Online marketplaces and cross-site price comparisons have made e-commerce more competitive than ever. How can you keep things fair among sellers while maintaining your brand integrity? 

Price floors and recommended resale values are key to leveling the playing field, but they can be difficult to implement when they involve so many subtle nuances. 

What Is a MAP Pricing Policy?

MAP stands for “minimum advertised price.” It is a policy a brand or manufacturer imposes on its sellers not to advertise a product below a certain threshold. 

For example, if a jeans manufacturer sets a MAP of $48.99, neither brick-and-mortar boutiques nor online marketplaces can advertise prices below that mark. 

Technically, distributors can still sell below the price, they just cannot publicly advertise below the set value. For example, a vendor who sells below MAP over the phone or behind a members-only website is still within the confines of the policy. 

How is MAP different from the manufacturer’s suggested retail price (MSRP)? MSRP is the price the manufacturer recommends selling a product at, while MAP is the lowest possible advertised price. Retailers don’t have to choose the MSRP (it’s more of a starting price), but the amount helps standardize prices across sellers.

It’s important to note that MAP policies primarily only apply in the US and Canada. In most cases, MAP pricing is illegal in other countries like the UK, where it is seen as a type of price fixing. 

What Are the Benefits of a MAP Pricing Policy?

MAP policies are important because they protect multiple parties, including brands, retailers and consumers. In fact, they benefit the entire market because they:

• Keep competition alive. MAP policies were primarily enacted to maintain fairness among distributors. By setting a minimum advertised price, brands prevent Seller A from undercutting Seller B and winning all the sales. Not only does this benefit a brand’s relationships with multiple sellers, but it fuels the free market with healthy competition instead of creating monopolies.   
• Protect profit margins. The prevalence of automated repricers has made it easy for sellers to stay in close competition with other retailers. Without a MAP policy in place, sellers are forced to follow suit with vendors who continually slash prices, resulting in a “race to the bottom” that erodes margins for everyone. 
• Maintain brand integrity. MAP policies are especially beneficial for luxury brands or manufacturers with high-ticket items. If a distributor sells a product significantly below the suggested price, customers will begin to see the item (and subsequently the brand) as less valuable. 
• Limit customer complaints. Consistent pricing also limits customer inquiries and complaints about finding cheaper prices elsewhere. MAP pricing keeps things fair among brands, retailers and consumers. 
• Increase sales channels. When competition is healthy, it encourages more sellers in various channels, whether offline or online. It also gives smaller resellers a chance to compete with major retailers. 

What Happens if a Seller Breaks MAP Policy?

MAPs are manufacturer policies, not contractual agreements with sellers, meaning they aren’t enforceable by law. In fact, manufacturers who require distributors to sign a MAP agreement are in violation of US antitrust law. This is according to the Colgate ruling, which stated that manufacturers may set pricing policies as long as sellers remain independent parties that are free to abide by them or not (while risking partnership termination from the brand). 

Each manufacturer may set its own policy in terms of dealing with MAP violators. Some companies may provide the distributor with a warning, while others choose to immediately terminate the relationship. In turn, resellers must determine if selling below MAP is worth the risk of never working with the brand going forward. It is in the best interest of sellers who want to maintain strong manufacturer relationships to adhere to MAP policies.

Why would a distributor even want to sell below MAP or market value? 

• To move inventory. Retailers who are eager to offload old inventory may be willing to take a loss just to make room for new products that will sell quicker. This is why it’s important for brands to reassess their MAP values from time to time, especially after releasing new generations of products that automatically lower the value of older versions.
• To win the buy box. Price-conscious shoppers will always choose the best deal. Sellers who price below MAP opt to lower their individual product revenue instead of withstanding slow or no sales at all. 
• To gain positive reviews. Some sellers price low to keep customers happy and boost ratings for their shop that will remain long after parting ways with the manufacturer. 

How Can You Set a MAP Pricing Policy?

Plenty of MAP pricing policy templates can help you draft your own, but we recommend working with your legal and compliance team or an e-commerce expert to tailor your approach and devise a plan that works for you and your reseller network. As you create your own MAP pricing policy, remember:

• Draft a unilateral policy, not a two-way agreement. Pricing contracts put manufacturers at risk of violating antitrust laws. For this reason, you’ll want to work with experts that can position your MAP as a one-way policy, not a contract that sellers are federally obligated to follow. 
• Don’t consult retailers. Write your policy independent from retailers or other selling partners so the price you set is free from perceived favoritism or price fixing.
• Include exceptions that make sense for your resellers. Consider offering specific situations and seasons where sellers can “break” the MAP policy to incite buzz and increased sales. This may include peak shopping times like Cyber 5 or other holidays that increase demand for your products. 
• Communicate clearly. Make sure your sellers understand exactly what they’re getting into when they partner with you. Opt for plain language instead of legal jargon unless necessary, and provide other resources like videos, checklists and examples to drive home the point. 

