One of the primary signals that shows a company is beginning to get serious about controlling their presence on the internet is a ‘thinning’ of their eligible resellers on the marketplace. It is simple logic, the fewer resellers, the less you have to manage in regards to keeping prices where you want them. Almost every successful company at enforcing online price protocols have undergone this process.
We are excited to announce that two of the biggest players in the industry are now enacting this procedure. Those two companies are Nutraceutical and NOW.
Nutraceutical has been involving us with their MAP plans from the very beginning. Their intentions have been clear that they want to do MAP the right way and fully show their support for the independent retailers. Admittedly, we have been slightly frustrated by how long the process is taking but in the end, it will all be worth it.
On November 15, 2018, Nutraceutical officially started reducing its authorized resellers on Amazon down to less than 10! This is coming from close to 400. Once they have narrowed the field they will begin implementing a 30% MAP policy.
When you look at a company like Nutraceutical with its size and amount of brands it is very impressive to see them take this step. Moves like this don’t come without risk though. Speaking with a company representative this week, he projected that the company feels that the move has already cost them approximately 5 million in sales. However, the representative quickly reiterated that no matter the cost, the company feels this is the right thing to do and the best decision moving forward.
In regards to NOW, this company has been typically against supporting the ideology and principle of MAP. This is shocking since we know how strongly NOW is connected with independent retailers since they themselves own a number of stores.
Recently though, NOW has been showing some positive progression towards buttoning up their currently atrocious standing on Amazon (roughly 40-50% off MSRP across the board). They announced recently that they will be reducing the authorized resellers of their essential oils from over 400 to less than 10.
We decided to reach out to Dan Richard, NOW’s VP of Global Sales and Marketing, and we were pleasantly surprised with what he had to say. In speaking with him, it was uncovered that the current plan is to extend their reduction of authorized resellers to a vast majority of their line in Q2 2019. We were shocked because, as stated above, this is a move that is typically done by a company that is preparing to roll out a pricing policy, something NOW has stated previously that they would not do.
Finding it necessary with this new information, I asked Dan, if their stance had changed on the potential of a MAP. Refreshingly, he informed me that though nothing is set in stone or been decided, the company is continually reconsidering their stance on MAP, and we may see them heading that direction. We also may not see them head that direction, but seeing NOW seemingly growing more cognisant of the effects of Amazon and the bottom barrel price tactics used there, give us hope.
Hope is sadly all it gives us though. Our store, Nutrition World, has already completely discontinued NOW and have not had much loss of sales as a result. Until NOW announces to us or publicly that they will indeed uphold some sort of price maintenance so independents can compete, we will not recommend them as a brand to support or stick with.
It is simply logical and a major reason NPI exists, the longevity of our industry, begins and ends with the survival of independents and the brands that support them. It is imperative that all independents support the companies that support our industry today or tomorrow there may not be a choice.