Grey market never offers black and white choices

Is the customer still the king? No doubt. The customer is, and should, always be the king, but this might not be the case in the grey markets where brand names are resold through unauthorised channels without established rules that assures the quality of the product and the rights of the consumer.

We can all recall dozens of stories where consumers were misled with wrong information regarding the products, their features or origin. It was not too long ago when an acquaintance of mine narrated his story of a salesman at one of the bazaars selling him a Huawei phone as a Swedish brand. I simply laughed.

Grey markets are common all over the world, but no one should estimate their volume due to the non-established rules that control such transactions. Also, grey markets affect all types of products, but they are more endemic in technology retail.

According to a IHS iSuppli study conducted in 2012, grey market shipments would amount to 189 million units, or 11 per cent, of the global cell phone shipments in 2013. If a small shop at a grey market can offer the same product at a more competitive price, then why would a consumer turn to a renowned retailer?

Obviously, price is the key driver in grey markets, but this is exactly the trap set for consumers. They might end up paying more, particularly when problems arise with certain items, such as consumer electronics. The importer is not able to provide the relevant service for the product and the local distributor will not accept these items. The customer runs the risk of losing the whole of the investment.

Products like smartphones, tablets, laptops or other technological gadgets are expensive and many would consider buying these an investment. Hence the importance of professional consumer service that values consumers’ investments and protects their rights.

For this particular reason, large authorised retail stores choose to invest more money to make the consumers’ experience more convenient and hassle-free. They employ and train staff to value the customer as ‘king’; they educate consumers and help pave the way for their decision on the product/service they want to buy. Not only that, large brand retailers continue to service consumers even after the purchase has been made.

For a more fulfilling experience, authorised retailers nowadays are becoming more like a learning hub and an experience, instead of just a trading store. Specialty retailers take full responsibility to educate the consumer about his/ her potential purchase. For instance, Emax Electronics will be introducing a series of consumer Buying Guides to assist customers with better purchase decisions and also providing detailed knowledge about the type of product they are looking to buy.

Authorised consumer electronic retail stores have also now developed areas like the tablet zone, the SLR zone, a 3D zone etc. clearly distinguishing between a generic outlet and a strong retailer.

It is clear that buyers need to make an informed decision from the beginning. If they are looking for long-term reliability and post-sale services following their investment, they need to balance the initial saving on the price of the item during their purchase with the risk of having nowhere to turn to in case the product malfunctions.

Added to that, the manufacturer prefers to have control over distribution channels as grey imports sometimes can damage their reputation in a roundabout way. The name of the brand and the lack of post-sale support may connect in the mind of a consumer who acquired the product in question through grey channels. Besides, manufacturers also need to protect their authorised dealers.

Manufacturers are not the only ones to suffer from the grey market; consumers, retailers and other technology end-users are also negatively affected. Many a time products are advertised as new and authentic when sometimes they are neither. However, these products cannot be confused with fakes or replicas of big brand names.

From a macro-perspective, the grey market affects the overall growth of the industry as it hinders sales from authorised channels. Healthy competition is, therefore, discouraged as inefficient informal players stay in business and prevent more productive, formal companies from gaining market share.

To sum up, don’t be fooled with the price trap and make your decision to buy products procured through authorised channels with a manufacturer’s warranty.

— The writer is the CEO of Emax Electronics.