One of Amazon’s biggest draws for potential consumers passing through on their search for the best deal is their incredibly competitive prices. However, this yellow brick road for consumers makes the journey to success as an Amazon seller even more difficult. The pressure to offer the lowest price can lead to risky pricing wars that violate minimum advertised price on Amazon and encourage questionable tactics, putting your sales and Buy Box position at risk against unauthorized sellers.
That’s why we’ve created this guide to help you navigate the path to scaling safely and compliantly. We’ll explain minimum advertised pricing (MAP), why it matters, how to enforce it, and how to set up a MAP agreement. Ready to secure your success? Let us lead the way!
What is minimum advertised price on Amazon?
Minimum advertised price (also known as MAP) is the lowest possible price sellers are allowed to advertise the product for. This minimum advertised price on Amazon, and any other public listing or marketing, is federally mandated and set by the brand manufacturer.
Keep in mind that while MAP pricing does not enforce what price retailers and resellers can sell it at in private transactions, all Amazon product listings are publicly advertised. As a result, all arbitrage and wholesale sellers must comply with the MAP pricing policy in order to retain their status as an authorized seller.
MAP Price vs. List Price
As we’ve discussed, the MAP is the minimum advertised price you can market a product for sale on Amazon. Most of the time the MAP price will be the same, or close to, the manufacturer’s suggested retail price (MSRP).
This is different from the list price which is ultimately the total price of a product for the consumer, i.e. the price shown when you add something to your cart.
Amazon sellers have to take into account lots of different factors to stay competitive when determining their pricing strategy, including profit margins. While setting your listing price at the minimum advertised price will likely help you win the Buy Box, it can also cut into your profit margins if you’re not careful. At the same time, unethical sellers may set their list price below the MAP price in order to undercut competitors.
Importance of MAP for Amazon Sellers
Although at first glance MAP policies may appear restrictive, continuous compliance with a brand’s pricing policy can provide a number of benefits to your business in the long run, including:
Healthy Relationships with Manufacturers
By adhering to the minimum advertised price on Amazon, sellers can show distributors that they’re trustworthy and reliable. This helps to build a strong relationship between the brand and your Amazon business, increasing the likelihood of advantageous terms in the future and a long-term, mutually profitable business connection.
Maintaining Brand Value
If a product is advertised at an abnormally wide range of prices, including incredibly low prices, it may devalue the product overall in the eyes of consumers. By maintaining a minimum price point, MAP policies help to ensure that a given product continues to hold perceived value, keeping sales and profits high for both you and the manufacturer.
Preventing Price Erosion
Without MAP pricing rules in place, unauthorized sellers could undercut rightful sellers, diverting sales and harming their profits. At the same time, when authorized Amazon sellers are pushed to lower their prices to compete with unauthorized resellers, price erosion can occur. By adhering to MAP policies you’ll help to prevent price erosion in the long run and ensure that manufacturer’s can identify those who enable it.
An Even Playing Field
MAP pricing policies make it more likely that both small business owners and large retailers are able to compete at the same price points for the Buy Box. Without minimum advertised pricing on Amazon, larger businesses would likely have increased opportunities to undercut smaller enterprises and monopolize the Buy Box.
How MAP is Enforced on Amazon
While it might be tempting to risk violating a brand’s MAP price in order to get an advantage over competitors, there are serious consequences if you get caught. Brands are known to terminate relationships with and blacklist Amazon sellers who are caught undercutting the MAP price, meaning you can kiss that “authorized seller” badge goodbye.
You might ask, how would I get caught? While MAP pricing enforcement is challenging, reputable brands take it very seriously. In order to ensure that their brand and products maintain integrity, regardless of the reseller, brand’s use a variety of strategies to keep tabs on the listed price of their products across ecommerce platforms, such as:
Utilizing Amazon Brand Registry
Many manufacturers opt to sign up for Amazon Brand Registry, which allows them to restrict the number of Amazon sellers who are allowed to list their brand. Through this program manufacturers can also require potential sellers to submit invoices for their product, making it easy to identify who is supplying inventory to the seller. From there it’s clear when you need to reach out to a reseller about reenforcing MAP pricing requirements.
Price Monitoring Solutions
Price tracking and monitoring solutions can be used to alert brands of any new MAP pricing violators on Amazon almost instantly. Many solutions check pricing as frequently as every 15 minutes.
