If you've ever seen those "Click To Reveal Price" or "Price Only Revealed At Checkout" products online, this here is one reason why. They help businesses keep discounted prices hidden from Amazon's crawlers.
Long-time seller/distributor here -- the main reason for this is mandated by brands, who want to make sure their MAP (minimum advertised price) is respected across all channels.
Basically different distribution channels (speciality shops, big box marketplaces, and ecom stores) have very different levels of overhead, so if each channel was allowed to set their own price, you'd end up with brick and mortar stores doing a lot of showrooming and then online stores gaining the bulk of sales because they're cheaper (because their overhead is low).
This pretty much happened in the early 2000s-2010s so over time brands became VERY particular about enforcing MAP.
> you'd end up with brick and mortar stores doing a lot of showrooming and then online stores gaining the bulk of sales because they're cheaper (because their overhead is low)
This is what I see happen in Poland with clothes and electronics stores, but I don't exactly understand what MAP is supposed to be solving here, given that the brick&mortar and on-line stores are literally the same entity/brand, and in case of clothing, they're also the manufacturer brand?
From my short experience with this - manufacturers want to ensure this internationally too. So then same product would cost around the same in Germany and in Poland. Otherwise Germans will check fit of shoes in German B&M store, then go buy it online from some Polish store for X% cheaper.
Manufacturer does not want that, because then it will lose most of it's distributors in Germany.
NB: Though I am not debating if it's right, fair or best for consumer. Just mentioning, what I've experienced.
So game-theoretically: if I know the price for an item is the same everywhere, I'll buy it at the place where I see it first (one of the big values of brick and mortar stores).
If I know I can go online and it'll be some % cheaper, I'll wait and order it online, defer my gratification for a few days, and end up with a cheaper product.
Not sure about Poland, but most B&M brick and mortar stores in the US are distributors/resellers of the brand, they buy for $4 and sell for $10, and their rent/labor/etc costs $3 and they profit $3. Another distributor let's say is an e-commerce website, they can setup a warehouse in a rural area with cheap labor so it costs them $1 and they profit $5... so they can afford to discount it to $7 and make $2... which the B&M store can't do because they won't profit at all.
I believe that it prevents the price from being indexed (by dumb crawlers).
I remember hearing our marketing folks talking about enforcing MAP, at the company I used to work for. That company didn’t have the clout of Amazon, but we did sell premium kit.
For us, it wasn’t about money, as much as we didn’t want to ever be forced to reduce Quality; which included the shopping experience. We were concerned that outlets selling lower-priced kit, also had a worse shopping (and support) experience, which we believed (probably correctly) would reflect on us, and our most favored retailers.
Premium brands are often driven by factors other than just money. Brand reinforcement is a really big deal.
> if each channel was allowed to set their own price, you'd end up with brick and mortar stores doing a lot of showrooming and then online stores gaining the bulk of sales because they're cheaper (because their overhead is low).
Um... and? That's quite literally "the market working as intended" and while I am not a free-market apologist by any stretch, that seems to be a rather benign effect.
What makes MAP especially suspicious in my eyes is that it's the manufacturers that seem to be overly concerned over well-being of one specific kind of their downstream buyers/distributors/resellers, not those distributors/resellers themselves. I understand that if B&M stores would try to impose that, then the FTC would (hopefully) smack it down pretty quickly but apparently when a manufacturer mandates the price to the resellers, it's perfectly fine? Somehow? Isn't there collusion somewhere in there, probably?
The problem with "the market working as intended" is you get unfortunate second-order effects. The brick-and-mortar is providing a valuable service by letting you browse, try things on for fit and style, feel the material, and hypothetically by curating products and trying to engender trust in their curation, only selling things of at least passable quality (some more than others).
Historically, you only paid for that service when you bought something, since most stores can't convince you to pay an entrance fee. When you go to the store to select products and then buy online, you're leeching on that service and putting the entire business model at risk. If everyone did that, brick-and-mortars would go out of business and you wouldn't have access to that service, which sucks for everyone.
+1 to this. I was around for the 90s and early 2000s to see when MAP wasn't tightly controlled by the brands; the B&M stores got destroyed because they simply couldn't price-compete because their footprint was way more expensive.
I do think that by not having physical stores, it directly/indirectly promoted a decline of product quality as well as misrepresentation of product, with Wish and Temu kinda exemplifying that to an extreme. Price differentiation is way greater now which I guess is a net positive to the consumer.
As a brand owner of midtier kitchen products (cheaper versions of designer OXOish products, but more expensive than your baseline Walmart stuff), our products look visually similar enough to both ends of quality, but shines more when a person gets to interact with the items themselves, feel the product texture, press the lever action, etc. So I do value B&M for their place in the economy and want to make sure they can have some margin (even though I'm selling the same thing in my Amazon store and Shopify and can make more money there).
This can also be true if the manufacturer of the product requires that retailers not offer a price below a certain amount. This is called the minimum advertised price (MAP) and is common for big brands like Apple. Another way to get around the minimum advertised price is to bundle the product with some other product or service, such as is done with cell phone contracts.
> If you've ever seen those "Click To Reveal Price" or "Price Only Revealed At Checkout" products online, this here is one reason why. They help businesses keep discounted prices hidden from Amazon's crawlers.
That is obviously not a reason why, considering the place where I've seen those listings is Amazon.
It can be both. I worked for a brand that wanted to have a sale just on their own, new site to be able to drive visits, but Amazon's "most favored nation" policies would have caused a backlash.
I know myself as well as others in my family have talked about this many times and have a hard rule that if someone has to hide the price they are ashamed of it and we refuse to support them.
I literally experienced this tonight. I've been wanting to try some SnackCrates the service where you get snacks from around the world delivered monthly or just a single box if you want. Well the Company SnackCrate stopped shipping to Canada so been looking for another company that does. I see an ad on Facebook and check it out. First looked if they deliver to Canada before anything else. Then try find a price and you can't. Looked all over their site with nothing that even hints at the cost. They want you to first do a snack test to determine good snacks you may like then provide information and so on. Then you can see pricing options.
I refuse to do that. Instantly left the site and read the comments on Facebook where I then saw several comments state how expensive they were for such little abouts of snack which made me say yep they are ashamed of the price and that's why they hide it.
Basically different distribution channels (speciality shops, big box marketplaces, and ecom stores) have very different levels of overhead, so if each channel was allowed to set their own price, you'd end up with brick and mortar stores doing a lot of showrooming and then online stores gaining the bulk of sales because they're cheaper (because their overhead is low).
This pretty much happened in the early 2000s-2010s so over time brands became VERY particular about enforcing MAP.