What is the Grey Market?

Recently, we discussed the risks of buying parts from unauthorized distributors. And you may have heard of these unauthorized sources referred to as the “grey market.” But do you know what that term means?

It’s Not Black or White

Here are some terms worth knowing when it comes to understanding the differences between authorized and unauthorized parts and products.

Black Market: At it’s most basic, this term refers to the illegal trading of goods.

Counterfeit: Goods that are not genuine and designed to deceive consumers by violating trademarks.

Grey Market Goods: Products that are manufactured outside of the U.S. and imported without the consent of the trademark holder.

Parallel Imports: Another term to describe grey market goods.

Trademark: A manufacturer’s words, names, or symbols used to identify its products and distinguish them from a competitor’s products.

Trademark Infringement: Any unauthorized use or imitation of a trademark held by another company.

Spotting the Shades of Grey

There are key differences between grey market goods and those sanctioned for sale in the U.S. These differences include critical things like warranty coverage and compliance with regulatory standards. Here are some ways to spot unauthorized products and parts:

  • The price may be significantly lower than MSRP
  • The item may not come with the manufacturer’s warranty
  • The products may not be eligible for rebates
  • The specifications may not comply with U.S. regulatory requirements
  • The instructions may be written in a foreign language

When in doubt, you can always ask an authorized representative for the manufacturer to check the registration number or other identifying information.

Grey Market Risks

There’s a reason buyers seek out certain manufacturers. For example, you may need a Rockwell Automation® part to keep your facility up and running. When you buy from an authorized distributor, you know you’re getting consistent quality and performance. The company’s commitment to strict supply chain management ensures you receive genuine products complete with support and a full-factory warranty. Additionally, you know that you have access to licensed software and receive any safety or recall notices.

When you buy grey market products and parts, you not only lose all of those benefits and assurances, but you may also expose your facility to risks. When you don’t know where your devices came from, you also don’t know what may be lurking inside them, putting your operational safety and security at risk. And you may unintentionally expose your company to cybersecurity threats such as Trojan horses.

You can view an on-demand webinar from Rockwell Automation on this topic: Mitigating Risk: The Hidden Threat You May Not Realize.

We Can Help You Avoid the Risk

We are an authorized distributor. Not only that, but we are also knowledgeable. Our Automation Specialists are experts, ready to help you explore solutions. Contact us today!