Thoughts on Minimum Advertised Price Policies

We’ve recently been asked about what we thought about Minimum Advertised Policies in general. I was working on a reply and then the comment was deleted. Since I had a reply, I thought I’d just post it here.

Let me start with a very important point which is – any publisher has the right to choose the price / Minimum Advertised Price Policy they want. It’s their products and so long as it’s legal (and I believe policies like these are legal in most jurisdiction), they have the right to make their decision on this.  These thoughts are more to do with the general affect about these policies in general, not the right of a publisher to make such a decision.  In addition, note that I’m talking from the viewpoint of a retailer in the games industry which deals with physical products that generally have a high cost of shipping and a minimum physical component that must be shipped.

Customer Level

It’s a given fact that with the introduction of board games and the addition of a slew of Internet retailers, the prices of games have dropped. This is a good thing for the consumer since they are able to purchase the game at a cheaper price than before. MAP policies generally are set higher than the cut-throat prices we see on the Internet, so these policies generally dictate an increase in prices for customers.

On the other hand, a MAP policy could also encourage less ‘shopping around’ by customers. If you know that a product (e.g. Lego / Louis Vutton handbags) are always going to be much the same price whichever retailer you go to, then you can start making decisions on purchasing using other factors than price – convenience and service being major examples.

Retailer Level

On a retailer level, which is where we are, the MAP policy depends on the type of policy and the MAP price. For example, the Lion Rampant Fantasy Flight MAP policy is actually relatively reasonable. It floors at about 70% of MSRP as they have considered what the MSRP should be, so it gives both online retailers and B&M stores a good variance while upping the margin overall.  It also allows a retailer (online or B&M) to run sales if they need to with a decent degree of latitude about the price without needing to get specific authorisation.

On the other hand, the recently released Mayfair Games MAP sets it at 90% of MSRP.  That creates a huge burden on retailers if they want to run any sale as 90% is too high a level for any useful discount level.  In addition, it certainly makes it more difficult for online stores to compete as we have to deal with the cost of shipping to the customers. Not impossible of course, just more difficult.

Additionally, what MAP policies do is reduce the desire by retailers to fully or deeply stock a publisher’s products.  This is more noticeable on an online store level rather than a physical game store level since most online stores have the ability to carry more board games than physical stores (see the issue about shelf space).  For example, it makes it much less likely we’d want to take risks of new games that we might (or might not) be allowed to discount further to remove from inventory if it does not sell.  Even if we wanted to bring a game in, we’d likely reduce our initial & subsequent stocking position on those games.

Why wouldn’t we be allowed to discount a game? Well, not every successful game will do well in all stores. A game might do generally well, but still be a bad game for a specific store. Without the ability to sell that game off, the store must then ‘eat’ the cost of the game, accepting the loss.  When you realise that a successful game in this business is 4 games sold a year, being forced to ‘keep’ one bad game that doesn’t sell is a major reduction in profit.

Of course, the other side of the argument is that having an MAP policy ensures that we get a better margin on the product, so there’s more likelihood that a retailer will actually stock these games.  In the short-term, when

Industry Level

On an industry level, it’s worth noting that enforcement is an unequal matter. Mass market retailers regularly break MAP policies and see very little in terms of enforcement / penalties because of their size.  I would be interested to know if they even have to sign the same policies as we do.  On the other hand,  B&M retailers can break MAP policies and run little risk of being caught due to the fact that there is no way to ascertain if they are breaking the policy other than local ‘snitches’.

The often quoted reason for having MAP Policies is to protect B&M stores by providing higher margins for products.  This is great,

Lastly, it’s worth noting that MAP policies inadvertently

Mayfair Games Online License Policy

On September 25, 2015; we received this from our Canadian distributors:

Dear Customers
This memo is to advise you that Mayfair Games have implemented an online policy for all their games sold online.
 
This Policy is effective immediately!!
 
Any persons selling online are required to have a license to do so. This will allow the retailer to sell under the rules set forth in the MAR agreement. This license allows the seller to sell online through the internet and to utilize the Mayfair Games IP with the explicit adherence to the signed MAR agreement.
 
Since this policy is effective immediately you need to get your signed licensed agreement into your sales representative a soon as you can. Please contact them to have a copy sent to you if you have not receive one from Mayfair.
 
Until you are licensed to sell online you cannot sell Mayfair games online. You must remove any online items or you will risk Mayfair suspending your account and placing you on their banned list.
 
We ask that you act swiftly and apologize for any inconvenience this may cause.
We immediately stopped the sale of games on the Friday and requested the necessary agreement.  The agreement was sent to us as attached.
Feel free to read the agreement.  We didn’t sign the agreement and after 2 weeks and multiple attempts to get a new agreement sent to us, we decided that we had been more than accommodating and turned sales back on.  Yes, that  means Mayfair may ban us from selling their games, but at this point, over nearly a month of not speaking with us or sending us an agreement that we can sign, we have product that is sitting on our shelves that need to move.  It’s rather obvious that they do not care to actually get this dealt with as it’s now over a month since this initial e-mail was sent out, so we might as well go ahead and sell whatever stock we have. I hate to cut-off such a popular line, but what else can we do?

Issues with the Agreement

Why didn’t we sign the agreement?  Quite a few reasons.  Here’s a game – read over the the fg_Mar_K_130401-tt.pdf and work out what issues you would have with the agreement.  Here’s the one’s I caught:
  •  MSRP of products are to be via printed price on the box (which is in US$) and/or sent to us if not printed.  No indication of what the exchange rate is to be used or how we can get the exchange rate so that we can comply with the policy. So, without designating that information, we could inadvertently break the agreement without realising it.  In addition, no list was included so again, we are left floundering.
  • We are not allowed to purchase products except from authorised Mayfair Dealers. Note that there are NO authorised Mayfair dealers listed in the Appendix.
  • There is supposed to be an active list of products that the MAP policy and sale policy applies to. None are listed.
  • Appendix B talks of ‘Mayfair Terms’ and the agreement is subject to it, but since it’s completely blank, who knows what it is?
That’s just the issues with the agreement as written. Basically, if we signed this agreement, we couldn’t purchase games from our distributors anyway because they aren’t listed on the agreement.  It’s great that none of Mayfair’s products are actually subject to the 90% sale rule (see the part where they don’t list any products as active?) but it does mean that we still can’t buy their products.