Retailers are very important in the supply chain. They help get goods from manufacturers to the final consumer. A good relationship between the two is thus, very important to help get products to the market. Manufacturers usually set a minimum price for their products which retailers should use when advertising. As a retailer, you can find yourself on the wrong side of the law and develop bad relationships with manufacturers if you defy the directive to advertise products using the manufacturer’s set price. Trade Vitality can help you ensure that you comply with such directives without having to go through the hassle of getting prices from each manufacturer.
You Cannot Sell Below MAP Price
MAP is the minimum or lowest price that you as a retailer can advertise a product for sale. You can choose to advertise at a higher price, but you cannot go lower than the MAP price. However, you are not restricted to selling those products at the advertised price. You can either sell them at a higher or lower price depending on your business and customers.
MAP Price is a Legal Requirement
MAP price is a legal requirement instituted under the U.S. (United States) antitrust statutes. The price is meant to protect manufacturers from brand erosion. If different retailers advertise a particular product at different prices with some going as low as below MSRP (Manufacturer Suggested Retail Price), it can lead to a product losing value as customers will stop buying that product at MSRP. It also leads to more counterfeit goods in the market.
Applies to Both Online and In-Store Retailers
MAP price law applies to both online retailers and those with brick-and-mortar stores. You are not allowed to advertise whether on billboards or online at a price below the one recommended by the manufacturers. Online retailers though, have a way of bypassing this requirement. According to the Federal Trade Commission (FTC), the price shown on encrypted shopping carts does not count as an advertisement. This leeway allows online retailers to display and sell at prices lower than MAP. They, however, have to include “price displayed in the shopping cart” as a disclaimer. Brick-and- mortar retailers cannot do the same on newspaper ads and add the same disclaimer.
MAP does not only protect the value of the manufacturer’s products, but also the businesses of small retailers. If all retailers are allowed to advertise at their discretion, small retailers would not stand a chance of making any significant sales. Large retailers would always advertise at the lowest price to keep the rest out of business. MAP thus, helps to protect both the small-scale retailers and manufacturers, especially their brand identity.
Legal and Business Repercussions
Under the U.S. antitrust laws, the manufacturer can pull their goods from your store and bar you from reselling those products altogether. Some vendors may demand the money paid to you as a retailer to stock their wares when you defy this price requirement. You can also develop foul business relations with the manufacturers which is bad for business as a retailer.