Final Holiday Push Puts Manufacturing Pricing Under Santa Siege

With just about a week left until Christmas, the holiday heat is on, and it's putting more pressure on pricing. Are you feeling warm yet?

As the days quickly tick away in December, online retailers know it's their final crunch time to squeeze out every possible shopping dollar, and they plan to do so with some of the deepest discounts we've seen in a few years.

According to Adobe Analytics, 2023 has seen online prices falling consistently this year despite inflationary increases in pricing throughout the rest of the economy. In fact, online prices this quarter have seen the biggest annual drop in the past three years. Online retailers are giving inflation a sneer (and possibly a hand gesture) as they seek to buck its rising prices and lure online shoppers in with deep discounts and extra offers.

The Santa Siege on Pricing

This inflation-busting mindset puts manufacturers' pricing under siege. While sales and advancing brand presence is certainly a good thing, when it comes at too heavy a cost, it is no longer a help but a hindrance. As online retailers seek to offer deep discounts to bring the last of the holiday shopping to the completed checkout screen, manufacturers who are utilizing a pricing strategy to build their brand value, hit revenue targets, and foster an affable reseller channel are paying the actual price.

Consider the very nature of the "good deal," that tempting price drop or other salacious offer that many consumers seek out like a proverbial pot of gold at the end of the rainbow. How often are we lured into a purchase because of the hot deal we just can't pass up, fearing it won't come our way again anytime soon (or possibly ever)? Online retailers are banking on this consumer behavior this season.

But that good deal, by definition, means getting a product or service we expect to pay a reasonable price for at a much lower cost. The starting price is key. As online retailers continue to drop manufacturers' suggested initial pricing — or, in the case of Minimum Advertised Pricing (MAP), required pricing — the new expectation of the starting price and what then constitutes the really good deal keeps dropping with it. This results in a "race to the bottom" for manufacturers who have built pricing into their core product strategy. With the lower pricing comes lower perceived brand value. That's a real problem for producers and the rest of their reseller channel.

Online Shopping Soars Like a Sleigh

Online shopping continues to be the culprit for manufacturers utilizing a MAP strategy. According to Adobe, e-commerce continues to soar as consumers are expected to spend almost $222 billion via online shopping from November 1 through the end of 2023, a 4.8% year-over-year growth, which is nothing to sneeze at in a tumultuous and inflationary economy. Moreover, Adobe anticipates that shopping via mobile devices may overtake desktop shopping this year for consumers, indicating more consumers clicking "buy now" on their phones and tablets…often as they easily scan for the best deals and hottest offers.

With the convenience of online shopping also comes the ease of price-watching and consumer research at their fingertips. Add convenience to a hot deal, and we may have just hit consumer Utopia…where shipping is also free, of course.

Keep an Eye on the "Naughty List"

Given this high pressure in the remaining weeks of December, and soon the subsequent new-year "holiday clearance deals" that will ultimately follow (the topic for a future blog), it's important that manufacturers, just like consumers, also keep a diligent watch on their online pricing and do their own continual retail research. Price monitoring, with tools like MAPCOP, is easier than ever and can now be done 24/7 and with real-time intel, also at your fingertips.

To avoid watching your prices race to the bottom…permanently, not just during the holiday season — and to keep a harmonious reseller network, it's critical that you continually monitor e-tailers' activities. At MAPCOP, we can show you how, both easily and with a free, no-obligation trial. Our manufacturing customers like you understand the importance of this real-time monitoring over feed-based data; being able to respond quickly and accurately to MAP violations is critical to a successful pricing strategy.

Don't let the final holiday heat of the month melt your prices. Set a resolution for 2024 to empower your MAP strategy and set the stage for your brand's bright new year!

Happy holidays from all of us at MAPCOP!