> 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.
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?