'Gray Market' - how legal and ethical is it?

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21 Jul 10 07:47:57 am
hi ,new to this.Does anyone know if suppliers like megagoods, evertek, watchcloseouts are legal and ethically right to buy from.Ive heard of something called the gray market which is sort of legal but many say is not ethical as it operates by dealers breaking contracts with their company and selling their goods under the table as they say.Is that what all these wholesalers and liquidaters etc on saleshoo are doing.Is it wrong,Im not really sure.Please advise me,regards Rich

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22 Jul 10 12:16:02 am
Welcome to the site fishy327, nice to have you here with us :)

Gray (grey) market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer. Clearly the definition states that this is legal. How ethical it is would depend on the end user. If you think about it resellers don't really violate any laws (or contract) since to begin with they do not have a contract/agreement with the products original manufacturer.

What you made you assume that the suppliers you named are part of the so-called 'gray market'?



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22 Jul 10 12:36:04 am
Tricky question :D!

It is LEGAL but is it ETHICAL?? that is open to debate.

From the point of view of business people who are in the grey market arena, this is perfectly legal. They buy low and sell high but lower than the competition. For the authorized distributor this is illegal as it infringe on their contract with the mother company who produced the product. As for the consumers, this is a win-win situation because name brand products are available to them at a fraction of the price compared to what they have to pay if they buy from authorized resellers.

My take....it is legal (so long as taxes and all dues are paid the government), as this helps control large corporations penchant for monopolizing the market and driving up the price of products for the sake of profits. :D

For consumers, competition between companies is a good thing as it helps keep the prices at a fair level.

As for it being ethical....no comment :D!


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22 Jul 10 01:14:28 am
When goods are not purchased through 'authorized' distributors, manufacturers will refuse to honor any warranty on the product, and this is a major drawback in the gray market. Manufacturers keep devising ways to track items sold by their licensed dealers, such that certain products are expected to be sold only in a particular country. The same electronic product for example, will be placed with different model numbers on different countries so that the manufacturing company can easily identify whether their item was sold in the “correct" country. When found to be bought from a third party in a different country, the warranty is not usually enforced. This makes electronic goods and DVDs bad items for gray market shopping.

I can see that the question on what is ethical lies heavily on infringing the rights of the authorized agents and resellers, as they are the ones most financially affected by the gray market. They lose business to the unauthorized sellers. Big businesses and manufacturers constantly lobby to enact laws to curb unauthorized reselling, but the gray market thrives because there are consumers who consistently purchase.

As what Marilou has mentioned, competition between companies is a good thing because it gives consumers fair options. :)


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22 Jul 10 01:46:27 am
Hi thanks so much for that,can I ask if the companies I mentioned and other companies on salehoo are selling gray market goods.I did hear that all the stuff sold on the internet from online shops or on ebay are gray market goods,especially brand watches etc which I am interested in.Thanks for your help


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