Grey markets – also known as parallel markets, refers to the process of selling goods through non-authorised channels. Although grey markets, unlike their darker counterparts black markets, are legal in theory they cause a great deal of concern for both customers and suppliers because of the association with criminal actives.
Customers of grey market products are willing to take these risks as they believe they are getting the same product for a cheaper price, which is not often the case. Grey market products often compromise in some way, be it power, storage or speed.
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Customers should consider the following risks before purchasing from the grey market.
1. A front for selling counterfeits
Customers of grey market products often experience low-quality, performance issues or costly downtimes due to being sold counterfeit devices. When users experience such major performance issues the appeal of this cheaper device is long forgotten.
2. Software licences can render invalid
The software included on grey market products is unlikely to include a valid license for those essential business applications. In order to seek a cheaper option to ensure their devices are stocked with the latest software, users may go onto downloading the software illegally – risking themselves to legal actions.
3. Exposure to criminal activities
As grey market devices do not follow the correct supply chain path they are often are linked with more serious crimes such as fraud and stolen goods. Purchasing stolen goods helps the illegal market grow. So in order to put a stop to theft, customers of grey market devices are recommended to do a full audit trial on these items, identifying their origin.
4. Invalid warranty claims
Many grey market products won’t be covered under the original vendors warranty, so fixing any problems with a grey market product may cause more than a headache for customers. Warranty claims can be easily identified by the items serial number. Find this then ring the vendor to see if the item is under warranty.
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The grey market isn’t going anywhere anytime soon, in fact it is seeing a year-on-year growth, with the IT sector seeing sales over £16 billion last year. Despite its growth, there is very little advice on how to manage sales due to the lack of visibility of how these products travel and they are often miss-labelled as black market devices (a different kettle of fish all together).
Although purchasing from the grey market can put customers at risk, it is suppliers that feel the real pinch. Grey markets allow products that were not intended to be sold within the UK market to be sold, meaning suppliers are unable to keep track of sales or distribution channels. This lack of visibility causes eroding margins, lost sales opportunities, damaged reputations and strained relationships.
By purchasing through the authorised channels customers are not only protecting themselves they are also protecting the volatile IT supply chain. If customers do think they have been sold items from the grey market they are urged to check the serial number and call the relevant vendor.
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