Grey Market Goods - Buying on the Internet

The Grey Market - So, You Think You´ve Got a Good Deal?

Would you give someone you don´t know and just met on the Internet your money? Here is an insight into the dealings of an increasing market, fuelled by the Internet and a buyer´s desire to save money.

Grey Market items are on the increase, easily accessible on the internet. As a result, more people think they are finding a bargain, but often they are finding problems and in the worst cases losing their money, especially if the item they purchased is faulty, or it develops a fault in the furure.

The Grey Market is best described as the channels of distribution of legal goods through unauthorised or unintended routes or territories. Let´s take for example a digital camera made by a well known manufacturer.

The manufacturer wants to sell this camera around the world, but might offer slightly favourable prices in different parts of the world. They will have divided their sales into different territories and provided different pricing depending upon things like exchange rates, strength of the local economy and the market generally. The product could be made available to the manufacturers´ distributors, their official sales channel, at a lesser price in say Asia or the USA than it would be available in the UK. The difference in the cost of the item to the distributor and what it sells it for to the public is called their margin, this is the difference between what the camera actually costs them from the manufacturer and the "sticker" price they charge you and me. And from this they make their money.

With the increasing use of the internet, traders and importers other than the official distributors of a product are finding ways to obtain goods from other parts of the world at a lesser price than the official distributors in say the UK, which results in the trader offering a "sticker" price significantly less than you will find through the official sales channels - and through this process money is being made.

For products such as digital cameras and camcorders this can result in a price difference of hundreds of pounds - so the consumer is a winner, right? - wrong. The problem arises when your expensive piece of technology goes wrong or is delivered to you with a fault or is damaged. Having purchased your camera through unofficial channels you do not have any protection under the manufacturer´s warranty, which you are entitled to in the first 12 months of purchase.

You will also find it difficult to have your expensive camera repaired by a manufacturer´s authorised dealer and service centre. Well that doesn't matter you might think, as the company I purchased my camera from says they will give me 2-years guarantee and they included a free battery with the camera too.

As often as not, promises of guarantees are not worth a brass penny if the trader is here today and gone tomorrow. And if they do have someone in a back room fixing things, would you be confident in the service they might, or might not offer over the longer period?

Prior to your purchase, a company trading in Grey Market goods will tell you almost anything in order for you to part with your money. They are not thinking about the long-term, but are more interested in the short-term profit to be had.

A Grey Market trading company does not have the support and backing of the original manufacturer. They do not have the support or access to the manufacturer´s service, repair centre or their spares.

How can you find out whether the goods a company is selling are Grey Market goods or goods not intended for the UK market?

1. Do your homework on the item you intend to buy:
In most cases, manufacturers include a number or letter in the model number of the item which identifies the intended market:
Sony for example use the letter E at the end of their camcorder model numbers to identify that the product is intended for distribution in Europe, and the letter U for the USA. If it has no letter, then it is intended for Asia and Pacific or the Rest of The World.

Ask the company directly whether the item you are interested in is a Grey Import. Ask if the item is supported by the manufacturer´s warranty.

Some trading companies are becoming deceptive in how they describe an item. In one instance we know, a company continually described and advertised a product using a European identifier in the model number, only to admit when confronted that the item was not in fact an "E" but a Grey import from Asia - even though the trading company sent details and written confirmation showing that it was not. If you find this yourself, then report this to Trading Standards as falsely describing and advertising a product (and that includes the model type) is illegal under UK consumer legislation.

2. If it´s too good to be true, then it is:
Do not be attracted on price alone. Again do your homework. If the company is a Limited company, go online to the Companies House website and look them up. Find out how long they have been trading; have they changed their name or trading address recently? Has there been a change of directors of the company? And is there a recent statement of accounts you can download? You can obtain this information quite easily and cheaply from Comapnies House as each report costs £1. Well worth it if you are parting with hundreds or thousands of pounds, in effect, to someone you don´t know and have just met on the internet.

3. Pay with a major credit card:
In the UK, such payments are protected by the Consumer Credit Act in addition to protection you already have under the Sale of Goods Act. With credit card payments you have additional protection through the Credit Card company for all purchases over £100 as the supplier is paid by the credit card company and you pay the money back to the credit card company directly. But before paying by credit card make sure you are handing over your card details on the internet to a real and trusted company or payment gateway through a secure connection. This can be identified by https:// in the connection and seeing a secure logo at the bottom of your browser.

4. Check out the seller´s website:
Find out who owns or registered the website you are thinking of buying from by going to Domain Tools. Find out how long the website has been operating? If the website is based or owned by someone in Italy, China or anywhere other than the UK, and it´s only been operating for a few months or even weeks, then buyer beware!

5. Ask very specific questions about warranty:
Obtaining a verbal guarantee is not worth the paper it´s written on. Obtaining a written guarantee is also quite useless. Be specific, ask about the manufacturer´s warranty. If the company cannot confirm any such manufacturer warranty other than what they offer themselves, then you will not be fully protected in the event of the item being faulty at delivery or in the future other than through what the trader says it will do for you in such circumstances.

6. Inspect the company´s Terms and Conditions:
Terms and Conditions are often there for the seller´s protection, not yours. Some might be reassuring or favourable to the purchaser but they are never cast in stone. Find out under what circumstances or what conditions they are imposing upon you, the buyer. Included are conditions of return of goods, refunds or replacement. A trader will often endeavour to avoid giving you a refund in the event of the goods being faulty when they are delivered. Likely, the most unscrupulous company will claim the shipper damaged the goods in the first place - that should spin out any dispute between you and the seller for a few months!

Invariably they will offer to repair the item or replace it. Giving back your money is the last thing they will want to do. In such circumstances, are you happy that they will provide you with this undertaking to your satisfaction?

7. Are you sure the item is genuine and is not a fake?
For most large electrical items such as cameras, camcorders, televisions etc., it is the Grey Market import which is the biggest issue. However, you do need to be aware of copies or fakes which look like the real deal, but are not. Again, if you are being offered an item which is far below the official distribution sales rate, then buyer beware. Ask yourself the most obvious question as to how is it they can offer you that price and still, supposedly, make a profit?

On the internet, all you have to go on is probably a picture and the description of the item. Do not be fooled if it uses the manufacturer´s name or model number. Follow your instincts. Unless you can afford to throw good money after bad, do your homework and ask questions.

But the only safe and sure way to be certain of purchasing product which is supported by the manufacturer is to purchase your item through an official seller or distributor. You can often find a list of certified suppliers from the manufacturer´s website. Yes, you are likely to pay much more for the item, but you will rest easy knowing that should anything happen after you´ve handed over your hard-earned money (and this could be as soon as you receive delivery of the item) then you have the full support of the manufacturer and access to service and support. And rest easy in the knowledge that a Grey Import trader is not washing your money down his throat laughing all the way to his bank.