You’ll also want to devise a plan for dealing with noncompliant vendors. Will they receive a warning? Will you send written communication? Or immediately terminate? Remember to make it clear that by law, sellers are free to sell and advertise any price they want — but you also have the freedom to cut ties. 

Set the Right Price with Rithum

Pricing your products is hard enough without worrying about minimum advertised amounts and seller behavior. But it’s absolutely necessary in a world of increasing channels and marketplace competition. 

Rithum’s experts can guide you through the process, acting as an extension of your team to devise a pricing strategy, implement automated repricers and make the biggest impact on your profit margin. Rithum Managed Services draws on years of e-commerce experience to execute the best repricing options to accomplish your goals and continually monitor performance as circumstances change. 

Contact us today to learn how Rithum Managed Services takes the stress out of creating an ironclad pricing strategy. 

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What’s one metric every Amazon seller should continually monitor?

The one that most directly affects any future prospects of selling on Amazon: the Order Defect Rate (ODR). This metric, perhaps the most important measurements tracked by Amazon, is used to gauge your health as a seller.

It can determine who will win (or lose) the all-important Amazon Buy Box.

If it’s bad, accounts get deactivated.

They keep tabs on which sellers are providing positive consumer experiences — and who’s failing to meet consumer expectations.

It’s strict, but not at all impossible to master. Once you have a strong understanding of how the Amazon ODR works, it can become remarkably easy to excel in this area.

Here are the basics that every seller needs to know.

What Is an Order Defect Rate?

An Order Defect Rate is the amount of consumers who purchase defective products within a certain time period. It is calculated by dividing the number of negative orders by the number of orders in the same time frame.

This important metric is used by Amazon to evaluate your seller performance and helps to ensure they are providing the best customer service for their consumers. The ODR is a measurement to look at whether you are providing a positive customer experience.

As a seller, you must create a high level of customer satisfaction for Amazon users, so you can continue to sell on the Amazon platform and reach more customers.

It takes Amazon about a month to calculate the ODR to provide time for defects to process and show up in the seller’s account.

What Makes an Order Defective?

Your ODR is used by Amazon to measure the customer’s experience with the seller after placing an order. Negative feedback received in the 60-day review period can cause your ODR to increase. ODR is calculated using three key components:

• Your A-to-z claims, which are made by consumers when orders are unsatisfactory or delivery is too slow. Amazon offers an A-to-z guarantee for consumers who buy products from brands that sell on their platform. Consumers can make an A-to-z claim if their product isn’t on time or not in the best condition. These claims can reflect negatively on your ODR.

• Any negative feedback, including comments and ratings. Negative feedback from your customers can reflect a poor customer experience. Poor customer experience will lead to more negative feedback and a high ODR.
• Credit card charge backs, or the number of times you refund orders. When someone requests their money back, it can affect your ODR. There are multiple reasons why people may request this such as bad service, fraud, receiving bad or damaged goods or never receiving a refund for a return.

Amazon takes into account your A-to-z claims, negative feedback and credit card chargebacks, and then divides it by the total number of orders during a given 60-day period.

So if you received one A-to-z claim and two negative customer feedbacks across a total of 100 orders placed in the most recent 60-day review period, your ODR is 3%.

What Is a Good Defect Rate?

To continue selling on Amazon, sellers have to maintain an ODR under 1%, so any number higher than this would be too high of an ODR.

However, anytime you receive one A-to-z claim and one negative feedback for the same order, these are counted as one factor, not two. So if you notice a slight difference between your ODR and the total number of A-to-z claims and customer feedback, it’s likely because the same consumer made an A-to-z claim shortly before posting negative feedback.

Still, each piece of negative feedback is one more claim you can’t afford.

Breaching that 1% threshold is more than a little treacherous. So before we dig into strategies for improving your ODR, it pays to understand what makes this single metric so critical.

What happens if your ODR reaches 1%?

First, you lose the Buy Box automatically for any products you’re responsible for shipping. Amazon’s goal is to protect the consumer experience and preserve buyers’ trust in the Buy Box. If your orders are faulty, Amazon’s reputation is at risk.

Second, Amazon can suspend or terminate your account straight away, holding payments in order to refund customers. Amazon is very strict on ODRs, so your relationship with Amazon is at risk the moment your ODR reaches 1% — no matter how big or successful you are.

Suspensions occur when your ODR is slightly above 1%. After seller privileges are removed, you have 17 days to come back with a plan of action to be reinstated.

