How can manufacturers fight dumping of their goods in retail chains?

“Stable pricing is the foundation of brand trust and the key to long-term success.”

— Warren Buffett

According to statistical data, around 20% of retailers regularly violate the supplier’s pricing recommendations, reducing product prices by 1-15%. This is due to fierce competition in eCommerce, where stores attempt to attract customers by offering the lowest prices.

Content List

• How Do Suppliers Combat Price Dumping?
• Automated Monitoring: Necessity or Trend?
• Why Preventing Price Dumping Benefits Everyone
• Conclusion

While this strategy may provide short-term benefits for retailers, it leads to decreased profit margins and disrupts price stability. Price dumping spreads like a domino effect: if one store lowers its price, others quickly follow suit. As a result, recommended retail positioning (RRP) is undermined, and suppliers lose control over the pricing of their products.

How Do Suppliers Combat Price Dumping?

One of the most effective ways to counteract pricing chaos is through continuous retail price monitoring. The faster a vendor identifies the first violator, the easier it is to stabilize prices. However, if this moment is missed, price dumping becomes widespread, making it nearly impossible to track down the initial offender.

Daily Monitoring Strategy

Manufacturers using manual tracking often follow this algorithm:

• Morning: Sending the latest recommended pricing policy to online retailers.
• Midday: Checking retail prices for compliance with recommended pricing.
• Late afternoon: Identifying violators and sending them notifications requesting price adjustments.
• End of the day: Conducting a repeat price monitoring session. If violations persist, further warnings or sanctions are applied.

If a retailer consistently ignores requests, the supplier may impose penalties such as revoking bonuses, increasing minimum order requirements, or even terminating cooperation.

Automated Monitoring: Necessity or Trend?

For small suppliers with a limited number of retailers, manual monitoring can be effective. However, for major brands with widespread online distribution, this approach becomes too labor-intensive. In the fast-growing eCommerce sector, automating retail price tracking is no longer just a convenience—it is a necessity.

Potential Solutions

To effectively manage their pricing strategies, vendors can choose from three approaches:

• Purchasing ready-made reports. Data is received with a delay, reducing the ability to respond quickly to price violations.
• Developing proprietary software. Allows for full control over price monitoring, but requires significant time and financial investment.
• Using existing solutions. A fast and practical way to implement automated monitoring without the need for extensive customization.

Benefits of Automated RRP Monitoring

Unlike manual tracking, automated solutions offer:

• 80% reduction in labor costs.
• Instant detection of pricing violations and automatic notifications to retailers.
• High accuracy of data collection (with only a 2% margin of error).

Why Preventing Price Dumping Benefits Everyone

Ensuring pricing stability benefits not only suppliers but also retailers. Vendors protect their brand value, while sellers maintain their profit margins. When all market participants adhere to recommended pricing strategies, everyone benefits:

• Customers enjoy stable prices and confidence in product quality.
• Retailers secure predictable profits and avoid destructive price wars.
• Suppliers maintain steady demand and gain the ability to plan long-term sales.

Conclusion

The eCommerce sector continues to evolve rapidly, and the amount of data requiring oversight is constantly increasing. Businesses that fail to implement automated price monitoring systems lose their competitive edge. This is why companies aiming to sustain strong market positions are investing in digital solutions that enable them to effectively manage their pricing strategies.