Who does the ‘Grey Market’ really hurt?

2008-08-29T15:02:13.065-07:00

First we need to look at the definition of Grey Market: http://en.wikipedia.org/wiki/Grey_market Now that we know all of the details of Grey marketing, let’s start.

If all is fair in business as long you don’t break a law, then Grey market products don’t hurt anyone. Everybody wins! The dealer gets a better margin, the frugal consumer gets lower than ‘street’ price, even the OEM (Original Equipment Manufacturer) wins because their product was sold in the first place. What’s better, the regional authorized distributor (many times the OEM subsidiary) is blissfully unaware that the sale even happened! What can go wrong with this sweet deal? A few things at least…Buyer Beware!

In today’s world of cutting edge digital imaging technology, many products share resources, connectivity and interaction. Because of this a myriad of issues regarding technical support and compatibility come into play regularly. Many times these issues require manufacturer authorized support. What if just a few months after purchase the product fails to operate or begins to function incorrectly? Once again, requires authorized support for warranty repair or technical support.

What is authorized support? Services that the authorized distributor has the internal resources for or has contracted out to an independent service center that then is designated ‘Authorized’. Authorized support can mean registering at the OEM website for firmware upgrades and/or voice technical support all the way to repair of the product even for a known production defect. This in essence is the entire ‘Authorized’ product: Camera/Device, advertisement, packaging, accessories, warranty, technical information & support.

Once the ‘authorized’ part is bypassed (Grey market sale) the rules change for everyone; some OEM subsidiaries refuse all forms of support, others offer limited service, others offer all services no matter what. In any case it’s the OEM’s prerogative as to what its rules are individually and Internet sales with cheap international parcel costs exacerbate the situation. Most consumers and Grey market dealers assume that a proof of purchase less than one year old will suffice for warranty claims. Not necessarily so. What if the receipt is from a Pay Pal account that does not list the store? What if the proof of purchase is from an online retailer and the warranty card is in German? If we as an ‘Authorized’ service provider try to register a claim for warranty repair service for a ‘Grey’ product, chances are we won’t get paid for labor or reimbursed for the parts cost (which can be significant). That’s why we scrutinize for ‘Grey’ products at such a high level every time we receive a warranty submission.

Recently, some Grey market retailers have posted notices on their websites that proclaim their ‘Grey’ warranty statement. These take responsibility for the quality of the product and will replace the item for the customer. This is a good first step, take responsibility for the product and explain to the consumer what their limitations are. Unfortunately most other Grey market sellers are purposefully exploiting a hole in free market capitalism. Because as always, there is a segment of the American consuming public that requires the lowest price no matter what. I think that it’s time for that particular American consumer to realize that what they bought for the ‘lower that street’ price is not really the same product, period.

So who does Grey Market really hurt? No one, as long as the dealer and the consumer’s eyes are open and they have realistic expectations as to what that ‘’Below Street Price’ purchased.

C.R.I.S.

Who does the ‘Grey Market’ really hurt?