What Makes A Product 'Grey Market'? Is It Wrong To Buy Or Sell Such Products?

I hear people refer to 'grey market' typically negatively but not sure what that means. Any help?


Quick answer

Black Market = illegal buying and selling, e.g. rhinoceros horns

Grey Market = unauthorized* buying and selling, e.g. Avigilon cameras on the web

*by manufacturer

To expand on what Undisclosed #2 stated, "grey market" usually refer to products that are sold outside of the product manufacturer's authorized sales channel. For example, a manufacturer may require that their dealers sell only to end-users in a specific geographical territory. If the dealer sold products online or outside of their designated territory, that would be considered a "grey market" sale.

The risk to the purchaser of a grey market product is that the manufacturer may refuse to support products on purchases that occurred outside of regular channels. The risk to the seller of grey market products is that they may lose their authorized dealer status if a manufacturer discovers that grey market sales are being made.

In reality, I have found that most reputable manufacturers will cut an end-user a break on support if a grey market product was unknowing purchased. They would rather ignore the policy violation than have an unhappy end-user bad-mouthing their product. On the dealer side, I suspect that some manufacturers turn a blind-eye to grey market sales because they would rather enjoy the sales volume than enforce their own rules.

100%..... An example we had a customer who was looking for a new camera system 100-150 cameras. The owner said they had a friend that did CCTV. So they went with the friend who subbed the work to someone else who ordered all gray market Dahua product. They have nothing but issues and can't get any firmware updates. I spoke with Dahua at ISC to see if they could help and they said sorry there is nothing they can would do to help. The customer has a system that they can't update or get support for anything.

They have nothing but issues and can't get any firmware updates... The customer has a system that they can't update or get support for anything.

Mike, didn’t you replace that system a couple years ago?

I agree with your statement Michael. With what U2 stated the exact same happens with online retailers. For instance B & H Photo is not an authorized distributor of Axis cameras yet they still sell them at very low prices. They buy the cameras through national distributors but yet nothing typically happens to the distributor that sells the cameras to B & H Photo. So in essence this is very similar to and authorized dealer selling out of market with a grey sale. You try and tell the customer that the manufacturer doesn't have to cover the warranty of the products they purchase this way but that doesn't always matter. If they are buying 100 cameras and the average camera is $300 MSRP and they have 2 failures over the course of 3 years warranty coverage doesn't really matter at that point. They will just buy replacement cameras.

Of course that is when as an Integrator you sell your company and the benefits of the services you provide and explain as to why your price is higher. Nothing worse than walking, designing and bidding a large system and the customer comes back and says I can get these online for $15 less per camera even though you come in at a great margin with a manufacturer discount. Sure you can discount more but at some point you can't.

We lost one like this a while back with a customer even though we walked them through the entire scenario, helping them tweak their design and coming in under their budget. As a public educational purchasing department they will say if we can get the cameras less expensive somewhere else then we have to go with the cheaper price. Cheaper is right as the online retailer sure as heck won't come out and spend time making sure the system is what they want. For the first meeting I actually went down on my scheduled day off to make sure we were making headway on getting the system put together. Moral of this story is charge for consulting and design service up front.

Grey market is when an OEM gets a steep discount from "normal channel price" for integration purposes. The agreement between the OEM and the manufacturer is the products are not sold in a way that would disrupt the channel. Manufacturer of the subject product has done much to build a healthy channel at a healthy margin and wishes to protect their investment. Warranty is typically to the OEM only and cant be returned in the same way the channel product is. There mat be difference in the label or firmware but the product is quite likely identical. Most grey market product ships from China where these agreements are routinely broken. China like to use the term "soft bundle" as a way to get around the agreement. Hard bundle means product must be integrated before OEM ships it anyway (except for their CM). Soft bundle allows for the product to be exported for the purposes of being sold as a complete kit even though not fully integrated. US manufactures should not allow soft bundle if they wish to stop this.

Argument for buying grey market:

Cheap price

Arguments against

You likely will not have best in class warranty

Local support (FAE etc) will be denied

Your reputation with the manufacturer

Another risk of Grey Market product can be interference with other devices or nearby equipment. For example, a product intended for sale in China only may not meet US FCC specs and emit various electrical or RF noise that interferes with wifi, AM/FM radio, etc.

In other cases, if something was intended to be sold in countries with 50hz power, running on a 60hz power supply can cause issues with things related to timing and synchronization. This would more typically affect AC-powered devices, but you can also sometimes see shutter timing artifacts with things like fluorescent lights.

Before Hikvision became widely available in US, people would procure it from places like Ali Express, where the sellers would crack the foreign firmware to use English firmware. Referred to as Grey market specifically, but generally it is procuring it through an illegitimate distribution/channel.

I have bought several photography lenses black market about 20 years ago as ecommerce started making brick and mortar less competitive.

If you are a professional integration company, you shouldn't be installing grey market product. I have bought security cameras grey market in past for personal uses.

Further subtle coloration:

Grey Market used more often in U.K.

Gray Market used more often in U.S.A.

That's only linguistic differences though as British English spelling of the colour is grey where as NA spelling is gray.

Like colour/color or realise/realize or aluminium/aluminum

We’re in complete agreyment.

I usually think of grey market products as ones that are designed for one market, but are "hacked" to make it work elsewhere and then sold there. For example, Chinese only models that are hacked to show an English interface. However it won't take normal US firmware and may not be compatible with US products. Some manufacturers will track serial numbers and not support it.

That being said, if a brand has an issue with grey market products, I think you should stay away from them. You only really hear about this with Hik & Dahua. I believe this is because they make their guts and they rely on OEM partners to skin the product/"value add" (I know that is a joke, as there is no actual value added).

When models that are designed for that region are sold online or through unauthorized dealers, such as B&H, amazon... I don't know if I would call that grey market products... You just don't know if it is new, refurb, or has been sitting in a warehouse for 2 years and has a short warranty, as the original warranty is from a previous sale. In this case, I wouldn't worry about the product getting updates, compatibility, etc.

Has anyone actually had grey market issus with anything BESIDES Hikua??