Grey Market Merchandise; It’s Legal, And It May Cost Less, But Is It The Right Choice For You?

Grey market goods are products that were manufactured to be sold outside the US but, because of pricing inconsistencies, made their way to our shores to compete with merchandise that was localized for our market.

Ah, the lure of the bargain. Everyone wants to get the most for their money, and some folks are willing to take significant risks to stretch their budget. That’s why so-called “grey market” merchandise has dug a formidable niche in the marketplace—it’s often cheaper than the genuine article. But in the final analysis, that’s about the only advantage it delivers.

Grey market goods are products that were manufactured to be sold outside the US but, because of pricing inconsistencies, made their way to our shores to compete with merchandise that was localized for our market. The term has become a nasty word, and retailers often substitute the euphemism “imported” in its place. It’s the bane of legitimate distributors who often cannot match the price and still manage to provide warranty service, technical support, and retailer training. Derived from the term black market, grey market is not illegal per se unless some other law (trademark infringement, for example) is violated in the transaction. It exists because prices vary widely around the world, partially due to currency fluctuations and partly because of prevailing economic conditions. We see less of it during times like these, when the American dollar is weak against other world currencies. But it still exists in many product categories.

If you buy grey market you may get a lower price. But here’s what you may not get:
Manufacturer’s warranty. True, the retailer may offer a store warranty, but it’s not quite the same. All electronic products experience what’s known in the trade as “parts modifications.” A product that is manufactured toward the end of the cycle will always contain at least a few internal parts that are different from the original. The change generally occurs for quality purposes. Always stick with factory authorized service and you’ll always have access to the invisible upgrades and latest improvements. Besides, digital cameras change so fast and so often that it’s virtually impossible for anyone except authorized service centers to keep up with repair techniques, tools, and other service essentials.

Latest U.S.A. documentation and English-language software.

Digital cameras that are built for the American market often include multi-language Owners Manuals and software applications. Some are “EFIGS,” or English, French, Italian, German, and Spanish. But many products that were intended for overseas consumption do not include American English documents. This can be especially pesky where software is concerned.

FCC approval. Strictly speaking, digital camera makers are not required to obtain FCC approval for cameras sold in Europe. The EU has its own regulating body (the European Commission) but regulated electronic products that have only EC approval and do not have an FCC approval label cannot legally be imported to the US.

The right plug. You’ll find the same electrical plug on AC adapters made for the American and Japanese markets, but elsewhere in the world you may encounter different apparatus. Voltage differs, too, and that can be a serious problem. So if you are buying something that plugs into the wall, make sure it’s 120v, 60 cycles, and has UL approval.

Technical support from the authorized importer. More and more distributors are refusing to provide tech support for grey goods. You really can’t blame them, since they do not derive any revenue from the importation and sale of grey merchandise.

Same name. We all know the difference between an IXUS and an Elph, or Maxxum and Dynax. Model names are frequently localized to appeal to a specific market. It’s not a big deal—more a matter of personal taste. If you don’t mind your Canon Digital Rebel wearing a badge that reads “Kiss,” the Japanese domestic model name, so be it. Colors and other cosmetics can differ, too.

The genuine article. Certainly not all, but some grey goods are counterfeit. There have been numerous cases of lithium ion batteries that were labeled to look like the real McCoy but were, in fact, fakes. Canon and others have reported that consumers have had their cameras damaged by phony batteries.

Why do some retailers–including some very large, reputable stores–sell grey market? Because consumers ask for lower prices, and many retail customers are willing to take a risk to save a few bucks.

“Anytime products are purchased outside the authorized distribution channel, there is risk that the customer is buying counterfeit or substandard products, including products that may have been altered in some way, or used products represented as new,” says Lily Mei, executive director for AGMA. This organization, the Alliance for Gray Market and Counterfeit Abatement, claims some big names among its members, including Microsoft, Kingston, Dolby, NEC, Seagate, and Sun Microsystems.

“From the consumer side,” Mei warns, “awareness is important and here are some tips. The consumer should ask questions and confirm, in writing, if the product comes with a US warranty from the manufacturer. If possible, get the serial number of the product you will be buying, and check it with the manufacturer. Once the product arrives check it carefully. Boxes that are unmarked, poorly printed, show multiple postage and labeling or previously have been opened may be signs that the product inside was purchased on the grey market. So are manuals that are photocopied or in a foreign language. Make sure the product comes with all the normal accessories and has a valid serial number.”

Then, if it’s so questionable, why do some retailers—including some very large, reputable stores—sell grey market? Because consumers ask for lower prices, and many retail customers are willing to take a risk to save a few bucks. Stores supply it because consumers demand it. If you’re buying an item that is essentially maintenance free and requires no tech support—a zoom lens for example—you may save by buying grey. Carefully consider all of the ramifications before you buy and always remember that the best value isn’t always the lowest price.

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