Welcome to the world where gray marketing is not well, and alive, it is prospering. In a universal context, parallel importation or gray marketing refers to the diversion of branded goods from authorized disposition channels within a country or transportation of such goods into another country for sale through independent brokers or distributors without having the manufacturers’ knowledge.
Contrary to the black market where smuggling and other banned products are traded illegally. While on the gray market, only legal products are sold by an unauthorized distributor network usually at prices that are lower than those authorized dealers. Gray market is legally a multi-billion dollar industry wherein the independent businesspeople buy branded goods from authorized distributors or manufacturers. Then they are sold in countries where the taxes, prices, and the margins’ trade are lower and sell them in countries where there are higher markups and rates.
Brokers who purchase goods globally from authorized dealers or manufacturers in the sale of them to the gray market sell them for 25 to 40 percent lower than the imports handled by authorized distribution channels. Gray products are shipped worldwide and frequently move through various tiers before reaching an end user, often supported by global broker distributions.
If you have universal dreams or if you currently market your goods in the international arena, you should realize that the impact of gray market is of an extraordinary strategic significance for you. Your branded products may emerge as gray items where unauthorized dealers will start in competing for sales with your authorized dealers.
The gray market may not be an unusually worrisome issue if you’re a small-scale entrepreneur with a handful of close-knit merchants. Nevertheless, as your volume increments and the number of sellers or wholesalers grows from a few too many, gray marketers could offer an exciting challenge for both of your authorized dealers and firm.
The gray marketing opportunities happen when the manufacturers use various pricing methods for branded goods in regional markets or different countries. Brokers or the independent distributors are motivated in acquiring the goods in one market and divert them to markets where there are higher prices especially when the price differential is vital. A lot of the successful universal brokers use a remarkably sophisticated database in developing inventory tracking tools in diverting products in the world markets with real accuracy.
Most of the manufacturers often adopt selective or exclusive distribution strategies in implementing their positioning strategies for premium and upscale priced goods. The channel members chosen for providing the products in a particular country demands enjoy high-profit perimeters and are allowed reseller support ventures at each level of distribution. If the sellers’ margins are disproportionately significant about the marketing duties they do, gray markets will emerge.
Also, gray markets develop when distributors and manufacturers are unable to synchronize supply and demand in different country markets. In some markets, the volumes sold are producing excess while in others they create deficiencies. In the event of stock shortages in a market, the business-to-business consumers most especially the OEMs or the Original Equipment Manufacturer direct to gray marketers for their demands. Hence, there are plenty of best watch dealers that you can choose from.