In its second-largest acquisition, Amazon buys the company for $970 million.
Vendor Digital BrandWorks tracks violations of its pricing policies online.
Kitchen brand manufacturer Ronco Holdings Ltd. needed to get its brand image under control. With more than 50 online retailers underpricing its products in violation of its minimum advertised price, or MAP, policies, large retail chains were unwilling to carry its wares on their web sites, says Monika Monsisvais, national retail sales manager for Ronco. Big retailers often require that manufacturers’ products are priced consistently throughout the Internet so that they won’t lose sales to comparison shoppers who find the same products elsewhere at lower prices.
Once Ronco fixed the problem, though, it quickly scored online selling deals with retail chains Bed Bath & Beyond Inc., J.C. Penney Co. Inc. and Kohl’s Inc.—and as a result doubled its sales through online retail channels, Monsisvais says.
Ronco enlisted vendor Digital BrandWorks last year for help in policing its online MAP violators. Within four months, all the listings that violated the company’s price policies were taken care of, Monsisvais says. “We just don’t have the manpower or bandwidth to go after those violators directly ourselves,” she says, explaining that Ronco has only 20 corporate staffers in total. “Without [Digital BrandWorks], we’d be stuck in some sand.”
To find and monitor MAP violations among retail resellers, Digital BrandWorks uses software that trawls the web searching for all sales listings of select product SKUs, says CEO Jeff Mariola. It provides clients with lists of the violators as often as daily for their most important SKUs, he says. On an average day, he says the company finds three or four violators for any given SKU.
In the worst cases, that can be much more. One manufacturer, for instance, once had 185 resellers listing its products online, 45% of which were pricing below the MAP—and half of that 45% weren’t authorized to sell that manufacturer’s products in the first place, Mariola says. “That can happen if you’re not focused on it,” he says. Within about a month, Digital BrandWorks had gotten rid of 85% of those unauthorized listings, but, he cautions, “You have to look at it every day—if you don’t, by the end of the week you’re up to ‘X’ again.”
After giving a client the list of MAP violators, the vendor helps it to contact the reseller, or provides templates for suggested “cease and desist” letters that a client can send to violators directly. Ronco typically gives violators 30 days to adjust their pricing to match its policies, Monsisvais says. If they don’t, it stops selling them products. Digital BrandWorks also alerted Ronco to the fact that one of its two main distributors, which divvy up its products to other retailers, was not cooperating in enforcing its MAP policies—that is to say, the distributor kept selling to violators even when Ronco asked it not to. Ronco has since dropped the distributor, relying solely on the one distributor it can trust, Monsisvais says.
MAP police work isn’t the only service Digital BrandWorks offers. It also buys and resells products direct to consumers through its e-commerce site BuyHappier.com, and it will manage a brand manufacturer’s listings and advertising on e-marketplaces like Amazon.com Inc. or eBay Inc. Ronco employs the vendor for both of those additional services, Monsisvais says. “Handing all of that over to Digital BrandWorks opened up our sales team so we could venture out and work on the other ‘big boys’ like Bed, Bath & Beyond,” she says. The vendor also helps manufacturers to create and publish consistent product images, text and other content for online retail web sites, Mariola says.
For a mid-sized manufacturer, Digital BrandWorks can cost $3,000 per month, going up according to the number of services and product SKUs involved, with the final bill based on the total hours of work required, Mariola says. Ronco pays for all of its Digital BrandWorks services by selling its products to the vendor’s BuyHappier arm at a discounted rate, Monsisvais says.
BuyHappier follows all its manufacturers’ MAP policies, Mariola says. “We have to demonstrate that those strategies work,” he says. “And one way we do that is to take on the risk of the products and selling them that way on our e-commerce site.”
Additionally, Ronco regularly tests new Digital BrandWorks products, including an iPad app the vendor released recently that takes in a manufacturer’s historical sales data and creates charts to show which products have been selling best, and from where, she says. Her sales team uses the tool and the historical sales data to convince other retailers of why they should stock Ronco on their shelves, she says.