Latest / Selling on Giants: The eCommerce Marketplace Podcast / Unpacking Strategies to Navigate Amazon’s CRAP Policy and the Importance of MAP Policy

Transcript

Unpacking Strategies to Navigate Amazon’s CRAP Policy and the Importance of MAP Policy · Selling on Giants: The eCommerce Marketplace Podcast

• 0:03
  SPEAKER_00: Welcome to the Selling on Giants, part of the Selling Smart series where we dive into e-commerce topics around Amazon, Walmart, Shopify, and beyond.
• 0:14
  SPEAKER_00: Today's focus is a 1P Amazon vendor central policy.
• 0:19
  SPEAKER_00: Amazon's crap can't realize actual profit or any profit policy, and how a solid minimum advertised price map strategy can shield your products from becoming unprofitable.
• 0:32
  SPEAKER_00: Let's explore actionable insights to enhance your e-commerce success.
• 0:37
  SPEAKER_00: So, to dive in, what is Amazon's crap policy?
• 0:41
  SPEAKER_00: Amazon crap, that's right, crap, can't realize any profit.
• 0:45
  SPEAKER_00: Policy targets products that yield low margins, uh, specifically on the vendor central platform.
• 0:51
  SPEAKER_00: Generally, these products could have high shipping cost, they could suffer from high return rates, or they can just be a low price point item.
• 1:00
  SPEAKER_00: Consider products like under$15, uh small quantity, high volume.
• 1:05
  SPEAKER_00: These items are susceptible due to any type of inefficiency, can really make these products unprofitable.
• 1:13
  SPEAKER_00: But there's all other types of reasons that your products, if you're selling through vendor central, may get the crap designation, which is something we want to avoid.
• 1:22
  SPEAKER_00: We now know that Amazon is when they buy your products, they are measuring profitability.
• 1:28
  SPEAKER_00: They're gonna use your some net PPM standard uh as a baseline, and obviously you have your profitability from there.
• 1:36
  SPEAKER_00: And one of the top reasons we find that these brands uh get that crap designation uh is because they have poor map policy, and that's minimum advertised price policy.
• 1:49
  SPEAKER_00: And what we found generally with brands that are a little larger, so maybe they're already in brick and mortar retail and they're also selling online, and their website does as well, if not better, than their Amazon, Amazon's third fiddle.
• 2:03
  SPEAKER_00: So they don't have the opportunity uh to get access to as much inventory, for example, uh as their website or their direct to consumer channels, and therefore it's kind of a fight.
• 2:15
  SPEAKER_00: And what we find with brands like that, they tend to let uh other retailers kind of dictate pricing.
• 2:21
  SPEAKER_00: So they may run a sale, the product gets uh on the market as a significant discount.
• 2:27
  SPEAKER_00: Uh Amazon sees that they cut back in their price to match it because they want to match the lowest price.
• 2:33
  SPEAKER_00: Uh, it eats into the profit margin, then your your products get designated as uh as crap.
• 2:38
  SPEAKER_00: They can't realize actual profit, they cut off your PPC, uh, you lose the buy box and it becomes uh really a big mess.
• 2:46
  SPEAKER_00: And it's it's painful to clean up from it, and it's gonna cost you uh in the end in purchase orders and getting Amazon to consistently buy that product.
• 2:54
  SPEAKER_00: What's the importance of a good uh map policy?
• 2:58
  SPEAKER_00: A robust map policy is essential for maintaining price integrity and protecting your brand values, especially in e-commerce settings.
• 3:06
  SPEAKER_00: So typically, what we see when brands have issues around their crap policy, it's usually there they have a lot of resellers.
• 3:14
  SPEAKER_00: And so normally what we find when brands are primarily wholesale, uh, they make most of their profits from their uh places in brick and mortar retail or how they're distributed uh outside of manufacturing uh tends to be one, or their website is number one and number two, and Amazon's a close three, so uh large enough where it requires a team to manage it, uh, but not large enough to get priorities when it comes to inventory.
• 3:41
  SPEAKER_00: And that's uh a major challenge.
• 3:43
  SPEAKER_00: And so what we have found in those instances is that generally when a brand or uh a brick and mortar wants to run a sale, that sales price gets back to Amazon and they'll cut that their price.
• 3:57
  SPEAKER_00: And if it's below a certain margin after the price cut, you're gonna get hit with this crap policy.
• 4:02
  SPEAKER_00: So this is why I go back to having good map policy and how it spills over.
• 4:07
  SPEAKER_00: And some of the things that they won't call out is like once you get violated for map policy, then you're gonna start having contribution issues because you're having all these other sellers jump on your listing.
• 4:18
  SPEAKER_00: So then you get this inconsistency in branding.
• 4:20
  SPEAKER_00: So you can see there's like a spillover, and it's very specific to the Amazon ecosystem, which is a challenge.