But if your ODR is dramatically above 1%, Amazon views it as an indication that serious issues are at play — things like excessively late deliveries and numerous cancellations, which have a direct impact on how consumers will view the marketplace itself.

This is why that 3% we mentioned earlier could be catastrophic. Instead of a temporary suspension and appeals process, your account could be terminated altogether.

How Should You Monitor ODR?

If you’re using Rithum’s Amazon Dashboard, you can review your performance at any time by looking at Sell > Amazon Marketplace in Rithum. The ODR is shown as part of your account health status.

You can also monitor your “performance over time” for the past 12 months, in both percentage and value. Because this is how Amazon monitors performance, it’s a valuable way for sellers to understand exactly how they’re viewed by Amazon.

How Can You Improve Your ODR?

While there’s a wide range of marketing, selling and fulfilling activities to consider, a couple of key elements will always be at play when it comes to your Amazon ODR.

1. Assess and address feedback

We strongly recommend carefully reading ALL A-to-z claims and customer feedback — the primary drivers of your ODR — to discover what’s causing them. Is it late shipments, cancellations or mismatched expectations?

If you find a recurring problem, make it a top priority. The sooner you overcome any issues, the less chance they’ll have to impact your rating. If you sell overseas, make sure you can translate and understand all A-to-z claims and customer feedback.

From time to time, you may come across customer feedback that includes obscene language or personally identifiable information. Or you might find a misplaced review that’s intended for the product itself, or that addresses issues around an order fulfilled by Amazon. In these instances, simply ask Amazon (via Seller Central) to edit the feedback so it won’t impact your ODR.

If a buyer removes negative feedback from their order, it is not counted toward your overall ODR, but can take up to 48 hours to be removed from your score/dashboard. Likewise, if you, as the seller, appeal an A-to-z claim and Amazon determines that you are not at fault, the claim will be removed from your ODR.

2. Make fast and free shipping a top priority

Delivery delays result in negative feedback. Whether you fulfill orders in-house or rely on third-party logistics, take pains to ensure minimal but accurate handling times and reliable, on-time shipment tracking uploads.

Some sellers opt to use FBA (Fulfillment by Amazon) after an ODR-induced suspension, since it guarantees Amazon’s strict requirements will be met and can help products reappear in the Buy Box quickly. You can even use it for a small selection of your best-selling products, for a limited period of time.

3. Optimize your fulfillment during the holidays

Keep in mind that many customers post A-to-z claims and negative feedback in January due to late deliveries during Christmas. Your ODR could be well below 1% all year, and then suddenly skyrocket if you fail to plan ahead for the end-of-year holiday rush.

Use Amazon’s vacation mode to prevent a high ODR. It allows you to customize quantities during the holiday months to prevent overselling. You can ensure you are handling the right amount of orders during the peak seasons.

There is also an option to pull your listings as it gets closer to the holidays. You can set a date for the latest you’ll be able to ship the product without it arriving past the holidays. Past this date, you can make your products invisible until the holiday season is over.

While it may seem like a loss to hide your products for those few weeks, it is better than the risk of losing your seller account and not selling on Amazon at all.

4. Review your listings

Make sure your products are properly filled out with all the information your consumers need to make their purchase.

It’s critical to review your listings for accuracy too. Product descriptions, photos, dimensions — all of these need to be true to the product. If you have the wrong photos or product descriptions, it will confuse potential customers.

Incorrect information will lead to unhappy customers who will leave negative reviews or make an A-to-z claim. Review your listings and provide accurate product content.

5. Monitor your listings

Are all your listings accurate? Great! Continue to monitor your listings and find commonalities amongst them. Customers may find common problems that cause them to have a poor experience.

By monitoring your listings, you can find these common issues and improve your listings. A couple of examples of improvement are packaging and shipping times. This is a great opportunity to provide great customer experience and keep your ODR low.

There’s never a time to stop prioritizing your ODR on Amazon. Whether you’re working to reverse a high ODR or to keep it under 1%, these tips will help.

Rely on the Amazon Experts

Acting as an extension of your internal team, Rithum’s Managed Services team combines the strengths of our technology with our unmatched industry expertise. Our Managed Services team client strategy managers (CSM) help monitor our customers’ ODR year round, along with account health concerns, to help ensure success on Amazon’s marketplace. During strategy calls, CSMs address any potential risk factors and offer guidelines on how to resolve and/or proactively notify Amazon of any outstanding issues. Our Managed Services team will not own any appeals, but we can offer guidance and best practice recommendations. While these services are year round, there is also an increased focus during Q4’s holiday season.

Contact us today to learn more about how we can help manage your Amazon ODR.

Editor’s Note: This post was originally published in October 2021 and was updated in October 2022 for accuracy and comprehensiveness.

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