I own a small business. We are able to keep our overhead low because I worked my butt off building a website and spent thousands of hours working on search engine optimization (so my site is ranked high on search engines). Then I found out that most of our manufacturers “selectively enforce” their MAP policy. The manufacturers turn a blind eye to MAP violations for “some” stores (I’m sure you can guess which ones) but strictly enforce their MAP policies on other stores.

I tried an interesting experiment a few years ago. I copied “word for word” (no word of lie, literally word for word) the MAP violations on a competitor’s website. I received a MAP violation letter within a few weeks from the manufacturer. Can you believe that the website I copied (still to this day) is worded exactly the same, with their MAP violation?!?

I must be blind because I certainly don’t see any “help for the little guy” in that scenario. If a business can find a way to lower their overhead and operating costs, which in turn enables them to sell a product for less, than let them. It is good for both competition and consumers. I say let free enterprise work the way it is supposed to!

Without that – there would be no chance of competition, since for sure the big guys get a better price. You can’t make any money when your cost is their selling price!

Manufactures have come up with a MAP pricing or did they? We all have heard it explained that we just want to keep the playing field level so the little guy can have the same chance as the big Box store. Really!
I want you to take the time to really look at this fix for the little guy. Who is he and why is a manufacture so interested in him. After all the manufacture could really make more money selling to the little guy because his budget is limited and can not buy in Quantity and can not get a price break. So the Manufactures would make more here for there product. It is sort of funny that this is called the Manufactures advertised price when I do not see how it helps the manufacture as he is still getting his set price for his goods. Right? Regardless of who is selling it at what ever price? Let’s take this senero.
I have come out with a new widget and I really need to get tit to the public so I start contacting folks and go to a few trade shows and I find out that the public loves it. Man now I am trying to keep up with the orders and really need to grow but just do not have the capital to do it quick. So I am sending out these widgets as fast as I can.
Then I receive a call from a big box store and they have heard about it and folks want them and they want to place a very large order. WOW we are on the way! But how can we produce any more with out the capital? Guess what the box store tells you that they thing so much of your product that they will help you out. We will go ahead and order and pay you for x amount of widget and you will have enough to make the changes you need to so you can meet the production. Wow WE really are on the way now! We can sell to out existing customers and also to our big account and we are making money hand over foot.
After the first few deliveries and more additions to your plant. One of the big box stores calls and suggest that you need to have a MAP on your product so no one else can sell them at a lower price than they are. After all they are a good account and they are not asking that no one sells them cheaper just so they sell them at the same price and everyone is happy. That sounds good and after all it does not affect your bottom line so why should you care you even repeat that it just make sense. So you agree and as the box store rep is leaving he tells you might want to check out Joe’s Widgets they are really selling your widget cheap. What can I do about it I guess he is buying it from some supplier some where. I would call him and let him know he needs to come up to map price and if he does not you will not be able to sell to him any more because you have map pricing. So you give it a go and the guy tells you I will sell it at what ever price I want I do not buy direct from you and if I want to give them away why do you care you get what you ask for your product.
Stunned you call the box store contact to let him know what was up and you can not do anything about it and to you surprise it is simply put you either quit selling to him or we can no longer buy your product! WOW!! That knocked the wind right out of your sale as the bank note on the expansion and you have already bought raw product for the next big order What can I do. Well if I were you I would call and find out what warehouse he is buying from and call them that if they do not make Joe’s Widgets sell at MAP pricing that you will no longer sell the poplar widget to them. So Mr. Warehouse man has no choice but to call Joe’s Widgets and tell them if you do not come up to MAP pricing we will no longer sell them to you. So old Joe has two choices either go up to map or drops your widget.
So in order to stay in bed with the big box stores you have to play by there, no these rules are yours aren’t they. So they have you right where they want you doing the dirty work they can not do.
Has anyone ever seen MAP pricing help any small or large shop?
If they really were concerned about a level playing field then less start with profit margin after all the big boys sure do not pay what the regular guys pay.
I have had man call me and ask if I would go up to MAP and I like to mess with them. I ask them do they have a good product and ofcore the answer is yes. I ask them if people really liked their product and they say yes I then ask them if they like to make money and that answer is yes. I ask them do you think if me or the box store quit selling it and you sold it to everyone else do you think the public would find it and buy it and again I get a yes. I then say then you and I can make money. Will you sell it to me what you are selling it to the box store? I will if you buy as many as they do. I tell him I can only buy them as I sell them but I still will be willing to pay the higher price and then I say that means you will make more from me than you did from the box store an I too think your product will sell with out the box store and there games!

“the manufacturer sells retail as well as wholesale, so they compete directly with their retailers”

Bingo. They don’t want competition in these channels. Perhaps they want to “own” the CSE and Amazon marketplace options.

Another issue is they may not want third parties earning commissions off sales – Amazon, CSEs or affiliates.

@lewis

Definitely. Manufacturers can easily make different agreements with power players (and we know who those retailers are), even making unique model numbers which are identical products sold at lower prices, or under private label. Happens all the time.