Case Study. Combating Price Dumping: An Effective Tool for Expanding the Partner Network
The client is one of the largest European manufacturers of water heating equipment. Product distribution is carried out through a network of importers. The company’s products are available both in offline stores specializing in home and garden equipment and in over 600 Ukrainian online stores.
Long before partnering with the Price Control service, the company used the services of another Ukrainian provider for online price monitoring. However, the challenges faced by the client remained unresolved.
PROBLEM
Price Dumping Online
Price Dumping Damages Brand Reputation
- The majority of online stores are setting price dumping practices. This has led to a decline in interest in the Client’s brand in offline stores, with widespread violations of the company’s trademark rights.
- Retail prices in some online stores have dropped to the wholesale cost of the product supplied to importers. Online stores regularly monitor competitor prices and adjust their own accordingly.
- Among sellers, a belief has taken root that earning profits with this brand is impossible, and the company appears to have distanced itself from addressing the issue.
Problem #2
Large Online Stores Refuse to Work with the Client’s Products
Importers have focused on cooperating with a small number of metropolitan wholesalers who supply products to price-dumping online stores.
These wholesalers have grown increasingly bold, demanding continuous price reductions from importers, effectively blackmailing them by threatening to switch suppliers.
SOLUTION
Daily Price Monitoring in Online Stores Selling the Client’s Products
- Regular monitoring of online stores selling the Client’s branded products has been launched.
- New rules for importers were introduced, imposing significant fines for cooperating with price-dumping sellers.
- A meeting with importers was held, resulting in an agreement for their managers to support the service’s anti-dumping activities.
- The Anti-Dumping service was activated.
- Automatic violation notifications are now sent to all price-dumping online stores.
- Automated robocall notifications were implemented.
- The Price Control project manager personally contacted responsible representatives of platforms violating trading rules.
- Test purchases were initiated for stores refusing to disclose their suppliers. Importers supplying products to these stores were penalized with fines.
- A continuous search for the brand’s online presence is conducted, adding all new online stores selling the Client’s products to the price monitoring system.
- All trading platforms in Ukraine were included in the price parsing process.
RESULT
Price Dumping Reduced to 15%
- At the start of the project in October 2018, price monitoring data revealed that over 70% of online stores were violating the MAP pricing policy.
- By October 2019, fewer than 15% of online stores were engaging in price dumping.
- Over the past year, the number of online stores selling the Client’s brand doubled. Positive results were achieved through pre-litigation trademark protection procedures.
- The project is ongoing. Regular price monitoring for competitor brands has begun, while continuous efforts to identify the Client’s brand presence online ensure that new stores are brought under price control.
Key Achievements:
- During the collaboration with Price Control, the Client doubled their partner network.
- Online stores have become more responsive to requests to adhere to the company’s commercial policies.
- The brand’s reputation improved significantly, and the manufacturer established itself as a supplier that protects the earnings and stable operations of its business partners.
The partnership continues, as only a systematic approach can effectively address the challenge of price dumping.
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