• 4:26
  SPEAKER_00: So, what are some strategies that we can implement uh to help alleviate this challenge if you are suffering from products getting crapped out?
• 4:35
  SPEAKER_00: First things first, if you can do it, a bundling strategy is probably number one.
• 4:40
  SPEAKER_00: Uh, and so it gives us the ability to take two, three, four items and bundle them together.
• 4:45
  SPEAKER_00: Uh, typically we do this with beauty or supplement brands, and we may do like multi-packs.
• 4:51
  SPEAKER_00: Um, so the ability to sell multi-packs on Amazon via vendor central and via seller central, we may be selling the single pack units, or uh we may be selling the single pack units uh only on the website, so only D2C is an example.
• 5:06
  SPEAKER_00: But bundling is a great way to get that average order value up and to give you better margins to play with as long as you have the ability to get it over to Amazon for bundling.
• 5:14
  SPEAKER_00: We're also big fans of the hybrid strategy.
• 5:17
  SPEAKER_00: So, caveat, not all vendors are gonna have this opportunity.
• 5:21
  SPEAKER_00: Uh, some contracts have stipulations where you're only able to sell through vendor.
• 5:26
  SPEAKER_00: Um, most of the brands we work with don't have this issue, but some brands do.
• 5:30
  SPEAKER_00: But your ability to sell your product on Seller Central and Vendor Central, we call this a hybrid.
• 5:35
  SPEAKER_00: We refer to this as hybrid in the industry, and it gives us play on both platforms, but it gives the ability to control pricing and logistics, and it creates an advantage.
• 5:44
  SPEAKER_00: If we're getting crapped out, you know, we can move that inventory uh over to Seller Central, get those active, win back the buy box, right?
• 5:52
  SPEAKER_00: You don't have any other issues, it'd be selling the product uh in a reasonable time frame.
• 5:56
  SPEAKER_00: The last top, oh, there's two more topics I want to touch.
• 5:59
  SPEAKER_00: So on that selling model, uh, if you're looking for ways to improve your cost, shipping in its own container, uh SIOC, I think is how you would say that acronym.
• 6:09
  SPEAKER_00: But also understanding uh that for vendors with heavy items specifically, uh your ability to get SIOC certified uh could signify cut in shipping cost and also have a positive environmental impact, which is always good.
• 6:24
  SPEAKER_00: Uh, this certification allows these products to be shipped in their own packaging and it reduces the additional packing material and handling, which is great because it'll save you money and it's a great way to get products out.
• 6:37
  SPEAKER_00: And there's insights that you could draw from customer returns.
• 6:40
  SPEAKER_00: So we also note that a lot of brands that get hit with crab policies, specifically in certain categories that are very subjective, uh, have high customer returns.
• 6:50
  SPEAKER_00: And these returns, uh there's a damage allowance, but past a certain point, it'll lead into that profit margin.
• 6:57
  SPEAKER_00: And that's how you'll end up crapping out for uh a poor customer experience on the uh the end consumers' um use of the product.
• 7:08
  SPEAKER_00: And so understanding the reasons by high return rate uh can really help.
• 7:12
  SPEAKER_00: And for us, uh we've we work with a brand that had some packaging issues, they were polybagging uh some products that they probably shouldn't have, and those products were showing up to customers' doors broken or damaged, and we had a higher return rate, which caused us some issues.
• 7:27
  SPEAKER_00: And so we ended up putting these products inside boxes that were a little more durable, and we reduced our return rate, which showed more profitability, and then we're able to get larger purchase orders and kind of return to Amazon's good graces.
• 7:41
  SPEAKER_00: But more importantly, the end user, the customer, got the better experience, uh being able to experience the brand and getting a good product to their front door.
• 7:49
  SPEAKER_00: So thanks for joining us on this episode of Selling on Giants as part of our selling smarts series.
• 7:55
  SPEAKER_00: We've unpacked strategies to navigate Amazon's crap policy and most important, of a robust map policy.
• 8:03
  SPEAKER_00: Remember, in e-commerce, being proactive and adaptable is key to staying competitive and profitable.
• 8:09
  SPEAKER_00: If you enjoyed this episode, please leave us a review wherever you tune into your podcast.
• 8:14
  SPEAKER_00: And feel free to email us at hello at sellingongiants.com with topics you'd like to hear more about.
• 8:20
  SPEAKER_00: Your feedback is invaluable to us as we continue to explore the challenges of selling on large platforms like Amazon, Walmart, and Shopify.
• 8:29
  SPEAKER_00: Don't forget to subscribe for more insights and tips as the latest episodes release.
• 8:34
  SPEAKER_00: And until next time, keep optimizing and stay classy.