Minimum advertised price.
It’s not something we talk about often, but it can be a huge sticking point for B2C brands and retailers alike.
It’s one way that small brands can actually maintain their value when selling through an online marketplace like Amazon. You can set a minimum price for your product — making sure your products aren’t devalued and commodified without your consent.
But MAP policy is just one of the many ways you can build a high-value brand, according to George Mikhail.
George is the Co-Founder and President of DYODE, an ecommerce consultancy that provides plug-and-play e-commerce executives and strategic direction. George has been in the ecommerce space since 2007 and previously worked in digital advertising for Kelly Blue Book and Tilly’s. With a focus on direct to consumer brands, he is always looking for a way to help his clients identify the gaps in their marketing strategy and find new ways to drive revenue.
In this exclusive interview, George shares:
- How MAP policy can help smaller brands build value
- The biggest mistake most B2C marketers make
- The investments you need to make to build a brand that lasts
- …and much more.
Listen to Episode 5: The Empowered Marketer
Read the Interview
1. What do you think is the biggest missed tactic that a lot of B2C marketers don’t do?
A lot of times, B2C companies sell product on their own sites and they’re undercut by third parties that they sell to wholesale. This is all due to a lack of MAP policy, which is usually overlooked. We really push many of our clients to implement a MAP policy to ensure they’re selling on a fair playing field. This way, all of their acquisition and retention efforts don’t get undercut by consumers shopping elsewhere for a better price.
But you have to be strategic about it. Marketers have to come up with a MAP policy that’s fair to their accounts and doesn’t put their wholesale business at risk, but allows their direct-to-consumer business to thrive as well. Especially when you’re dealing with large marketplaces and retailers like Amazon or Nordstrom, they’re looking to create an optimal customer experience. It’s very hard to offer free two-day shipping, seamless customer service, seamless returns process, and no questions asked when you return anything.
You’re already competing on all of those things, and you can’t really control any of that because these large marketplaces have the operational structure to outrun you. But when it comes to pricing of your product, you can control how that’s dealt with.
Usually, it’s quite simple. Come up with a strategy that allows your brand to set the bar on the cadence of discounting and the terminology used in conjunction with your product, making sure to have some way of monitoring it to make sure that everybody’s adhering. From then on, you can win from providing a better brand experience.
Of course, retailers have a slightly different strategy because they don’t own the brand, and they’re the ones that are being dictated to from a MAP policy standpoint. So, their strategy has to be a little bit different, but that’s one of the main things that’s really overlooked these days.
Everybody’s so focused on acquisition strategies, retention strategies, but nobody’s actually looking to see why the consumer could potentially be shopping elsewhere. It’s just a bunch of assumptions, but in reality, the number one most important thing to the consumer after they’ve decided that they want to be your customer, or be loyal to your brand, is price.
2. How do you actually enforce your MAP policy? If you’re a small e-commerce company going up against a huge retailer, what leverage do you really have?
You can’t legally force anybody to sell anything at any given price. Once they own the merchandise, they can sell it for whatever they want. However, you can control what it’s advertised for, and that could be as an extension or in addition to your dealer contracts, your sales contracts or even purchase orders. The real threat is not doing business with them anymore. They can ultimately do whatever they’d like, but then it’s at your discretion as to who you sell to, who you want to continue doing business with, how much product you give them, and when you give it to them. That’s all up to the brand, and that’s the leverage that they really have.
3. That’s a tough choice though, for a smaller brand. Is it even an option to not sell on Amazon?
Well, no. In our consultancy, most of the conversations around Amazon revolve around the best strategy of selling through Amazon. Amazon has multiple products, and we help clients figure out which product makes the most sense for the brand. Certain products have very stringent SLAs, but there are ways you can work with Amazon and make the most of it without cannibalizing your direct-to-consumer business.
If you can decide on which product is best for your business and you have the internal resources, your sales staff might be able to make that decision. If not, companies like DYODE can step in and definitely assist in vetting the best potential product. There are ways of working with Amazon where you don’t have to put your direct-to-consumer business at risk. It just takes a lot of vetting because you don’t want to miss the opportunity either.
4. How do you measure success for your clients?
We don’t share the same KPIs across all clients. Some clients engage us because they have operational problems, or staffing problems, or resource allocation issues. Those obviously will have a different set of KPIs depending on their challenges. Of course, everything that we do rolls back to revenue growth. Everybody, ultimately, looks for more top line, but we’ve also had clients come to us and say they want to improve their sell-through on REI or with a particular big box retailer. Every client is different and their KPIs are a little different as well.
