As an e-commerce business, you’re going to encounter pricing violations at some point.
The digital shelf is vast, and unfortunately some sellers don’t always play by the rules. If the opportunity to undercut your pricing arises, they will take full advantage.
Of course, most online merchants are perfectly compliant with the original requirements of their partners’ terms. However, even just one bad apple could spoil your reputation (and profits).
This article provides you with info on how to deal with pricing violations, so that your company isn’t seriously impacted if and when they occur.
What constitutes a pricing violation?
Can prices ever be ‘too low?’ The short answer is yes, and you should watch out for them.
For example, a company may have a MAP pricing policy in place in a compliant way. This means that they’ve agreed the minimum price with retailers at which to sell their products. Should be easy-peasy, right?
Well, the problem is that some resellers take it upon themselves to undercut companies’ MAP pricing. Doing so violates any signed agreements.
Staying on top of pricing violations is your responsibility. Quick action helps preserve market position in the event of prices being violated – either once or repeatedly.
5 ways to deal with pricing violations
Knowing how to deal with pricing violations from the get-go will help you keep control of your situation and avoid any long-term repercussions.
Here are a few key points to remember:
1) Understand the risks
Whether you’re part of an SME or a large enterprise business, the risks associated with online pricing violations remain the same.
When looking for pricing violations, you should check out small, independent merchants alongside big marketplaces, as the former are more likely to slip through the cracks.
2) Set up a price enforcement team
If you’ve encountered a lot of pricing violations recently, you should create a team whose task it is to prevent these from happening. Get them to keep an eye on sellers, products, costs, etc., and find out just how widespread this problem is.
Make sure your team has the right tools as well. Equipping them with software like Magpie DBX ensures that they have everything they need to spot pricing violations as and when they happen.
3) Track down the violators
Once you’ve identified who’s been violating your pricing policy, you can then take proper action. First, contact the offending sellers and obtain their assurance that the violations will no longer continue.
If, however, they are uncontactable or refuse to change their listings despite your objection, you should seek legal advice and work together on a strategy for shutting down this unauthorised trade.
4) Log your history of pricing violations
Keep detailed records of sellers violating your price point and any interactions you’ve had with them. Also, make sure you store these records in one place so they’re easy to refer back to.
By doing this, you’re much more likely to identify patterns and repeat offences.
5) Report any pricing violations to the appropriate authorities
Companies on the digital shelf often have procedures they follow if you report a pricing violation. If, for example, you suspect that an Amazon listing of one of your products has an incredibly low price, your first priority is to let the platform know so they can investigate.
In the US, if you wish to report any pricing violations, contact the Federal Trade Commission (FTC), whose Bureau of Competition enforces the nation’s antitrust laws and works to prevent deceptive and anticompetitive business practices.
What do pricing violations affect?
Price violations have a detrimental effect on brand positioning. They undermine credibility and jeopardise chances of retaining customers for the future.
Also, they can strain relations with resellers who do follow your recommended pricing strategy, which may result in important contracts disappearing.
It is therefore vital that you address any pricing violations as a matter of urgency; otherwise, you yourself could be held liable and face penalties.
Using Magpie DBX to deal with pricing violations
Capable of tracking thousands of price points across the digital shelf, Magpie DBX is well-equipped with competitor pricing intelligence to help you identify and safeguard your business against any violations.
Think of how much time and energy you’ll save: it’s automated, we can monitor all of your resellers/partners, keep track of everything in one place, and alert you when prices drop too low.
Our Stock & Delivery feature can even provide you with information about specific distribution channels, including who manages them and from where. This way, you’re always kept in the loop and able to act if you suspect any funny business.
Magpie could be the software you need to stop pricing violations in their tracks. Get in touch with us and request a free demo now!