PowerBass Sets New Internet Policy for 3P Sellers

PowerBass is implementing a new policy to enforce its Minimum Advertised Price (MAP) policy online.  Starting gradually in Q4, the company will allow only six sellers to offer their products through third party (3P) marketplaces on online outlets such as Amazon.

“We are selecting five to six authorized third party marketplace sellers to begin in Q1 with a slow roll into it starting in Q4 2023.  [Distributors, retailers] are no longer allowed to sell to any customer who sells on a third party marketplace. If they have their own dot.com website, we’ll allow that as long as they make us aware of it,” said Erik Harbour.

While MAP has been a problem for decades it became a bigger problem during COVID because “the world went on the Internet and started buying things. Everyone’s Internet business doubled, tripled or quadrupled.  Ours tripled online,” Harbour said.

The problem is getting worse because third party marketplace sellers no longer need to stock inventory.  They can buy product through a distributor and the distributor will drop ship it to purchasers.  “There’s no inventory and no overhead. Someone sitting at home on a computer is generating profit without putting money into the industry and that has become a big problem,” Harbour said.

PowerBass uses a third party tracking service, but that only goes so far.  “It helps us track and automate messaging to maintain MAP.  We message violators, provide them correct MAP prices and are able put in MAP holidays if we allow discounts.  What I’ve learned from that is a lot of the sellers use the UPS store as the address and the phone number on Amazon isn’t their real phone number,” said Harbour.  A shop may also have multiple stores on the marketplace, but it’s really doing business through one owner using multiple email addresses.

“What we found is that 85 percent of violators and unknown sellers on third party marketplaces are buying from distribution, not direct.  Out of that 85 percent, 60 percent of these unknown sellers are being drop shipped by the distributor. They are stocking nothing …the world today allows it,” Harbour continued.

PowerBass has spent hundreds of thousands of dollars buying back inventory from dormant distributors who are selling to unauthorized third party marketplace sellers, Harbour said.

With the new policy, the goal  is to embrace the fact that Internet sales are here and growing but not to allow them to deter brick and mortar sales.  If everyone is selling at the same price and the local store has the product in stock “customers love the satisfaction of walking out of the store with it in their hands,” Harbour said.

“The biggest takeaway is that MAP has been a problem for decades. It really is a matter of everyone working together, following MAP prices and removing unauthorized sellers on third party marketplaces by removing the flow of product to them.  Once you have control of the third party price structure and supply chain, then you can take away the advantage of the Internet, so then brick and mortar stores simply need to have the inventory in stock and they will have the advantage again,” Harbour said.

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