One way of attracting consumers to buy a product online is by offering a price tag lower than its counterpart products with the same brand. This is often possible because you get your goods at a price way lower than the manufacturers’ retail price, and that you do not have much overhead expenses.
However, in some cases, you cannot perform such advertising practice if your products are made available in other countries.
It is a legal way to protect manufacturers
Many believe that we should protect manufacturers who sell their products online against small online resellers that could be selling the same products.
In the U.S., online businesses are required to comply with the minimum advertised pricing policy – a service provided by firms such as PriceManager – to protect manufacturers from online resellers advertising products at a much lower price.
Though the policy strictly requires online resellers to display ad prices not lower than manufacturers’ prices, there were some loopholes observed in the policy.
The policy was also meant for online resellers to compete with other resellers and not with the manufacturers who have set value for the products they sell.
Ways online resellers could advertise lower prices
The minimum advertised pricing policy only prevents online resellers to advertise product prices, but they could still sell products at lower prices.
In a physical novelty shop, for example, you cannot put a price tag to a branded stuff toy that is lower than the manufacturers’ suggested retail price, but you can lower the price before the final purchase.
The Federal Trade Commission finds it legal for online resellers to give “discounts” before product check out because they believe such practice is not “technically” advertising.
Although online resellers in the U.S. need to comply with price advertising policies, there are ways for them to lower their prices as long as they are not advertising it.