Before you head over to Amazon.com to buy cycling accessories, do you mind if I gripe about how Amazon.com plays the price-matching game?
You don’t mind? Thank you.
Previously, I wrote about Minimum Advertised Pricing (MAP), and how it means that bike shops that play by the rules can’t advertise below certain price points, but they might be willing to sell below those price points if you just ask.
But when people are shopping online, they rarely ask for a lower price. Savvy shoppers will use a comparison shopping engine, such as Google Shopping, and then they’ll click through to whoever has the lowest price.
But it creates an incentive for some online retailers to break the rules. Some retailers will advertise a price that is lower than the manufacture’s MAP price, because price is all that matters to many shoppers — not service, or the expertise of the retailer.
Frequently, Amazon.com will match (or nearly match) the lowest price that has been fed into the comparison shopping engines.
Screw you, manufacturer!
Screw you, honest online retailer!
Screw you, local bike shop!
And whose job is it to make a fuss? The manufacturer.
The bike shop or the honest online retailer can make a fuss, but the manufacturer has the ball.
And if the manufacturer chooses to enforce their MAP policy, they don’t have much choice but to threaten to stop selling to the MAP-violator.
Suppose you’re a rent-a-cop at the mall. You see two vehicles speeding through the parking lot, at nearly the same speed. One is a tour bus full of corporate lawyers. The other is a shifty-looking little guy on a (probably stolen) fixie. Who are you going to chase down?
So who tends to bear the brunt of the enforcement? The shady little rogue, of course. Would you go after a behemoth like Amazon.com, with it’s tour-bus full of lawyers?
And does the shady little rogue MAP-violator care? Of course not. It’s a shady little rogue. It’s the one that lowered the bar in the first place. It’s the one that will be difficult to bring into compliance for the same reason that smart people won’t want to buy from a shady little rogue they’ve never heard of before.
Given the choice between shady little rogue MAP violator and the familiar corporate behemoth MAP violator, most people will buy from Amazon.com.
In short, Amazon.com hurts small businesses by matching the lowest prices offered by rogue retailers, and pretty much dares manufactures to do anything about it.
So you, consumer of cycling products, benefit from prices that are harmful to honest businesses, and harmful to cycling. I thought you might want to know why.
So who plays by the rules? Who should you support when you shop online?
Take a look at the graphic on the right. These are prices for the Burley Nomad Bike Trailer. Notice that the prices fall generally in three groups.
There is a bunch of prices within a dollar of $349. Those are folks playing by the MAP pricing rules.
Everyone below $348 is a MAP violator — and all of those but one is a shady little rogue. Guess who.
Everyone above $350 is following MSRP pricing — but just not playing the game very aggressively.
When you are using comparison shopping engines, you will see this three-tier distribution (as long as you are comparing apples to apples). Unfortunately, it won’t be color coded the way it is here.
In the “MAP Followers” tier, you will usually find the Bike Shop Hub shops: Bike Bag Shop, Bike Kid Shop, Bike Tech Shop, and Bike Trailer Shop — along with other reputable retailers of cycling products. And often Amazon.com is in the “Map Followers” tier as well. Amazon.com can be deviously strategic about when they break the rules and when they don’t. But even when Amazon.com is in this tier, they are still taking a whopping 15 percent cut — plus fees — from the manufacturer.
When you buy from the MAP followers — ones whose names don’t begin with Amazon.com — you are supporting cycling and a strong cycling industry. (This applies to any industry. Amazon.com by no means has singled out the cycling industry with this tactic.)
Last week I wrote, “Find it locally if you can, and from a small online business if you can’t.”
And to that I will add, Support cycling by supporting businesses that aren’t racing to the bottom.
Updated 11/30/11: The original version of this post did not present damning evidence (as reader Josh pointed out). The post has been updated with a clear example of Amazon.com violating MAP. The original version of the article is here.
Updated 112/2/11: I took out the references to Cyber Monday,” because this phenomenon is relevant beyond one day a year.