With the end of the fourth quarter looming for brands and retailers, and consumers’ expectations for large holiday sales, it’s no wonder that product sales and discounts spike in November and December. These heavily discounted sales holidays, often spanning from Veteran’s Day, through Black Friday, Cyber Monday, and beyond, offer brands wonderful opportunities to increase sales at the end of the year. However, these deals can increase retail arbitrage, unauthorized sellers, and MAP violations. Let’s dive into the effects of sales holidays for brands; the good and the bad. 

The Good: How Sales Holidays Impact Brands

“Black Friday” has, historically, been the epicenter of holiday sales since the 1980s, morphing as consumer behavior has changed over time to include major online sales, spanning several days. Truthfully, it has become impossible to discern which sales throughout November are actually “Black Friday” sales, because major online retailers like Amazon, Walmart, and Target seem to start their sales earlier and earlier each year. This year alone saw $10.8 billion in online sales for Black Friday, up 10.2% from last year. 

Do these sales holidays work for brands? The short answer is yes. Major sales holidays have many perks for brands who participate:

Boosted Revenue and Sales Volumes

Many consumers expect and wait for significant sales around the holidays to finish (or even begin!) their gift-buying. These sales holidays often drive a considerable spike in consumer spending, allowing brands to quickly move larger inventory volumes, increase cash flow, and meet year-end revenue goals. 

Additionally, high-demand products often sell out, helping brands clear old inventory and make room for new stock. 

Increased Brand Visibility and Customer Acquisition

Promotions during sales holidays attract a wider audience, including new customers. Offering competitive discounts during popular sales holidays can attract first-time buyers, providing an opportunity for brands to convert them to loyal customers through post-sale engagement, quality experiences, and future promotions. 

Strengthen Retail Partnerships

Sales holidays allow companies to deepen their relationships with retail partners by collaborating on high-impact promotions. Successful campaigns benefit parties and strengthen ongoing partnerships. 

Essentially, participating in sales holidays like Black Friday is extremely beneficial to brands, often allowing companies to hit those 4th Quarter sales targets while potentially bringing in new and future customers. 

The Not-So-Good: How Holiday Sales Negatively Impact Brands

While participating in Sales Holidays is almost essential for most eCommerce brands, it doesn’t come without its downfalls. Companies often struggle with enforcing MAP policies during the holiday season and many brands face retail arbitrage when products are massively discounted, leading to a spike in unauthorized sellers and a decline in brand integrity. 

The MAP Policy Dilemma During Sales Holidays

A MAP (Minimum Advertised Price) policy is like a safety net for many brands. It ensures that products aren’t advertised below a certain price, preserving fair competition and brand value. But, the fact is that sales holidays like Black Friday and Cyber Monday often see a spike in MAP policy violations. Retailers and sellers drop prices below a brand’s designated MAP to compete for customers, creating a “domino effect” where other eCommerce companies follow suit to remain competitive. 

Enforcing MAP during the holiday season can become especially tricky as these MAP violations not only erode margins but can also create tension between brands and their authorized sellers. After all, no brand wants to fight with its retail partners during the holiday season, yet maintaining control over pricing is crucial to brand protection. 

Retail Arbitrage: The Grinch Who Stole Brand Control

Enter retail arbitrage; particularly prevalent during the holiday season. Retail arbitrage involves individuals buying discounted merchandise from retailers to resell at higher prices online. While this can lead to increased market reach, arbitrage is a potential nightmare for brands. 

Why? Often these resellers bypass MAP policies altogether, offering products at erratic prices that authorized sellers can’t match. Worse, their listings may lack proper branding, high-quality images, or customer support, damaging the customer experience and, ultimately, the brand’s reputation. 

With their clearance events and massive discounts, holiday sales are a goldmine for retail arbitrageurs. Products like trending toys, seasonal decorations, and must-have gadgets are prime targets. While these resellers profit, brands are left grappling with inconsistent pricing and unhappy authorized sellers. 

The Rise of Unauthorized Sellers

Holiday sales also see a spike in unauthorized sellers; Individuals or companies who obtain and resell products without a brand’s consent. Like retail arbitrageurs, they undermine MAP policies, creating a chaotic pricing landscape. These resellers create other problems for brands as well: 

  • Quality control issues: unauthorized sellers may sell damaged, expired, or counterfeit products parading under the guise of ‘the real deal’. 
  • Brand trust erosion: When customers receive subpar products, they blame the brand, not the seller. 
  • Profit leakage: These sales cut into profits that should go to authorized channels. 

During events like Black Friday, Cyber Monday, and other sales holidays, a customer may buy a discounted product online only to find it doesn’t meet expectations. They follow up by leaving a negative review about the product, damaging the brand’s reputation, even though it wasn’t sold by an authorized retailer. 

How to Safeguard Brand Integrity

Given this information, how can brands protect themselves amid the holiday hustle? It’s all about proactive strategies: 

Strengthen Your MAP Enforcement

Investing in technology, like MAP Policy Partners, allows a streamlined approach to monitoring online listings for MAP violations in real-time. Our automated software offers brands a solution engineered to detect, investigate, and enforce MAP violations, ensuring consistent pricing across channels. 

Combat Retail Arbitrage 

Retail arbitration thrives on a lack of visibility. By closely tracking inventory and pricing across retailers, brands can reduce arbitrage opportunities. Some brands even limit their distribution during the holidays to maintain control. 

Shut Down Unauthorized Sellers

Work with platforms like Amazon’s Brand Registry or legal teams to identify and remove unauthorized listings. Make it clear to customers where they should (and shouldn’t) buy your products to avoid counterfeit or subpar goods. 

Unauthorized sellers are one of the biggest thorn-in-the-side issues for brands; Map Policy Partners offers a few solutions in our separate article on Unmasking Unauthorized Sellers.

Support Authorized Sellers

Ensure your authorized retail partners are equipped to compete by offering promotions or incentives that align with your MAP policy. A strong partnership can reduce the appeal of unauthorized channels. 

Final Thoughts

As holiday sales continue from Black Friday through the end of Quarter 4, brands find themselves walking a tightrope. On one side lies the promise of record-breaking sales, expanded customer bases, and heightened visibility. On the other, they must contend with the challenges of MAP violations, retail arbitrage, and unauthorized sellers that can erode margins and tarnish brand reputation. 

However, taking a proactive approach-strengthening MAP enforcement, monitoring for retail arbitration, and fostering strong relationships with authorized sellers-brands can reap the rewards of holiday sales while minimizing risks. Sales holidays are undeniably a double-edged sword, but with careful planning and a focus on brand integrity, they can serve as a powerful tool to end the year on a high note and build momentum for the future.