Lets talk about MAPP!

whitty

whitty

Dealer / Materials Provider
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Minimum Advertising Pricing Policy

This is a topic I have been wanting to bring up for a long time. Recently with ZT offering their dealers MAPP free days, it has become something that I could no longer hold out on talking about. MAPP has been a point of controversy on the forums and social media for a long time. A lot of folks hate it. I certainly understand that. As a dealer that started selling knives before MAP Policies were in place I freaked out when they started using and enforcing it. Now I realize why it is such an important part of the business. With the recent MAPP free days we took the opportunity to sell some stock at below our cost. It was great. We unloaded about 15 ZT0609PUR Sprint Runs at a significant loss. We also watched as other dealers took similar opportunities with knives that they were overstocked on. Then some, mostly smaller dealers, just went straight out crazy and put everything at prices below their cost. I watched as the entire thing went nuts. Now what are we left with. We are left with past buyers who now have to reduce their secondary market prices to unload a knife. I have sat back and watched as folks have struggled to sell their brand new in box knife for half off MAPP Pricing. It sucks!

In my opinion MAPP is a necessary evil. With out it you will get dealers bulking up on new inventory, selling as much as they can right off the bat, and then dropping prices just to unload it and make their monthly budget. It hurts the manufacturer, it hurts the reseller, and in all it hurts the industry. To me it becomes a race to the bottom. Only the purist who has to absolutely have it first will buy when a knife comes out. Everyone else will wait for the dealers to unload.

Many years ago this used to not be a problem but I give Benchmade and ZT a ton of credit for seeing in to the future. As knife sales on the internet continued to grow, more and more small online dealers began popping up. Most were running their business out of a side room in their house and some were even selling knives they did not have in stock and paying a 3rd party to drop ship them. ZT and Benchmade realized first that this was going to become a problem and input MAPP. I think it saved them both from the race to the bottom, and while many of you hate it, I think it saved your secondary market sales.

I am still curious to know if most of you still hate MAPP, still undecided, or if you see where I am coming from?
 
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I deal with MAPP in my line of work as well. Some call it price fixing. I call it maintaining brand value.

MAPP takes the low-hanging fruit off the table for customers, and let's be clear, someone absolutely can sell their product at a loss. They just can't advertise it. What I appreciate in my line of work is that many manufacturers with MAPP meet the consumer in the middle. I have a "professional" line of products that are not only internet protected but also can only be sold held to MAPP. That works for me. The manufacturer can sell their entry level stuff and drop-shippers can gnaw at each other like hyenas trying to make a 2 penny profit. This other line coaxes customers into my brick and mortar store. They get to see the product, understand the expertise we have, learn about the extended warranty, and walk out with an item that is better, will last longer, will pay for itself, and only cost them a few bucks more upfront all while supporting a tax-paying local business.

When it comes to knives of such high quality, I'm totally fine with MAPP. I'm not a deal shopper. I'm looking for a good value, sure. However as a business owner, I known that part of your "customer service" is built into the profit. People often wonder why they buy heavily discounted things online and end up getting crappy service when something goes wrong. It's not that the seller is trying to be a jerk about it (probably...maybe). It's just an unwritten contract of business math. There is nothing left in the profit to make it "right". The "rightness" of it was getting it cheap. You squeezing blood from a stone and feeling awesome about what a deal you got is your "rightness". That sounds harsh, I know. But it's true.

One of the reasons I gave ZT a try, and ended up with 10 of them, is that because of MAPP, my brick and mortar store had them priced the same as Amazon. I wouldn't feel comfortable spending $300 on a knife shipped from a Wish Fulfillment Center by some random worker. However if i get to handle the product and talk to the sales guy, flip it, look ot over, I'm probably going to buy it as long as there isn't some huge overly tempting financial incentive to buy it somewhere else.

