IMAGINE JEFF BUYS A GIANT BOX OF HERSHEY CHOCOLATE BARS AT A LIQUIDATION SALE.
Maybe a local mom-and-pop convenience store is going out of business. Jeff grabs the box, along with some deeply discounted toiletries and nonperishables, and heads home.
The box of chocolates sits in Jeff’s car for a couple of days in the middle of summer, melting in the sweltering heat and then reforming in the cool of the night. Finally, Jeff, the hungry bargain buyer, brings the box inside and realizes purchasing 35 chocolate bars for personal consumption might not have been a great idea. But what does seem like a great idea is tossing them up on his Amazon account, “chocolateforever35,” to make a quick few extra dollars.
What happens next?
When sellers like chocolateforever35 list Hershey bars on an eCommerce site like Amazon, the listing is placed right alongside the genuine, quality-controlled Hershey bars being sold directly by Hershey. Then, when you hop on Amazon to satisfy your chocolate craving, you might grab one of chocolateforever35’s Hershey bars because they are listed at a lower price than the genuine item listed by a legitimate Hershey seller. When your order arrives on your doorstep and you unwrap that chocolate bar to take a big bite, you quickly realize the integrity of that chocolate bar has been compromised. It looks like the hot mess that it is.
But you don’t know where it came from, so who are you going to be mad at? Jeff? No. You can’t be. You don’t know him or where he lives. Instead, you direct your anger and frustration at Hershey.
Gray Market vs. Black Market
By listing those chocolate bars online, Jeff the thrifty shopper becomes chocolateforever35, the illegitimate, unauthorized seller, who—perhaps even unknowingly— is participating in the gray market. Unlike the black market, which relies on the sale of counterfeit products, the gray market moves legitimate (although sometimes compromised) products through the eCommerce world.
If you buy a Prada purse and realize it’s fake, that’s the black market.
If you buy what turns out to be a genuine Prada bag from an unknown seller for half the price, that’s the gray market.
Where Gray Market Product Comes From
Whether it’s a compromised bar of chocolate or deeply discounted designer handbag, gray market product can find its way onto sites like eBay and Amazon through a variety of channels including:
o Liquidation of a business
o Product overstock
o Stolen goods
o Display models of product
o Product purchase from discount stores
o Purchases made in bulk
All of these methods allow rogue, unauthorized, and illegitimate sellers to acquire products for little to no cost, enabling them to list the product online at a price lower than the retailer and still make a profit.
How the Gray Market Damages Brands
Buying that lower-priced product might be appealing to you as a consumer, but if you also live in the world of sales and branding, the gray market is bad news. Gray market sales can trigger dishonest marketplace pricing, perpetuating mixed messaging on the established price point of a product and damaging a brand’s reputation with other retailers. A brand’s reputation is king.
When a consumer receives a subpar product and leaves a bad review on Amazon, that sale damages the brand’s reputation and dilutes the value of that product.
In addition to compromising both product integrity and brand reputation, rogue sellers have the power to cheat brands out of major product launches and exclusive sales campaigns. By obtaining a product that hasn’t yet been officially placed on the market, thereby beating the brand to the finish line, illegitimate sellers are sabotaging launches and stealing sales.
When a consumer receives a subpar product and leaves a bad review on Amazon, that sale damages the brand’s reputation and dilutes the value of that product.
How You Can Fight the Gray Market
These are just a few of the ways rogue sellers can infiltrate the gray market, undermine brands, and steal product sales. The good news is, this seemingly unwinnable battle can be fought – and won! You can take several steps toward identifying these sellers and getting them removed from your eCommerce listings. Download our free eBook to learn how you can start fighting the gray market today.
Gray Falkon is the sharpest weapon you can yield in the fight against the gray market. Contact us today to find out how we can win this war together.
About the Author
Gray Falkon CEO Trajan Bayly is the author of this blog post. If you are interested in learning more about him and the Gray Falkon team visit their About Us page here.