Unauthorized sales continue to raise costs and damage brand reputation
The “gray market” refers to an alternative channel through which branded products are diverted from authorized sales channels into the hands of dealers, brokers or the open market. Gray market vendors may be unauthorized to sell those items, or may not have permission to offer products in a specific country or region.
This unauthorized activity has long been a problem for OEMs, which can lose significant revenue and margin from price erosion, as well as improper sales and marketing discounts and potential brand reputation risk. Further costs include handling end-customer issues caused by inadequate customer service, product handling and installation, and a lack of warranty coverage (which manufacturers often provide, at no cost, to maintain customer relationships).