I was just in Louisville and stopped in at Spark's shop. Walked out with a CRK. Mostly because I knew he was the closest dealer to me and that he does so much for our community here on these boards and i wanted to finally meet him, but also because the pricing it was it is. The dollar amount being the same meant that beyond having it shipped to my door, Amazon could offer me nothing more, and for a $450 knife I had never handled before it was important for me to get some fingers on it before pulling the trigger. So glad I did.
 
Just curious…does MAPP allow for group discounts?

(I sell a book at 1 price, never discounted. However, if a teacher wanted 5 or more books, there would be a reduction, and shipping is proportionally less.)

I agree about a race to the bottom, and I’m always amazed by what others “think” is the right price for a product—knowing nothing about production costs, taxes, overhead, etc. (yet they will write me from their iPhone or iPad because they have no money. LOL)
 
I think this kinda sums up much of the problems people forget in a race to the bottom

good-fast-or-cheap.jpg
 
MAPP protects manufacturers and their dealer network.

I think this is a good policy. Between MAPP and sales tax collection, the small retailer now has a chance against Amazon and similar companies.
 
MAPP doesn't bother me companies have a right to sell as they wish, and if I like a product that's just a factor in the cost. I think to problem stemmed from dislike of the change and feeling like deals were being "taken away" by and entity who should care about how their dealers sold (made zero sense...keeping dealer happy is a big deal... dealers are their customers). patchwork collection/charging of sales tax is a bigger issue to the 1st sale market of products I think.
 
I don't think you can conflate no MAPP at all with MAPP free days. My post here relates to customer view, not dealer.

Take the example shared: "We are left with past buyers who now have to reduce their secondary market prices to unload a knife. I have sat back and watched as folks have struggled to sell their brand new in box knife for half off MAPP Pricing. It sucks!"

That situation doesn't happen if MAPP was never a thing. The buyer trying to unload the knife didn't pay MAPP price is in the first place. That's a problem with having MAPP plus MAPP free periods, not with not having MAPP or no MAPP. If there's no MAPP, the market bottoms out, sothe the customer doesn't pay that high price in the first place and doesn't take a bath reselling it.

In other words, while MAPP most of the time and some non MAPP periods can help dealers, that's what's hurting the buyer in this example. It's the worst case of all three for the customer who resells a knife (those three being: always MAPP, no MAPP at all, MAPP but some periods where it's lifted).

I can see how as a dealer there are ways it's helpful, but I don't see how it ever helps buyers.
 
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GB940Rookie said:
Good luck trying to sell MAP pricing.
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There's no "selling" it beyond the stated reasons. The internet and online shopping has changed everything. It's still a pretty new thing in and of itself. The issue is that it tried to be purely capitalistic, and that works about as well as communism does off paper.

My amateur point: Commerce isn't really about the capitalist market setting the price, not really. It is on paper, but what it really is is NEED. The consumer needs a knife, and they feel the knife needed should be as cheap possible. We all do that sort of self interest need fixation.
The dealer NEEDS to make a profit. Profit is not salary. Salary is factored into expenses. No his/her profit needs to be there for expansion or securing a line of credit with a high end manufacturer OR offering super awesome return policies for people who generally dont like "you bought it, it's yours, take any issues up with the manufacturer because I dont have enough skin left to have any in this game" as an answer.
So the dealer NEEDS to purchase from a distributor. Distributors in the 21st century are mostly banks. They offer dealers lines of credit to buy the knives to resell to customers. They buy a crap-ton of product from the manufacturers which they then sell to dealers who keep it in inventory (not drop shipped). Distribution makes its nut on the dealer buying their stuff.

So let's say a manufacturer is a pure capitalist. They sell a knife to Distribution for say $100. Distribution sells that knife to the Dealer for $150. The dealer charges $200 to a customer. The manufacturer takes the stance that the markets will decide what the price is. If someone will pay $400 at a brick and mortar, fine. If someone with tons of cash and poor business skills buys a bulk order of 500 from the manufacture to drop ship and flips it for $101 online, the manufacturer doesn't care. They are still making 100 bucks per knife.

