good customer". Consider this "Is this really a good customer if they're undermining your efforts to maintain a fair market for the rest of your customers". Consumers will find and buy your products regardless of the source. Brand integrity, customer service and continuing to bring viable products to market isn't easy or inexpensive but it's what you've built your business on. Don't allow your work to be degraded by sellers who are only interested in a quick buck and could care less about how their actions undermine your hard work. ...Read More
In today's dynamic business climate, price changes have taken on much more importance. Freight and raw material costs are rising quickly and price changes need to happen quickly as well. Fortunately, we make these price changes easy for our clients. It's as simple as sending us an email with the new file and we make it happen. No need to log into a portal and format your file to fit etc. Just send us your price file to ensure enforcement is in sync with your internal price notifications. In addition, we can make sure your new price file is distributed to all your resellers, even the ones that you do not have direct contact with. We can notify all the Amazon and eBay sellers in one easy email making your life easier and also heading off future advertised price violation issues. IMPORTANT: Do not forget to update your data services as well. Updating one and not the other is a recipe for a MAP violation nightmare." Send your price files to; danh@mapservicescorp.com ...Read More
Besides monitoring and MAP policy enforcement we also develop a healthy relationship with your compliant sellers.
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