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Spyderco MAP Prices: What Do Knife Dealers Think?

November 10, 2015

Yesterday, Spyderco announced that it will start drawing the line on prices by enforcing Minimum Advertised Pricing (MAP) with retailers of its products. The measure would require retailers to sell Spyderco products for no less than 40% off its Manufacturer Suggested Retail Price (MSRP). The new policy takes effect starting in 2016.

The move is controversial and the reaction from Spyderco’s customers on the forums, and in social media has turned into a contentious debate between those who believe the new policy is a good thing for the knife community and others who don’t want to see any changes. But what do the people who must adhere to Spyderco’s new policy think?

“Good advice can save you money because you’re not ending up with a product that doesn’t meet your needs”

We asked Jon Blumenfeld, President of HL Dalis, a company that has been distributing a wide variety of products since 1925 for his reaction to Spyderco’s announcement. Blumenfeld who works with both manufacturers and retailers, contends that the move is required because not all retailers are created equal. “MAP pricing is necessary to protect certain retailers from what I like to call ‘garage dealers’ who operate with very little overhead, add no value, and undercut the dealers who are creating all the buzz,” says Blumenfeld.

“In effect, you have dealers that do the videos, take the pictures, write the blogs, mind the databases and spend time distributing all of that information to the benefit of consumers. Good advice can save you money because you’re not ending up with a product that doesn’t meet your needs,” he points out.

Blumenfeld presents an analogy that parallels what he believes has been taking place in the knife industry: “If you call a reputable electrician and ask him to tell you what’s wrong with your house – it’s not fair to then call the world’s cheapest electrician to get the work done once you have already benefited from the expert’s advice.”

The Federal Trade Commission, in a 2007 Supreme Court case also brought attention to the problems caused by manufacturers who don’t adopt MAP pricing policies: “discounting retailers can free ride on retailers who furnish services and then capture some of the increased demand those services generate.”

In Spyderco’s case, Blumenfeld is supportive of MAP. “Moderate MAP pricing is reasonable so long as the knife is worth the MAP price. Spyderco has set its MAP pricing at a reasonable level because the core of Spyderco’s products are worth the MAP price,” Blumenfeld concludes.

“This is great news for legitimate knife dealers.”

KnifeCenter is one of the online dealers who has invested significant resources in keeping consumers informed via their website, blog, YouTube Channel and various other social media accounts. We asked KnifeCenter’s Founder and Owner, Howard Korn for his reaction to Spyderco’s announcement:

“This is great news for legitimate knife dealers. No longer will Amazon be able to undercut prices and drive the value down for these great products,” Korn says. “Amazon is hardly a good actor in the marketplace. They repeatedly steal images from KnifeCenter.com and other hard working dealers then undercut prices because they are not driven by immediate profits”, adds Korn.

Jeff Bezos, Amazon Founder & CEO once said that “percentage margins are not one of the things we are seeking to optimize”. Amazon is able to resell products often below cost because it can sell additional services like product and text advertising and Amazon Prime subscriptions and credit card offers to consumers drawn in by its rock bottom prices. Spyderco’s announcement will cause Amazon to have to raise its prices on certain models which can sell by as much as 53% off the MSRP.

“They just want to own the marketplace and they will not succeed as long as companies establish and police MAP policies,” Korn continues. “We salute Spyderco for finally seeing the light on this and hope they adequately police it. The industry will be watching.”

“We’re sure they’ve heavily weighed both sides”

We asked other reputable dealers for their reactions to Spyderco’s announcement. GPKnives‘ Jamie Quinn believes it was a difficult decision but trusts that Spyderco has arrived at the right policy. “We recognize there are positives and negatives when a company decides to implement a MAP pricing policy. Spyderco has been a long time industry contender and contributor and we’re sure they’ve heavily weighed both sides in an attempt to do what they feel is right for their brand and supporters,” says Quinn.

“Our relationship to Spyderco is symbiotic”

Cutlery Shoppe‘s Jeff Loffer, while supportive of Spyderco, has mixed feelings about the new policy. “My basic philosophy, be it knives, or anything else is this: I believe in a free and open market, made up of willing buyers and sellers,” says Loffer. “While I’m convinced the market is always ‘right’ and I am less concerned with inefficient dealers, [Cutlery Shoppe] is compelled to comply with the MAP policies our manufacturers put into place. I feel it’s in the best interest of Cutlery Shoppe and ultimately our customers that we retain our valuable manufacturer relationships,” he says. “Regarding the upcoming Spyderco MAP policy specifically, we will be doing our part to comply. Our relationship to Spyderco is symbiotic, and as an ardent fan of the knives and the brand, I could not consider acting otherwise,” says Loffer.

“It is a small step. The next step is enforcing their pricing. We shall see.”

KnivesShipFree Owner, Derrick Bohn highlights another issue confronting the knife industry – the large gap between MSRP and actual prices in the market. “The problem with establishing a retail price at one level and having a MAP price at 40% off is that the retail price is completely meaningless. It is a small step. The next step is enforcing their pricing. We shall see,” says Bohn.

Spyderco will have its hands full trying to enforce its new policy. For MAP to be effective manufacturers must relentlessly monitor retail prices and punish offenders who are also the intermediate customers, neither of which will be easy. And Spyderco might not be able to count on Amazon for help disciplining third party sellers. “Amazon takes a percentage of third party sales within their marketplace .. Amazon is extremely hesitant to enforce seller pricing agreements and risk losing revenue,” says one expert.

In their announcement, Spyderco calls their new policy “a work in progress”, and says they would apply their “Constant Quality Improvement philosophy” to the measures over the coming months. In addition to keeping close watch on the effects of the new policy, Spyderco also promises that they won’t be increasing their prices to retailers and distributors on nearly all of their 2016 product line-up.

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