Ideologically speaking, people stand on two sides of the economic bailout fence:  individuals who are concerned about the cascading, rippling decline of credit and lending institutions, and those who argue that the marketplace should remain private without government intervention.  Either way, there is an unquestionably direct impact on e-commerce sales.   Perhaps one of the better ways to gauge the current economic impact on e-tailers is by understanding the Consumer Confidence Index (CCI).  In September, the CCI was at 59.8, which is roughly only half what it was the same period last year.    Consumer confidence reflects the attitudes and perceptions of households related to personal spending habits.   That being said, the typical citizen hasn’t had a promising view of the U.S. economy for quite some time.

Perhaps complicating or even exacerbating the challenge of consumer sentiment is a recently passed economic bailout bill designed to absorb the financial ruin of risky lenders and equally risky borrowers.  Naturally, a $700 billion invoice doesn’t get paid the next day, unlike the typical office lease or re-stocking inventory purchase known to retailers.  Therefore, convincing the public to assume an unprecedented debt of this magnitude requires the kind of bi-partisan efforts recently displayed within the U.S. Senate, and later the House.  A strong command of economic jargon and appeal to fear of the unknown has catapulted the news media into a frenzy of what-ifs.  Unfortunately, little time was spent to check the overall barometer of voter attitudes.

Bottom line, the economic bailout does an effective job of inflating the U.S. dollar.  The Federal Reserve must inject new currency, all of which includes interest payable by the United States.  For every new U.S. dollar introduced to global markets, the actual value of said dollars is considered both domestically and abroad.  This inflationary spending directly impacts cost of goods sold by online and brick-and-mortar retailers.

Declining consumer confidence levels and devalued U.S. dollars results in fewer customers purchasing increasingly expensive products online.   E-tailers must double their efforts to mitigate the impact of the $700 billion dollar economic bailout generously given to Wall Street.  Otherwise, there may be no more value in the U.S. dollar to bail out future online retailers, as well.

The most important distinction to be made about MAP selling policies circles around keeping a solid relationship with the manufacturer of your brand.  In some cases, manufacturers are extremely meticulous about where and when their merchandise can be sold, especially within the web of e-commerce.  Keep in mind that these “hard MAP” manufacturers are accustomed to a more traditional supply chain: manufacturer sells to distributor, distributor sells to stocking retailer, and retailer fills its shelves with merchandise at a brick-and-mortar store.  Therefore, expect established brands to take a more cautious approach to online retail sales.  They may even discourage “hide price from consumer” shopping cart tricks as a means to competitively lower the final product selling price.  In fact, don’t be too surprised if you find yourself unknowingly violating a manufacturer’s hard MAP sales policy!

On the flip side, many small and medium-sized manufacturers that have aggressively embraced internet sales will accommodate “creative” MAP selling strategies.  Your retail business can benefit by leveraging this flexibility, as described in a different article published here.

The most important consideration regarding what to sell, where to sell it, and at what price depends on a simple suggestion:  know your product.  Take time to communicate with your authorized distributor about current MAP limitations.  Perform market research to determine current price levels, but be careful not to assume the lowest price complies with MAP policy.   If another retailer is violating MAP, inform your vendor source.  By understanding the subtleties of manufacturer pricing, your business will have a unique selling advantage:  your vendors will love you.

To purchase your very own ticket to Quasi Catatonia, simply visit your local Starbucks (line shouldn’t be as long considering their apparent retail business declines) and order up a Venti Mocha; the double shot comes standard.   Oh, and don’t forget to keep your eyelids unshuttered for at least 30+ hours prior to downing said drink.

You’ll find Quasi Catatonia is a relatively friendly place.  Or, it could just be that you’re too tired to appreciate the opinions of its residents.  Either way, you’ll enjoy visiting!

Perhaps the most prevalent question about MAP policy is the most obvious one:  why do MAP policies EXIST?  Well, it really comes back to brand sensitivity and perceived price erosion.  If a manufacturer producing hand-signed sports memorabilia feels that the actual commodity value of their authentic signed football is the football itself, they’ll be sensitive to how consumers perceive the final retail price.  How much is an athlete’s signature really worth, after all?  This is where minimum advertised pricing “kicks” in.  The manufacturer instructs authorized retailers to not sell the signed football for less than 10% below original MSRP.  In our previous scenario, if the hand-signed football has an MSRP of $500.00, the lowest advertised price would be $450.00.

