What Are MIP and MAP Policies?
Inside The Manufacturer Pricing Standard
Man, has the internet changed the landscape of floor shopping. I've been in the internet flooring business for some 15 years, and dont know anything else but e-commerce. And I've seen some changes in the industry that have helped and hurt dealers as a whole. The main point of interest on my mind is the MAP or MIP policy. What is it and how doesn it affect the consumers? MAP stands for Minimum Advestised Pricing (MAP) and MIP stands for Minimum Internet Pricing. As challenging as it is to be in the E-commerce business, these policies were a detrimental blow to my business model. My father always took on the Sam Walton (Walmart) approach for the flooring business. Its simple and affective, drop your prices lower than anyone else, do more volume to get market share, then you can do what you want. That works, until a recession, if you control all the variables. This is what manufacturers realized back on the early 2000s when our business model generated somewhere near $12 Million / year in flooring sales acorss the country, which equates to $30 million in retail price. The flooring dealers across the country were livid. We were selling solid and enginnered flooring for cheaper than they could buy it. And the manufacturers were taking the heat for it, sometimes getting as many as 50 calls per day from angry dealers. And this was before luxury vinyl flooring even hit the market. Since we were generating so much volume and had such a tramendous paying history, along with a great relationship, these manufacturers couldnt pull back the reigns. They were making good money off the deal. This is when the MAP policy first surfaced. The MAP policy states that a free market country, we could sell products for whatever we wanted to, but we couldnt advertise below a certain price. Typically, that price was somewhere around 40% above our cost, making it well over the price we needed to sell for to make the wheels turn. With this policy, manufacturers were trying to level the playing field for dealers and wholesalers alike. And it works, if implemented correctly. Back before Amazon became Amazon, not everyone was so intune with shopping online. Malls and Strip Malls carried full parking lots every weekend. What we were seeing in the industry was a customers need for flooring information. When they visited the retail flooring stores, they would go to the web to look for more information about the product they just saw. We would pop up on the first page with a cheaper price. It brought on anger when the customer realized the local guy was charging 50% more than we were. So with the MAP, the customers wouldn't see the low price up front, and more than likely keep moving through the website, and back to the retailer. When the MAP or MIP first arose, we shot holes in it right off the bat. The beauty of having a website, is being able to control your whole business platform with the flip of a button, and thats what we did. Remember, they couldnt tell us what we could sell it for, so we hid the pricing until the shopping cart, and had some kind of slogan "add to shopping cart for sale price". This worked for years to come, but eventually got pounded by Mannington. Another issue with the MAP policy was that it had to be unilateral, meaning every dealer across the country had to adhere to it, not just internet flooring companies. We battled with manufacturers for years, citing sites across the country that didnt conform to the policy, thus opening us back up to price at whatever. Again, this worked well in our favor until Mannington. Somewhere back in 2010, Mannington came out with a MAP policy that stated no prices could be advertised, at all. This takes the ability to hide in the cart away. They also stated the policy would go into affect on a certain day and that any dealers not in compliance would be suspended from receiving products. This worked well for Mannington. I know because I got suspended for 30 days. This instance unfolded to make MAP policies what they are. The MIP policy was credited to Armstrong, giving local dealers the ability to advestise in stores for whatever price they chose since MIP is a Minimum Internet Price policy. The industry has evolved and manufacturers are able to control the advertised pricing, but it doesnt affect the consumers aility to buy flooring cheap online. All the customer has to do is call in to get a quote. As the e-commerce business evolves year over year, I think people will realize the requirement of calling or emailing for a price. I know it takes longer, but if they save 25% iover their local flooring vendors pricing, its worth it. To be an Authorized Internet Retailer, we must be able to comply with all guidelines nationwide, and this compliance will be for the good of everyone. Dont be surprised when floor shopping online to find internet companies with higher pricing, or no pricing at all. Its the new norm. Just talke my advice and make a phone call, or text for a price, or chat. The savings are worth every minute of it. As the digital age continues to grow, more and more consumers will be shopping online for floors, but people still want that service of face to face customer. Georgia Carpet Industries is a hybrid, with the best of both worlds. Being in business since 1969, has brought Georgia Carpet avmultitude of opportunites. Yet, no matter the times, they have always had one thing in common, customer service. Sometimes pricing at flooring outlets are cheap, but watch for the service as well. Trust us with your service. Thats why we call it customer service, not dealer service.