Most of the time, brands engage us to tell them what their weakness is. They might have assumptions around resources or budget, and in most cases, their assumptions are true. But in many cases, we find that they have other issues they didn’t even consider. Speaking to MAP policy, that’s a perfect example where you may have no idea that 85% of your accounts are discounting your product aggressively because you’re not really monitoring it. If you don’t realize it, you’re not prohibiting them from doing so and it’s cannibalizing your business. It’s to each his own. Every company is different — the structure is different, their products are different, their market is different, and their staff is different. We have to examine every single engagement independently and really dive in to see what fundamental things we need to change to fundamentally change the business.
5. Beyond MAP policy, what’s another way that brands can be perceived as high value and increase their value in the marketplace? How do you get that perception from your buyers?
One of the conversations we have, especially with smaller organizations, is that they need to invest in building the brand itself. They don’t tell the story as to why their product has a unique value proposition. They don’t align their product with anything notable in the lifestyle they’re trying to penetrate. They don’t have any PR and they don’t do any collaborations. we always tell them, quite frankly, if it was that easy to start a brand and get it off the ground, we would probably be doing that and not consulting.
A lot of people forget that to build a brand — regardless of what niche you’re in — is expensive, involved, requires PR, and requires marketing. It requires things that sometimes don’t have a direct KPI tied to it. It’s very difficult to assess whether a PR play or brand marketing or having a shout out by an individual has a real impact. Sometimes it’s easy and you see a spike in sales, but in most cases, it’s very difficult to align those efforts with a direct KPI.
A lot of people look for that direct KPI and they don’t realize that, once again, the cost of developing a brand and penetrating a market and earning market share is very costly. You have to be patient.
We’ve had companies that just got one shout out or got one opportunity to shine through and they capitalize on that opportunity. But then that opportunity goes away and they don’t do anything to continue the customer perception or cling to it, and so it dies. They think because this celebrity or that artist wore this or wore that or mentioned this or mentioned that, now my brand is cool. But the fact of the matter is if you’re not constantly in front of the consumer and you’re not constantly investing in PR ploys or brand marketing, you just become a commoditized product.
6. You’re also an expert on utilizing marketplaces strategically. How can smaller brands use marketplaces to their advantage?
For smaller brands, marketplaces are a great opportunity to expand your reach and as leverage for customer acquisition. In many cases, there are no costs to set up an account and so it’s an optimal way to get your product in front of consumers. It’s easier to get off the ground without having the risk of paying for an impression cost or a click cost as some of these more traditional acquisition channels.
The key, though, is to be able to figure out how to bring the Amazon or marketplace customer back into your own funnel and really capitalize on it — especially with limited customer information and a limited ability to market to that consumer. There are very heavy guidelines and restrictions from these marketplaces because they want to retain their customers.
You need to figure out how to create such a great experience for the customer through the marketplace that the customer would potentially consider coming back to you directly. I think it’s a great way for a small brand to get started with minimal risk and cost. Of course, it’s always best to try to launch a direct-to-consumer experience solely and invest in marketing and bringing traffic to your own site. But, once again, there’s a cost associated with that. If you have a limited budget, you really have no choice other than to leverage these massive marketplaces to your advantage.
7. How do you convert someone who comes in through a marketplace into buying directly from your site? That seems like a real challenge.
There are a lot of restrictions and marketplace contracts that prohibit you from marketing to that consumer, but your packaging can say a lot. Some brands put letters in the packaging and they give the customer a reason to become a fan of the brand. If they can experience the brand through the product, through the packaging, through whatever means that align with your contractual restrictions, then the buyer is more inclined to be loyal to that brand. They may continue shopping and, ultimately, you can get them back into your funnel. It takes a lot of work to do that in a very strategic way.
Some marketplaces outside of Amazon have lesser restrictions around how you can communicate with the consumer, and they’re more open to you having a dialogue with that consumer. Unlike with Amazon, where that’s their consumer and you’re just acting as a drop shipper.
8. Looking to the future, what do you think is going to be most important in the B2C market in 2018?
Two things, really, keep coming up in every conversation. One is how to deal with Amazon. We try to put the brakes on anything our clients doing so that we can figure out the best way of approaching Amazon. You can’t really ignore it, but you have to know which path to take in dealing with them.
Number two is how can I grow internationally? That’s also been a big topic of discussion with a lot of companies. They feel like they’ve topped out on the domestic market or they are building traction elsewhere, and they don’t wanna just sign off the brand through a distributor. They want to own it. That also requires an A-to-Z strategy as far as what you need to do to establish yourself. Everything from registering trademarks to having the logistics set up, operational resources and also the appropriate marketing budget and strategy to penetrate a given region or market. Otherwise aren’t playing in or at least playing seriously.
Those are the two common things that our clients have been really focused on. There’s obviously all sorts of other things. Pricing is also a big topic of discussion. Retention marketing is another big topic. Segmentation and personalization, MAP policy, international growth, and Amazon are really the four big things that are top of mind for 2018.
If you’d like to learn more about George Mikhail and DYODE, visit www.dyode.com.