Heres where it gets tricky: Johny drop-shipper buys 500 knives direct and ships them as they are ordered with a smell ya later return policy. ABC Distribution buys 10,000 knives...a year. Without fail. Guess what. Brick and Mortar doesn't like the fact that his reasonable price of $150 is HIGHER than a customer can buy it online, and he either wants a huge cut in price or he simply won't carry that knife anymore. Distribution is not only not going to be buying knives from them anymore, but they also want to return their inventory as it will sit unsold if Brick and Mortar doesn't buy it.

So now the manufacturer is left with this: Piss off a huge, stable customer by catering to a tiny opportunistic fish who may be gone next year. Or, set a minimum market value for their goods. Will that piss off some customers who aren't forward thinking enough that they are buying more than just a knife...yeah, of course. However, buy setting this value their brand remains more valuable, Distribution keeps buying it, and the end user customer gets to purchase a quality good from a reputable dealer who stands behind his/her product.

Is there a dollar value on that for the end user? Maybe, maybe not. That's going to depend where his or her loyalties lie. I know that in my business, if it's not protected from scalpers in some way, I drop the product. I have to. If I can't make money on it, why sell it? If someone buys one online and it breaks, why stick my neck out to try and fix it or work with the manufacturer. As I said earlier, all of that customer service is baked into a profitable price. That's business.
 
ABC distribution shouldn't be paying the same $ for their 10 000 knives as Johnny does for his 500.

That means they can appear to drop their pants on the price but still survive. And if they get very aggressive there's no way for Johnny to match them.

Eventually if it continues the small guys vanish and only the monolithic online stores remain. Now you would think that would be good for the buying public but it's not. The big guys live and die by price and volume and won't be interested in any of the more niche market models. Plus since they're strictly online there's no way for anyone to hold a knife in hand and compare before they buy like you could do in a Johnny sized store.

If the manufacturer won't play pricing ball with the ABC folks he gets dropped and they go direct to the next lowest denominator. They make their money off pushing volume to the average member of the public.

MAPP shields the small stores that helped build the knife makers business and makes it possible to reach a wider base. For sure some people won't have a local store and they'll only want to shop online for the lowest price. That can be good for them but in the long term it's not the best for the majority.
 
It's bad for consumers , because they must pay higher prices . Great for dealers , I understand !

The rationales for consumer benefits are simply turd polishing BS , IMO .
 
As a consumer only (rarely sell used) it's only affected me in that there are far fewer knives from MAAP companies I think are worth the price, especially when I was on the fence or they were on the list for the next big sale, and the price goes up overnight by 20-25% (MAAP gets instituted and no more holiday sales). My knife per year purchasing has gone down by about 60-70% (mostly a Spyderco, Benchmade, ZT guy) I have around 150 knives accumulated over the last 10 years, but only purchased about 4 this year. Maybe 5 the year before.
 
No one remembers paying full retail before the Internet? I sure do. MAP protects legit dealers & brand value, and is still well below suggested retail. Win, win.

For bottom value people, they can still enjoy close-out prices once a Model has had its run.
 
"Need"? "Want," I could buy. Somewhere along there I may have needed a knife that I bought, but that was the exception.

MAPP is clearly not "price fixing" because sales price is not fixed, only advertised price. Agreement to fix sales prices is a federal felony.
 
All I really get from the MAPP discussion is that it's good from the retailer/distro/manufacturer point of view, and that's about it. It's good for businesses to make money, and that somehow, having the consumer pay more is good.

As a consumer, I say that no, no it isn't. Yep, I am one of those folks who purchases on price. If the item is subpar, it'll get sent back to the manufacturer, pretty simple. This is why I buy very few new knives these days. Knives by and large are luxury items, and I already have more sharp edges in my home than a lifetime of cutting chores will ever dull. I don't need to pay what these online retailers are asking these days because it's absurd. I remember a time back when knives online were cheaper because they didn't have to pay the overhead that brick and mortars do. If the manufacturers are going to set a price, then set it low enough that it gets rid of the middlemen. This is what amuses me the most, the idea that we should care about the health of middlemen businesses. When there are false "protections" put into place that protect middlemen entities, that's a good sign that it's time to revamp the entire system.

