We all want to buy and sell goods and services in the most optimal fashion possible. As customers, we look for the best deals and the lowest sales prices. As sellers, we want the inverse – best offers from buyers and the lowest expenses to go with them.
But there are times when some deals can ultimately cost us more in the long run. The grey market is one such realm: this is where supposedly great bargains can harm businesses, involve stolen property, lead to fraud, and more.
Normally, legitimate purchases are knowingly provided by manufacturers and sellers. These “white market” products are licensed, legally approved, and monitored for taxation and consumer protection. Meanwhile, the black market involves illegal commodities such as stolen artwork, drugs, weapons, and exotic or endangered animals. These are smuggled into a country and sold well outside government oversight, let alone approval.
As the name suggests, grey market goods fall between the two extremes. They are genuine products, but sales occur outside the usual supply chain and are not licensed or approved by manufacturers or distributors. Physical objects are just one aspect: digital products including media and software are also part of the trade.
Despite its unethical nature, the grey market still holds appeal to prospective buyers and sellers alike for several reasons:
● Lower prices are the main appeal for many. The products are outside normal distribution channels, so the seller can offer them at a discount. Sometimes, buyers also avoid taxes or other fees applied to official sales.
● Various regionally locked items, such as electronics, video games, and digital media, often see high appeal in the grey market. Here, they are unofficially available for a prospective buyer or, in some cases (such as DVD players or game consoles), are modified to accept region-locked media.
● Favored products can be hard to find, especially with ongoing supply chain issues, or when goods are in high demand like during the holidays or initial sales. To get around such limited availability, deal-seekers may turn to the grey market.
At first blush, grey market goods seem like a great deal, but you should avoid them despite the temptation; they can cost you more than you bargained for. Consumers cannot claim warranties on these purchases and have no recourse if they break or fail to work. Some items are even previously used or of poor quality, despite being claimed as brand-new. This trade also undercuts official prices, leading to lower sales. All of these issues can harm public trust in a company and its products.
Criminal charges or business penalties are other significant risks. Those involved may lose authorization for official sales from the product vendor or be permanently banned from any future purchases. The goods may come from theft – sometimes from leaks in the very supply chains that are offering limited white market goods – further damaging a company or brand’s reputation while implicating a buyer in the crime of receiving stolen property. And no regulation or oversight means risk of identity theft or fraud if a customer provides credit or banking data or other sensitive information to a shady seller.
Fortunately, there are plenty of ways to stay safe and avoid the dangers of the grey market.
Know the Local Pricing
If your hardware configuration is being offered at pricing significantly below other re-sellers, ask for a detailed listing and price breakdown of all components for the project configuration.
Request Serial Numbers
Warranty claims can be easily identified by the item’s serial number. Contact the product manufacturer to see if the item is under warranty.
Report Suspicious Dealers
We need to ensure grey market sellers are exposed and that others are warned about these bad faith dealers. No one wants to be a victim of fraud.
Request Software License Numbers and Certificates
Valid software licenses must be registered and activated. Contact the software manufacturer to see if the license is valid and get written confirmation from the seller that all items are new and sourced through authorized methods, and fully covered by the manufacturer.
Know Your Supplier
Developing a trusted relationship with an authorized re-seller partner will not only ensure that you’re always delivered genuine products sourced through authorized purchasing channels. You also gain additional value via access to their certified expert sales and technical resources, special pricing, and access to new and upcoming technologies.
Don’t have a relationship in place with a trusted authorized re-seller? When obtaining quotes or going to RFP, ask sellers for proof of certification or authorization to sell the product AND the contact information of their authorized distribution sources.
PC Corp has teams solely focused on IT Procurement of hardware, software, and infrastructure. We only partner with well-known premier manufacturers and distributors and have strong supply-chain relationships developed over 40+ years in IT. Please do not hesitate to ask us about how our Procurement know how can benefit your business.
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