Amazon & Walmart Price Matching and MAP
So you’ve settled on implementing a MAP policy for your brand. You’re doing it for a number of reasons:
- By controlling retail price, you can count on consistent profit margins, and so have confidence in your planning around profitability.
- Besides this, MAP helps you control the perception of your brand’s value as it’s reflected in price.
- It also helps you avoid relationship conflict—both with sales partners and within your organization—that can arise from cross-platform price conflict.
- And MAP makes your product more attractive to potential new sales partners—they know you don’t want them to be undercut on price, and appreciate your diligent management of your retail presence.
You’ve made a great decision!
Sellers break MAP, though. Your policy needs not just implementation but enforcement. And then, retailers’ price-matching practices compound the problem. It’s possible that responding to price-matching episodes will be the largest part of your MAP management activities.
Learning how to attack and prevent price-matching as effectively as possible, then, will benefit MAP compliance for your brand as well as ease worry and workload for you.
First, what do we mean by price-matching?
Major online retail sites use software to regularly “scrape” the web to discover the prices of your products at other sites. Because it’s a simple thing for shoppers to quickly discover product listings for the same product across the web, there’s great benefit for a given online retailer in having the lowest available price.
Also, for the biggest ecommerce retailers, low prices are a deep matter of longstanding strategy and company identity. Amazon’s marketplace famously developed according to the “flywheel” model, where low prices drove greater popularity with shoppers, which in turn drove more sellers to the platform, which increased competition, which lowered prices. Meanwhile, Walmart pioneered and has always followed an “everyday low price” strategy. Consistently low prices are synonymous with the Walmart brand, and what Walmart understands that shoppers expect from it.
This attitude toward price is customer-centric rather than brand-centric, and colors the whole consumer ecommerce landscape. The centrality of Amazon and Walmart to ecommerce means that many other sites have developed a price-matching practice in order to not be left holding the high-priced bag, as it were. For instance, Amazon scrapes prices from Chewy.com and Wayfair to see if they’re lower, which means that Chewy and Wayfair, to try to be price-competitive, scrape prices from Amazon too.
Price-matching becomes especially troublesome when it results in a cascade of lower prices across multiple platforms. A price can fall on only one site, and a dozen sites may soon follow, sometimes within hours. Yes, you the brand may have—and should have—communicated your MAP policy to all selling partners and retail stakeholders. But some sites take the discovery of a lower price elsewhere as carte blanche to follow the herd. Their business priority is the shopper, not the brand.
We said earlier that retail sales partners tend to like MAP policies on the grounds that these make the retailer less likely to be undercut on price. A more rounded explanation of the situation might be this: they’re in favor of it for other retailers—for their competition. But for themselves? They’d of course prefer to have the flexibility to post the lowest price on the internet.
That arrangement obviously doesn’t work for your brand’s priorities in the areas of profitability, predictability, image, and smoothness of daily business—the priorities that made you choose MAP pricing. Managing a sales presence across multiple major online retail sites as a MAP brand often means managing this conflict.
How Amazon and Walmart price-match on their marketplaces
If you sell to a retailer, on a 1P/vendor basis, then that retailer commonly has control over your onsite pricing, and is able to simply adjust it unilaterally upon finding a lower price online—and this will often amount to their committing a MAP violation. In this situation, the durable solution is to forge some agreement with the retailer forbidding this practice, or else to be willing to enforce the penalties in your MAP policy against that retailer.
If you are a third-party seller on a marketplace like Amazon or Walmart, you control your own pricing. But this doesn’t mean that these sites leave you alone when they discover a lower price elsewhere.
Amazon’s way of not leaving you alone involves your access to the buybox and the advertising ability tied to it. When Amazon discovers that your product is available for purchase at a lower price elsewhere, it alerts you that your Amazon offer is suffering from a “Brand Health Issue”.
What this horrible euphemism means is that your offer no longer qualifies for the “Featured Offer”— Amazon’s formal term for the buybox. The buybox might instead go to another seller of your product who lowers price, or it might simply disappear from the product page.
By one estimate, 82% of Amazon purchases go through the buybox. These buyers click on “Buy Now” or “Add to Cart” to purchase the Featured Offer, rather than perusing the list of available offers on the page.
Experienced Amazon sellers know that without an offer in the buybox, sales can crater. The problem is compounded for anyone who uses Amazon Advertising: offers not in the buybox aren’t eligible to have ads delivered for them. Competitor products can then overtake coveted paid positions in search results and so begin to capture market share from your product.
The way out of this situation that Amazon provides is for you to match the “competitive price” that Amazon alerts you to within Seller Central—the low price that Amazon has scraped from other retail sites. Amazon defines the competitive price as “the lowest price for the item when compared to other reputable and relevant retailers outside of Amazon”. If you like, you can sign up for Amazon’s automated repricing program, and they’ll make downward adjustments for you—though we don’t recommend giving Amazon any more control over your pricing, especially when it would lead to your breaking your own MAP policy.
Any other solution has to be worked outside of Amazon. Amazon won’t tell you where they found the low price—you have to find it. And it’s then on you to try to have the MAP-breaking seller remove or adjust their offer.
Walmart works in a simpler but more aggressive way. Whereas on Amazon, your “uncompetitive” offer is still buyable—though because out of the buybox, not easily findable—on Walmart it can simply disappear.
The Walmart policies that govern this behavior are called the Price Parity and Price Leadership rules. Offers that don’t meet or beat prices on other sites are “unpublished,” with a message in Walmart Seller Center declaring, “Reasonable price not satisfied.” As with Amazon, your response can either be to lower your Walmart price or to try to have the offending external price raised, or its offer eliminated. As soon as Walmart’s search bots find that the lower external offer has disappeared, the site will republish your offer.
How do I beat price-matching?
The central opportunity of MAP is that you, the brand, can take control of your pricing—setting your own terms rather than accepting terms from retailers or resellers. It should go without saying then that except in dire circumstances, you don’t want to accept strong-arming from the likes of Amazon and Walmart just in order to “play ball” on those platforms.
There are a couple of ad hoc tactics that can address price-matching problems in the short term, and that don’t require you to exacerbate the problem by acceding to demands for lower prices.
One is simply to let the low, scraped offer sell out of stock, in the expectation that after it disappears, retailer prices will rise again to the level of your MAP. If there are multiple MAP-breaking offers though, and they take a while to sell out, this can be a dangerous course to take, both for your sales health and the message your partners might receive about your commitment to your MAP policy.
Another tactic can work if the offending offer is one for which you control the inventory level. For instance, suppose you have a vendor relationship with Target, and Target is breaking your MAP, but Target doesn’t hold any of your inventory—you dropship it to Target customers. If you’re able to simply tell Target that you no longer have inventory of the product in question, then the below-MAP offer for it might disappear from web search—become unscrapable.
These approaches work only in specific scenarios, though, and even then presume that you have adequate data on the wheres, whens, and whos of sudden pricing changes to your products on the internet.
A more robust solution to the price-matching problem is to use a program of digital MAP monitoring and enforcement. A MAP monitoring software solution like MAP Policy Partners’ can give you all this data on MAP breaches to your products, and MAP Policy Partners can also help you unmask and communicate with any unrecognized third-party seller damaging your sales and brand.
A MAP policy is never a set-it-and-forget-it endeavor, since—as we described above—retailers and resellers can have priorities that diverge sharply from yours as brand owner, and work against the stability of your pricing regime. In this environment, quickly delivered, actionable insight on MAP violations of your products is simply a big piece of the puzzle in making MAP work. We encourage it, and wish you the best of luck in your ecommerce enterprise.