Pro Tip: These solutions can also be used by Amazon sellers looking to monitor competitors pricing strategies for a competitive edge when vying for the Buy Box or to report those who don’t follow MAP requirements.
Prohibiting Sales on Specific Marketplaces
Unfortunately, many brand manufacturers that have had poor experiences working with Amazon sellers in the past opt to simply prohibit all brand sales on the marketplace. This is listed in the contracts between manufacturers and retailers, like yourself, and can sometimes extend to all ecommerce sales.
Sending a Cease and Desist Letter
If brand manufacturers identify a consistent violator of the minimum advertised price on Amazon, they will often choose to send a strongly worded cease and desist letter. The letter will identify the policy being violated and state potential consequences.
Pro Tip: Private label Amazon sellers can also use these strategies to ensure that resellers across a variety of ecommerce platforms don’t undercut the MAP price.
Does Amazon enforce minimum advertised pricing?
The simple answer is no. Amazon does not, and probably will never, actively enforce minimum advertised pricing for brands.
Amazon’s first and foremost goal is to provide customers with the best deal, in order to be as profitable as possible–just like any ecommerce business. As a result, if you’re looking to Amazon for support for enforcing a MAP agreement, beyond Amazon Brand Registry, it’s unlikely that you’ll find it.
However, if you get caught violating MAP pricing for a brand you’ll likely see relationships with manufacturers deteriorate, or even be cut off altogether. In the long run not only will this harm your bottom line, but potentially your account health and reputation as well. That’s why it’s so important to be proactive about maintaining compliance with the brand’s minimum advertised price on Amazon.
How to Implement MAP Policies
If you’re a brand looking to implement a minimum advertised pricing on Amazon, first you’ll have to set up your MAP agreement. Make sure that your agreement is strategic and easy to understand. While it’s important to be specific and use the correct terminology, it’s also wise to keep in mind your anticipated audience while writing. Retailers should be able to easily read and understand the full policy–this will give them the best chance of adhering to the regulations in good faith.
A strong MAP agreement will include:
- A minimum advertised price for each of your best sellers.
- List of potential pricing violations.
- Clear consequences sellers will face if they violate the agreement.
Many brands even have their MAP agreements reviewed by attorneys to guarantee that they’re up to par with current federal guidelines.
Once you’ve established a MAP agreement, be sure that it’s distributed to all potential retailers looking to work with your brand in both their initial offer and final contract. By establishing the MAP price upfront you’ll allow sellers to make more informed decisions and prevent violations before they happen.
Finally, once a retailer or reseller has entered a contract with your brand it’s wise to begin tracking their sales of your products. By keeping a close eye on third-party product listings, you can make sure that they aren’t violating the minimum advertised price on Amazon, or any other marketplace. You can also encourage sellers to reach out to you with concerns and questions, helping to deepen the relationship.
How to Report MAP Violations
In order for MAP requirements to work as they’re intended, sellers who violate them need to be penalized. However, it can be challenging for manufacturers to track all of their authorized sellers, sometimes across multiple brands, and identify unauthorized sellers. In many circumstances, this means reporting violations to manufacturers is left up to Amazon sellers who notice competitors undercutting the MAP price to win the Buy Box. By reporting these violations directly to the brand you’ll hopefully see a reduction in unfair competition and be able to strengthen your relationship with the manufacturer.
How to Report MAP Violations to Manufacturers
- Verify that the competitor is violating the MAP agreement and has been doing so for a significant period of time.
- Document the violation by taking clear screenshots of the product, price, and retailer’s details.
- Send any evidence to your distributor or directly to the manufacturer.
- Wait to see if the product listing in violation of the MAP agreement is taken down or fixed. If you see repeated violations from the same reseller, continue to document and report.
Keep in mind that most resellers who are violating MAP on Amazon won’t be taken down immediately, and some might never be at all. By continuing to report violations you’re building a case against unfair competitors and establishing yourself as a seller who will play by the rules.
Sticking to the MAP for a Successful Journey
No matter where your Amazon business is going, it’s critical that you stick to the MAP when selling in order to uphold a healthy relationship with brands and manufacturers. By maintaining compliance with MAP policies you’ll set yourself on the path to a successful Amazon arbitrage or wholesale business, with healthy sales and profit margins. At the same time, maintaining compliance can help you reach your final destination even faster with a fair chance at winning the Buy Box.
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