GRAY MARKET

Gray Market – Beware wolves in sheep's clothing

If the price for a product seems too good to be true, it probably is-meaning there is a chance it's a counterfeit or substandard product sold through the 'gray market'. 
While you may save a few dollars, the fact is that you have no idea exactly what you are getting and could be putting your business-and even people’s lives-at risk.

What is the gray market?

As its name suggests, the gray market occupies the space between the black market and the authorized market for electrical products. Consisting of unauthorized resellers and brokers selling potentially counterfeit and faulty products, the gray market is a growing problem for electrical product purchasers and suppliers alike.

In fact, according to the International Anti-Counterfeiting Coalition, worldwide gray market deals in electronics (including many products sold through electrical distributors) totalled $600 billion in 2013.

Most gray market resellers are found on the internet, and often these unauthorized resellers will entice customers with low upfront costs. However, they can disappear as quickly as they appear-causing problems when products need to be repaired or replaced.

Where do gray market products come from?

Products sold through the gray market can come from various sources.

Often they are legitimate products that have been diverted from the authorized sales chain to an unauthorized distribution channel. The diversion can happen at the freight forwarder, exporter, shipping company, importer, wholesaler or retailer stage.

Gray market products can also come from excess inventory or dated goods, and they can also be counterfeit-often originating in China and Hong Kong.

Why should you be aware of it?

Buying from the gray market can have disastrous consequences for people and businesses. Many gray market products are not in their original and new form and have been altered, tampered with, used, refurbished, or counterfeit to fool a buyer into thinking it is new.

When dealing with high voltage equipment, every component needs to function properly to protect the equipment and people around it. Gray market products that move through unauthorized distribution channels are more likely to get damaged, tampered with, repackaged or relabelled without being subject to the checks authorized channels provide.

And there is also no guarantee that gray market products have been properly tested, which poses a threat the integrity of the entire electrical system-not to mention putting lives at risk.

It may work fine-at first-but the risk of a faulty product should steer you clear of making the purchase. Buying from unauthorized sources also exposes you to potentially costly liability risks when something goes wrong-affecting your business’s reputation and finances.

And without a guarantee or warranty, you can’t repair or replace faulty products bought through the gray market.

What can you do to minimize the risks?

If you are concerned that a reseller is not an authorized dealer of electrical products, contact the local supplier representative for confirmation before buying.

Some authorized dealers have taken steps to combat counterfeiters and help identify gray market products. Eaton’s Staged Circuit Breaker Authentication tool [link to cba.eaton.com/Home.do#] is intended to provide customers with the ability authenticate Eaton molded case circuit breakers (MCCB) through 400 amps.