Post by 2nd Bat on Sept 18, 2016 14:31:40 GMT -5
We are all no doubt frustrated when an attractive discount coupon offered by a major retailer isn't applicable on the very items we WW2 airsofters want to buy. The explanation invariable is "not applicable due to M.A.P. pricing" or "Protected by M.A.P.". So what is that? And how did it come about?
Large retailers face an interesting challenge and an even more interesting relationship with their distributors. This situation has direct impact on the success and growth of Airsoft in general and WW2 Airsoft in particular. When the hobby was experiencing explosive growth from around 2005 to 2008 a lot of both big and small retailers sprang up with both brick and mortar and online presence. To succeed a retailer typically needs about a 30% margin to succeed. (The difference between what they paid and what they sell an item for). Notice that margin is NOT "profit" as the retail has to deduct costs to arrive at what they actually made. Costs like wages, insurance, taxes, facility, returns and inventory that just isn't turning or becomes obsolete. Many other costs not listed. When the hobby was exploding retailers bought tons of inventory and distributors incentivised volume purchases. Many (if not most) retailers over committed and aggressively discounted to prices that constituted losses. Anything less than 30% plus invariably costs money. Prices on guns and accessories came WAY down with the entry of all the Chinese clones and even if the margin stayed constant making 30% on a $150.00 rifle is far less than 30% on a $400.00 sale! With lower prices and ever younger, ever more price conscious buyer entered the hobby and with SandyHook and other tragedies the impact on gun image and Airsoft was huge! Real gun sales exploded while Airsoft sales tanked! With the losses quite a few large (and especially small) retailers folded. With excess inventory retailers were reluctant to order with the uncertainty that the inventory would hold the necessary mark up in a competitive marketplace (especially online where pricing is so transparent. To assure the retailers and extend wholesale confidence distributors sell some items (especially lower turnover,riskier items) with a mandate that the item cannot be advertised below a Manufacturers Agreed Price. (Usually lower than the "Suggested Retail Price"). The retailer violating this agreement risks being cut off from the distributor. In our free market, capitalistic society this seems like price fixing (which it is) but without it even more retailers would fold, customer support and return policies would be non existent and inevitably pricing would ironically GO UP! (Less competition)
Much as I get frustrated by M.A.P pricing it is what it is and probably isn't going away.
Large retailers face an interesting challenge and an even more interesting relationship with their distributors. This situation has direct impact on the success and growth of Airsoft in general and WW2 Airsoft in particular. When the hobby was experiencing explosive growth from around 2005 to 2008 a lot of both big and small retailers sprang up with both brick and mortar and online presence. To succeed a retailer typically needs about a 30% margin to succeed. (The difference between what they paid and what they sell an item for). Notice that margin is NOT "profit" as the retail has to deduct costs to arrive at what they actually made. Costs like wages, insurance, taxes, facility, returns and inventory that just isn't turning or becomes obsolete. Many other costs not listed. When the hobby was exploding retailers bought tons of inventory and distributors incentivised volume purchases. Many (if not most) retailers over committed and aggressively discounted to prices that constituted losses. Anything less than 30% plus invariably costs money. Prices on guns and accessories came WAY down with the entry of all the Chinese clones and even if the margin stayed constant making 30% on a $150.00 rifle is far less than 30% on a $400.00 sale! With lower prices and ever younger, ever more price conscious buyer entered the hobby and with SandyHook and other tragedies the impact on gun image and Airsoft was huge! Real gun sales exploded while Airsoft sales tanked! With the losses quite a few large (and especially small) retailers folded. With excess inventory retailers were reluctant to order with the uncertainty that the inventory would hold the necessary mark up in a competitive marketplace (especially online where pricing is so transparent. To assure the retailers and extend wholesale confidence distributors sell some items (especially lower turnover,riskier items) with a mandate that the item cannot be advertised below a Manufacturers Agreed Price. (Usually lower than the "Suggested Retail Price"). The retailer violating this agreement risks being cut off from the distributor. In our free market, capitalistic society this seems like price fixing (which it is) but without it even more retailers would fold, customer support and return policies would be non existent and inevitably pricing would ironically GO UP! (Less competition)
Much as I get frustrated by M.A.P pricing it is what it is and probably isn't going away.