eCommerce Lifestyle
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Competitors Breaking The Rules

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Anton shares the biggest dropshipping risks, and what to do to avoid them.

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Transcript

What should you do if you're drop shipping and one of your competitors is violating the price policy? That's a question that just came in on a coaching call I host every month for members of Drop Ship Lifestyle. And I gave the answer to the member that asked it, but I wanted to get this episode out, share exactly what I do, what I believe you should do. So if this comes up, as you do business, which it definitely will, if you work with lots of different drop ship suppliers so that you know how to act and how to basically get this problem to go away.

So, first of all, what am I even talking about when it comes to price policies? Well, the majority of the suppliers that we work with at Drop Ship Lifestyle and the majority of the suppliers our students work with are suppliers that enforce controls through something known as MAP, map stands for minimum advertised price, and basically what this is, is you cannot advertise this product for less than this price. So let's just say I was selling this iPad Mini here, I don't know what it costs, let's say it was 500 bucks, maybe minimum advertised price is $500. That means the lowest I can list it on my store for would be $500. If you sold it, 500 would be the minimum and so on and so on. Now, these policies are basically in effect to protect manufacturers' brands. For example, if I started selling iPad Mini's, became an authorized retailer for Apple and sold it for a $100. Well then now this is a $100 product, everybody buys it from me and the value is just gone. So that's why they exist.

But that's not what this episode is about. Let's just take a realistic example for something that meets our niche criteria, that you might possibly be selling, something like this standup desk that I'm at right now. And let's just say, minimum advertised price for this desk was $2,000 and you uploaded it to your store and you listed it at $2,000. Now, let's a month goes by, you receive an email from a potential customer, they say, "Hey, I just saw this desk on competitorxyz.com. And they have it for only $1,800. Can you match that price?" Well, first of all, I would say if the margin is there, I would just say yes. But the next thing I would do immediately is go to that competitor's website, I would take a screenshot of the page, I would even go to Google Shopping and search for that product and find the competitor, if it's listed there as well, and take a screenshot of their listing at the $1,800. And I would send that right to my sales rep at whatever manufacturer made this desk.

Now, does that mean I'm telling on people? Yes, yes it does, but it's for a reason. These minimum advertised price policies are to protect the actual brand, they're there to protect the actual retailer and believe it or not, that includes you and your competitors. If everybody just sold for whatever they wanted, it would become a race to the bottom and the person that would be okay with making a 2% profit margin would do that. These problems need to be cut off as soon as they arise, so contact your sales or whoever your contact is at the specific brands where the price policy is being violated as soon as possible.

Now, I'm going to say this because a few things can happen from there. It could be a supplier that actually cares about their price policy, which most do, if you find suppliers the right way the way I teach and Drop Ship Lifestyle, then they should reach out to that other competitor. You're not reaching out to them directly, this all goes through the supplier, AKA brand. They will have them update their price, they usually give them some type of window, maybe three days, five days, maybe even only 24 hours. And if they don't update the price, then what the supplier should do is cut that company off as a retailer, basically not allow them to sell their products anymore. And that's what's going to happen in the majority of situations.

But you will find sometimes you see this violation, you let your supplier know about it and then a week goes by and the price still isn't updated on the competitor's website. Well, what do you do then? I follow up with my reps, I recommend you do as well. Well, what if another week goes by and it's still not updated? Well, then get serious. Say, "Hey, listen, we're having people ask us about this. It's been two weeks at least already, the price still hasn't moved. This is obviously a violation of the minimum advertise price policy. What can we do about it?" Give them another chance to take it seriously, if they don't and they're not willing to actually enforce their own policies, then you have to make that the decision of do you want to stop running paid ads for products from that brand? Do you want to remove them from your website entirely? I don't recommend you go with the strategy of just lowering your prices to match theirs. Again, the options, if your supplier just is not enforcing their own policy, as far as what I do is either just cut them off completely or stop spending money on paid ads for those products, rely on organic traffic. Now, this will give you a good sense of how legitimate and how much your suppliers actually care about your brand, when this comes up, when you have to report a supplier. It's not going to happen every day, but if you're in business for the long term, if you're drop shipping, it will happen. So hopefully this episode gives you some insight what I do and what you can do as well.

With that being said, if you're watching this or listening to this, you're brand new, you want to know exactly how we build highly profitable semi-automated stores, literally from A to Z, go to dropshipwebinar.com. I'm going to link it up in the description. When you go there, it's going to take you to a page or you can register, choose a time that works for you. And you're going to a three hour in depth free training from me, plus a list of 237 profitable product ideas for drop shipping. Again, totally free. The link is dropshipwebinar.com. Look for it in the description. So with that being said, as always, I hope you got value. I will be back on Thursday with another episode and I'll talk to you then.

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