Keep in mind, not all manufacturers employ MAP policies.  Technically, MAP is but a few degrees away from bona fide price fixing, an illegal practice within the USA and many European nations.  However, because most online retailers aren’t stocking the products they’re promoting, a manufacturer or supplier can simply reserve the right to not sell said merchandise to the retailer should they violate MAP terms.  This can and does happen often within established product channels, particularly when popular consumer brands are involved.   Retailers that knowingly (and sometimes unknowingly) violate MAP Policy find themselves locked out of certain product lines without much notice.  Supplier policy enforcement is pretty much a finesse game that usually weighs considerations such as retailer sales volume, number of violations, etc.

One of the easiest strategies to consider regarding MAP policy is simply not to offer MAP-priced goods to the public.  I hesitate to identify this as an actual strategy per se, since the retailer is avoiding the MAP issue altogether.  Also, the retailer loses potential revenue that would have been realized by reselling price-sensitive product lines.

A truly legitimate MAP strategy is to take a closer look at the technicalities of most MAP policies.  Conventionally speaking, Minimum Advertised Price refers to the published price that consumers can easily retrieve by browsing a website, perusing through Google Product Search results, or reviewing at a price comparison site.  This is where your website presence can leverage the published versus non-published price strategy. By integrating a “add to cart for lower price” or “call for best price” marketing concept, many larger websites have successfully complied with policy while offering discounted prices below MAP.   For example, only when customers are logged in or have added the product to their cart are more aggressive prices revealed.  However, I’ll give you fair warning:  not all manufacturers agree that this strategy complies with MAP terms!  It’s important to confirm with your supplier which selling methods are in manufacturer compliance.

A second highly effective and commonly used MAP strategy is to offer free shipping in conjunction with related products.  Free shipping promotions really DO work, especially when your retail operation has little room to discount items that have tight pricing controls. In most cases, MAP prices are high enough that your business will have plenty of profit margin space to introduce a free shipping campaign.

One last consideration regarding MAP selling strategy:  if you have to sell a product at MAP price, so do your competitors!  This reality creates an even playing field for those retailers pushing the same product.  Maximizing your marketplace with smart MAP strategies can make all the difference and separate your retail brand from the rest of the pack.

Keeping with the spirit of all things product, here are some websites to help boost business.  If you haven’t yet heard of these, now is a good time to educate yourself!

Sourcing:  http://alibaba.com - if you havent yet heard of this, please do your business a favor and submerge into the sea of global online trading

Market Visibility:  http://alexa.com - Although there are plenty of website ranking tools out there, Alexa does a good job of providing comparative trends of your website’s popularity.  Things get most interesting when you match your popularity ranking against competitor websites.

Credibility:  http://dnb.com - Dunn & Bradstreet is pretty much the De facto standard manufacturers and wholesale distributors use to identify the credit worthiness of new business partners.  Be sure to contact DNB directly for a free ID associated with your business profile.

Product Hype: http://gizmodo.com - The Gizmodo Gadget Guide is a wonderful, little gem of insight into the latest and greatest product fads.  This is a good resource for exploring new products, whether at the manufacturer, distributor, or retailer channel level.

Let’s fast-forward to the present:  online retail sales figures are skyrocketing and e-commerce activity continues to flourish despite a sagging global economy.  When the convenience of dropshipping was introduced to modernized e-commerce, retailers no longer needed to stock products at all.  Although today’s online retailer benefits from these advantages, a new kind of problem is emerging:  too much product.

Unlike older brick-and-mortar retail operations that maintained large physical inventories, today’s retailer can virtually offer millions of products to customers within days of first opening their website presence.  This glut of goods has its challenges, including a retailer’s ability to intelligently communicate about products.  An informed customer is a happy customer, which is why online resellers should fully take advantage of product expertise available to them by their wholesale distributor or manufacturer.