28 January 2019 | 32 Comments
In spring of 2018, after much deliberation and debate, I quietly implemented an Amazon-specific minimum advertised price policy (MAPP). 6 months later, the policy was dead. Here’s what happened.
I’m a big believer in capitalism and the free market. I love that we sell games to distributors who sell to thousands of retailers worldwide. With a few extreme exceptions, I don’t monitor what those retailers do. I don’t check on them to see if their bathrooms are clean, that their staff can accurately answer questions about our games, or that online stores are shipping well-packed boxes. Consumers decide from their experiences with those stores if they want to continue to shop there.
Most importantly, both brick-and-mortar and online hobby-game retailers add value to customers in a variety of ways. They run events, accept preorders, offer loyalty programs, personalized service…the list goes on.
Then along comes Amazon. Stonemaier Games doesn’t sell through Amazon, nor do we sell directly to Amazon. Amazon’s main value offering is price. Their entire algorithm is structured around the idea of vendors (and Amazon itself) competing on price, cent by cent.
While I appreciate consumers wanting to get a good deal, I came to believe that the “race to the bottom” resulting from Amazon’s algorithm was a problem. Sure, there are other online retailers that discount our games, but those retailers don’t also host third-party vendors who are incentivized to compete for the lowest price. Clever? Yes. Good for our long-term relationships with all other retailers who do a lot more to serve their customers? Not so much.
That’s why I implemented an Amazon-specific MAPP. I wanted to address the problem at the source. While there are other companies that implement industry-wide MAPP (or across entire regions), I just wanted to focus on what I perceived to be the problem. Plus, I am Stonemaier Games’ only employee, and I already work 80 hours a week–I couldn’t add another 10 hours just to monitor every store and website out there that sells our games. Amazon actually makes it quite easy to see vendors and their prices for each product.
How Did It Work?
I kept the policy short and sweet:
Stonemaier Games has an advertising policy on all products sold through and by Amazon.com in the US. This policy takes effect on April 15, 2018. Vendors may not advertise or otherwise promote Stonemaier products at a price lower than 20% below MSRP on the Amazon.com marketplace. This applies to prices visible to customers who are logged in or logged out of their Amazon accounts. Unilateral exceptions to this policy may only be granted via communication between Stonemaier Games and distributors based on sell-through rates, particularly after a product has been on the market for 6+ months.
Distributors are responsible for informing their retailers of this policy and for halting sales to retailers who violate this policy. Any violation of this agreement may result in termination of the right to purchase Stonemaier Games products.
This was posted on our website and disseminated in our retailer/distributor e-newsletter about a month and a half before it began. There was a little confusion about the “unilateral exceptions” sentence, which was basically there to assure vendors that if we had a complete dud of a product, we might make an exception to MAPP for that product so their not stuck with inventory they can’t sell.
What Happened Next?
On April 15, I looked through Amazon.com listings of our products to find that most vendors updated their prices to exactly match the 20% discount. I gave the violators a few days of leeway, and then I started compiling a list to report to distributors.
After the first time I reported violators to distributors, I got a bunch of e-mails from vendors saying they had no idea the policy existed. While this would turn out to be a common excuse throughout the process, I think most of these requests were legitimate, as it turned out that a few distributors hadn’t communicated the MAPP to any of their retailers. We gave them a pass on this and moved forward.
For the next few months, I would monitor the prices of our main products on Amazon every week or so, and I would report violators to distributors once a month, politely asking them to stop selling to those retailers.
I’m not sure what changed, but after a while I decided to first contact vendors through Amazon to let them know they were violating MAPP. If they responded and corrected the price, I wouldn’t report them as violators.
Why Did It Fail?
Over the summer and early fall, there were an accumulating number of issues:
- Every week or so, I would hear from vendors who claimed they didn’t know about the policy and thus shouldn’t be punished for violating it. I couldn’t prove whether or not their distributor had told them about the policy. In most cases, I simply went to the distributor and asked if the vendor was on their e-newsletter when they announced the MAPP. Sometimes I got responses, sometimes not–neither party wanted to be held responsible.
- Vendors on Amazon often obfuscate their legal name or other identities, making it difficult for distributors to mark them as violators. You might be surprised by how many brick-and-mortar game stores also sell on Amazon under different names.
- Monitoring MAPP became a much bigger part of my job than I wanted it to be. At first I was only checking every few weeks, but by the end I was checking nearly every day (and finding new violators every time I checked). I think there are some monitoring apps that can help with this process, but I don’t think they let you contact the vendor through Amazon’s messaging system.
- There is no way to enforce MAPP at the moment of the violation. That is, if Cheap-O-Games on Amazon is selling Viticulture for $19, I can’t prevent them from doing so. Amazon doesn’t care. I simply have to wait until Cheap-O-Games runs out of inventory, after which distributors won’t sell our games to them anymore.
- The biggest problem, though, is the Amazon itself will not adhere to MAPP. I foolishly thought that I could game the system, because Amazon’s algorithm typically matches the lowest vendor price. So if I could get vendors to respect MAPP, so would Amazon. That actually worked well for a while…but then, as far as I could tell, Amazon’s algorithm started looking at other online retailers as well. So even if the lowest vendor price on Amazon’s marketplace for Viticulture was a MAPP-friendly $48, Amazon might be selling it for $45.95 because that’s $0.04 lower than a hobby-game online retailer. This really frustrated vendors who were following the rules, and justifiably so. Even though it seems like I could stop selling games to the distributor who sells to Amazon, that’s not going to stop Amazon from getting our games. They’ll just find someone else.
So, without solutions for these issues, I ended our MAPP on October 30.
Were There Any Positive Results?
Really, there was one benefit that emerged from the experiment. You see, just because the MAPP was over didn’t mean that certain vendors hadn’t violated it. We continue to ask distributors not to sell to those vendors. So the benefit is that we identified a number of vendors who either (a) don’t read communications from distributors and/or (b) are inherently sneaky and shifty–not exactly the types of vendors we want carrying our brand.
Even though it failed, in hindsight I’m glad I tried this experiment. I learned a lot about how the Amazon marketplace works. And honestly, I have nothing against Amazon. We bring joy to a lot of tabletops worldwide thanks to Amazon’s platform. I certainly wish their algorithm didn’t promote a race to the bottom, and I hope other retailers can continue to find creative ways to entice customers. I want to sell our games in a wide variety of ways to best fit the needs of different consumers.
I don’t feel comfortable recommending or not recommending MAPP, but if it’s something you’re considering for your company, hopefully this post has provided some value for you.
I know that MAPP and Amazon are contentious topics, so please keep your comments constructive and respectful (to me and to each other). I’d love to hear your opinions, though, and I’m happy to answer your questions.
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