When you as a manufacturer or brand use a unilateral pricing policy, minimum advertised price (MAP) policy, minimum retail prices, or another form of resale price maintenance, not all sellers follow them.
Your online pricing policy protects your margins and ensures customers have a consistent experience with your brand, wherever they buy. So, when a seller violates your policy, it hurts your bottom line and can have a lasting impact on brand perception.
This is a big problem for manufacturers and brands who sell online through resellers, especially if they use marketplaces like Amazon, eBay or Walmart.com. Ideally, your process for handling pricing violations should be built into your policy. But, even if you’ve done that, it can be hard to know how to start.
Here’s are 5 steps you can take to address violations of your online pricing policy:
Determine the Scope of the Problem
First and foremost, investigate how widespread the problem is. How many sellers are violating your online pricing policy? How many products are being sold for less than your policy allows? How much is it costing you? Is this a consistent problem, or did you just see a spike in violations after a sale?
Learning more about the specific violations you’re dealing with will help you decide what solutions to pursue and what to focus on.
Track Down Violators
If you can’t contact sellers violating your policy, you’re never going to be able to take care of the problem. You need to investigate and track down the contact information for violators. However, if you can’t find contact information, you may need to work with a third party to assist with investigations and an antitrust lawyer to create a strategy for “pulling the plug” to shut down unauthorized sellers. Once you know who you’re dealing with, you can start exploring what enforcement actually looks like.
Dedicate Someone to Price Enforcement
Enforcing your online pricing policy is a serious job with high stakes. Mishandling pricing enforcement can easily lead to legal liability and even lawsuits. You want to make sure there’s a designated employee (or team) with clear ownership over this area who understands how it impacts your brand and business. You also need to make sure they have the necessary tools to do their job successfully.
Equip Your Team
Even if you only have a handful of products, identifying violations can be difficult and easy to miss. Sellers often play games on nights and weekends, lowering the price when they think you’re not looking. Thirteen percent of violations are only visible during non-business hours. There are often more websites selling a brand’s products than they realize, which makes manual enforcement inconsistent and easy to miss. Having hundreds or even thousands of SKUs across hundreds of websites only makes it more difficult to try and enforce manually.
Most brands need solutions to automate the process of tracking pricing violations. There are lots of software programs that can do this for you, but not all of them will set you up for success. Some only pull pricing information from retailers’ sites on certain days or at specific times—which means bad actors can violate your price policy between these days and times without getting caught.
Some programs may also require you to manually respond to each violation, which is both tedious and inefficient. And when you can’t keep up with the number of violations, you’re forced to prioritize some and let others slip through the cracks.
Be sure you choose a solution that monitors sellers’ sites multiple times a day to catch activity on nights and weekends. It should also provide ways to respond to multiple violations at a time.
Enforce Your Price
The exact process you’ll use to respond to pricing violations will depend on what you’ve laid out in your policy. Your response needs to be unilateral and consistent across the board, so no seller can argue that you’ve shown favoritism or that you discriminated against them.
If you haven’t already, make sure you work with an antitrust lawyer to help you develop an internet dealer agreement that includes your pricing policy as well as templates of letters to send to violators. They can also help you choose the consequences and responses that are most appropriate for your situation.
Having an online pricing policy isn’t enough – you need to enforce it. The more you ignore pricing violations, the more of them you’ll have.
Justin Meats is VP of product for PriceSpider