Ways to End Gray Market Sales & Its Effect

In today’s fast evolving global economy, gray market diversion is gradually becoming an acute concern that most brands encounter. Unlike black market practices, were refurbished, counterfeit or stolen products are sold as authentic brand products, gray market activities involve unauthorized movement of commerce across multiple territories by fake distributors and channel partners.

More commonly termed as “parallel importing” or “product diversion” gray market activities can be considered as a fraudulent medium of inflating profits for participating distributors, simultaneously bringing down the brand owner’s revenue. It has been observed that gray marketers tend to capitalize on lower manufacturing expenses, surplus inventory, economic conditions, fluctuating distribution expenses and currency exchange rates by exporting products without the approval of the original brand owners.

The gray marketers undercut the prices of authentic domestic distributors by selling the products at reduced prices. This results in them attaining higher or similar profits that results from the lower procuring cost from the originating countries. Gray market product diversion can occur through multiple resellers and brokers, who look for lesser product prices round the globe. The ultimate impact of gray market sales is twofold.

• The local distributors are compelled to compete with the price reductions those results from the gray market activities, resulting in critical conflict and supply chain demand concerns within the approved sales channels.
• The product revenue streams for brand owners gradually become unbalanced, resulting in inflated sales metrics in certain regions, simultaneously incurring minimized revenues in other regions

However, today there are innovative solutions to combat gray market sales and the product counterfeiting that takes place in these markets. Solution providers have introduced advanced anti-counterfeiting solutions that offer brand protection and helps in counterfeit detection. It operates in the following way:

Apart from proactively searching the internet on an everyday basis for counterfeits, the solution also applies human intelligence to ensure complete data integrity

• The solutions help companies to significantly reduce the amount of fake goods circulated in the market by recognizing the networks and syndicates high volume counterfeits

Going by its very nature, gray market practices disturbs the invisible competition present in a particular sales territory by attracting the consumers and purchasers away from the authentic channels. It also sets up a false but increased demand for products that are imported by unauthentic means and offered at discounted price. With high-end brand protection and anti-counterfeiting solutions today companies can implement enforcement efforts in the apt places and minimize the percentage of counterfeits prevalent in the market.