MAP policies – or minimum allowed price policies – are increasingly popular in the after-market parts and accessories industry, and for good reason: without MAP policies, parts are often offered on eBay or Amazon at cost plus a very small margin.
By adopting MAP policies, brands have made it possible for online and offline retailers to hold a certain minimum margin. This margin makes it easier for part retailers to stock inventory, offer consumers benefits like free shipping or free returns, invest in customer service and marketing, etc. etc. Put simply, MAP policies make it easier for retailers to earn a profit.
But there are some negative consequences that result from MAP policies, some of which we’ll explore here.
Three Big Downsides To MAP Policies
If you’re an ecommerce retailer of auto parts, MAP impacts your business in three key ways:
1. You’re no longer able to compete on price, which means consumers are going to focus less on cost and more on things like shipping costs, return policies, and website reviews. This means you’ve got more moving parts to concern yourself with now that price mark-up is off the table.
2. You can’t drive consumers to your website by offering discounts on specific parts. With MAP policies, you’re not allowed to offer discounts on specific parts. In the “old” days, you could drop an ad somewhere showing an amazing price on a popular part, and that discount would lead to lots of website visitors. You could then upsell those visitors and/or try to turn them into loyal buyers.
3. Ecommerce retailers are competing more with local brick and mortar retailers, as consumers may choose to buy locally if they can’t get a substantial discount online (especially if the consumer wants the part today).
When most retailers hear that they no longer have to compete on price or worry about competitors offering big discounts, they’re excited. But when they actually start to “live” with MAP, they realize that MAP has made their lives easier in one way and much, much harder in other ways.
When Everyone’s Price Is the Same, Marketing Becomes Paramount
In a world where consumers find identical pricing on every website and at every store they go to, the choice on where to buy the part or accessory they want comes down to:
- Special offers or discounts that aren’t part-specific, like coupons for first-time buyers, discounts on orders over a certain dollar amount, free shipping offers, etc.
- Shipping times and part availability, eg “Who has the part in stock and will ship it to me today?”
- Return policies, such as the process for completing returns and the amount of the restocking fee.
- The quality of information on the website, from consumer reviews of the part they want to buy to detailed photos and specs to installation videos.
- Website functionality and ease of use, where sites that are slow or hard to navigate lose business to faster, slicker websites that are easy to use.
- Part exclusivity, such as carrying a particular brand of part that consumers can’t find elsewhere.
- Affinity for a specific website, which is often developed via social media marketing, content development, brand advertising, etc.
There’s a lot of detail that we can go into regarding coupon and special offer design, website functionality, building relationships with potential consumers, etc., but those details are for future posts.
The big takeaway from this post: MAP policies mean that good marketing is key to a retailer’s success.
The company with the best marketing will win.