See Tesla and the auto-sales industry. And for the record? I can't STAND Tesla. But by all accounts, it's fantastic to be able to walk in and buy a product direct from the producer of that product without all of the markups added to it by layers of middle-men.

If nothing else, MAPP feels very predatory.
 
Quiet said:
All I really get from the MAPP discussion is that it's good from the retailer/distro/manufacturer point of view, and that's about it. It's good for businesses to make money, and that somehow, having the consumer pay more is good.

As a consumer, I say that no, no it isn't. Yep, I am one of those folks who purchases on price. If the item is subpar, it'll get sent back to the manufacturer, pretty simple. This is why I buy very few new knives these days. Knives by and large are luxury items, and I already have more sharp edges in my home than a lifetime of cutting chores will ever dull. I don't need to pay what these online retailers are asking these days because it's absurd. I remember a time back when knives online were cheaper because they didn't have to pay the overhead that brick and mortars do. If the manufacturers are going to set a price, then set it low enough that it gets rid of the middlemen. This is what amuses me the most, the idea that we should care about the health of middlemen businesses. When there are false "protections" put into place that protect middlemen entities, that's a good sign that it's time to revamp the entire system.

See Tesla and the auto-sales industry. And for the record? I can't STAND Tesla. But by all accounts, it's fantastic to be able to walk in and buy a product direct from the producer of that product without all of the markups added to it by layers of middle-men.

If nothing else, MAPP feels very predatory.
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Exactly my thoughts, just that Mr. Quiet said it better. :thumbsup:

I for one appreciate (some) dealers gave big discounts on ZT knives to customers during the Thanksgiving holidays. I cannot imagine how that one single event that lasted only a few days can affect significantly/noticeably dealers, manufacturers, and second-market sellers. Knife prices have become ridiculously inflated and there is no reason not to believe the trend will continue. I know I cannot nor will I bother to swing others' opinions but I'll continue to vote with my wallet.

Yes - theoretically speaking MAP is minimum advertised prices that a dealer does not need to stick to for each individual sale. But how many people and how often actually successfully negotiated lower prices when purchasing from dealers? Most if not all dealers either knowingly or unknowingly take the MAP in the wrong way.
 
sharp_edge said:
Exactly my thoughts, just that Mr. Quiet said it better. :thumbsup:

I for one appreciate (some) dealers gave big discounts on ZT knives to customers during the Thanksgiving holidays. I cannot imagine how that one single event that lasted only a few days can affect significantly/noticeably dealers, manufacturers, and second-market sellers. Knife prices have become ridiculously inflated and there is no reason not to believe the trend will continue. I know I cannot nor will I bother to swing others' opinions but I'll continue to vote with my wallet.

Yes - theoretically speaking MAP is minimum advertised prices that a dealer does not need to stick to for each individual sale. But how many people and how often actually successfully negotiated lower prices when purchasing from dealers? Most if not all dealers either knowingly or unknowingly take the MAP in the wrong way.
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The issue is proof of price-fixing conspiracy. Drive past 10 gas stations of ten different brands and each one has the same price to 1/10 of a cent. Acting independently? No agreements? Prove it. I worked in a Shell station when a kid and heard the boss fix prices with the owner of the Mobile station across the street. All it takes is one employee on the inside will to go for the reward.
 
Thomas Linton said:
The issue is proof of price-fixing conspiracy. Drive past 10 gas stations of ten different brands and each one has the same price to 1/10 of a cent. Acting independently? No agreements? Prove it. I worked in a Shell station when a kid and heard the boss fix prices with the owner of the Mobile station across the street. All it takes is one employee on the inside will to go for the reward.
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Price fixing isn't what is happening with these quasi MAP situations.
 
How do you guys set the prices where you work? Are there any deals to be had?

If there's any markup you should have some room to move for me and you can make the profit off someone else.
 
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