A grey market is when a product is being sold without being brand approved.
These products can damage the relationship between retailers and the reputation of the product. It’s very common with goods such as cameras, watches or even beauty products for example.
There are many ways to limit the damage to grey items that a brand can adopt. But first, let’s see what a grey market is, its consequences and how to get protected against it.
What is the grey market and how does it appear?
The grey market is a collective system that corresponds to products that escape the conventional distribution channels of a brand. These products are not counterfeit, they are just distributed without the agreement of the brand. It can be cheaper or inferior to products purchased through official sales channels and is often characterized by old products and sub-stocks, the latter offering consumers products at attractive prices, but whose quality is not up to the standards of the brands present on the market.
Generally, grey market products are distributed illegally, as warranties, renewals or other support are usually not available for grey market products, which is very advantageous for the retailer and they are usually sold on marketplaces such as Amazon or Ebay for example.
What are the negative consequences of the grey market?
Some markets are more victims of the grey market than others. Indeed, among the latter, perfumery and cosmetics are regularly victims of this parallel market and the brands are paying the price because it results to:
- The lack of control over the use of its products on the market.
- The lack of brand identification by consumers
- Inconsistent sales policies and declining profitability
- Degradation of brand image
How to protect your brand against grey markets?
There are several ways to stop grey market sellers but first of all:
You should know who sold your products by taking into account marketplaces, distributors etc..
And a price monitoring software and a MAP tracking software will help you to detect where exactly your products are sold and if the retailers in question are working with you. Also detect the sellers who sell below your PPC.
And finally check the Inventory available in all sales channels. By analyzing the inventory in the sales channel through Netrivals’ Sales Channel Stock Analysis you can see if the distributor’s sales match the inventory. If not, there may be another.