When Marisa Lytle arrived at gift manufacturer Demdaco in 2017, she found that the brand was doing big business selling its products to Amazon.com Inc. That was the good news. The bad news was that the 15,000 mom-and-pop gift shops that sell Demdaco products were complaining about Amazon undercutting their prices.
The problem was that the prices appearing on Amazon for Demdaco’s hand-painted figurines and other giftware frequently were below the minimum advertised price (MAP) set by the brand. And consumers, smartphones in hand, could see that when they went into bricks-and-mortar gift shops offering Demdaco merchandise.
“Consumers would look at an item in one of the 15,000 mom-and-pop shops that sell our products, then look at their cell phone and say, ‘How come I can get it for $5 less on Amazon?’” Lytle says. “That caused a lot of channel conflict.”
Demdaco addressed the problem by stopping first-party sales to Amazon, establishing firm policies that prohibit Amazon sales by retailer customers without Demdaco’s authorization and giving authorization to sell on Amazon only to four retailer customers. The new policies include strict terms and conditions laid out in detail on Demdaco.com and backed by action.
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