The internet can be a great place to buy electronic products. Sometimes, good deals can be found saving the consumer quite a bit of money had they instead gone to their local electronics retail store and paid full price. But cheaper doesn’t necessarily mean a better deal.
More often than not, people who shop online don’t know who they are buying from or where this retailer store is located. They simply look for the cheapest price and go with it. Places such as EBay, PriceGrabber, Nextag and even Amazon list retailers who sell products at what appear to be very discounted rates. And because these are big name online stores, they think it’s probably a good deal.
There are typically four ways of buying a product both on the internet or at a local store; you can buy that product from an authorized dealer, straight from the manufacturer, on the gray market, or buy it stolen. If buying from a store such as Best Buy, Circuit City, Ultimate Electronics or any other common household name, it’s almost always an authorized dealer. This is a good thing, but the products are usually pretty expensive compared to the alternatives. When you buy something off the internet from a “retailer” that isn’t an authorized dealer or the manufacturer itself, the prices can be substantially less saving you the consumer lots of money. However, in all likelihood, the item you are buying is off the gray market. Don’t be too frightened. It’s perfectly legal to buy a gray market item, but there is a risk to the consumer (of course you do know it’s illegal to buy stolen goods).
Grey market items come off the same product assembly line as the products sold in your local authorized retail store. They are built in the same manufacturing plant. They are made with the same parts. The function exactly the same way as a non-gray market item. They are even packaged in unopened factory sealed boxes. To you and I, they are exactly the same as a product that is sold in an authorized retail store. The only difference is the price. It’s not uncommon to find gray market items selling for 40% less and it’s all perfectly legal, though some claim it is unethical. So what’s the big deal? What’s the catch? If I can find it online for 40% less, why not buy it?
Usually, gray market items appear when there is a large price difference between one country and another for that particular product (usually electronics). Unauthorized retailers will buy the product where it is available cheaply (due to currency exchange rate differences) at retail or wholesale prices, then import it legally to the target market where the product is selling at a higher price. However, in doing so they bypass the US Manufacturer Distributors. Because the item was purchased a much lower price than what it’s selling for in the retail stores, the unauthorized dealers can sell it at a price high enough to provide a profit but much lower than the normal market price in that country. This is why a product at Best Buy might cost $1000 (authorized US dealer), but online through a gray market distributor it sells for $650. Again, this is a legit business that is perfectly legal for both the seller and the buyer.
When these products come off the manufacturing assembly line, the serial numbers are recorded by the manufacturer and are tagged in a database as being exported for foreign distribution. If you buy this product outside that foreign distribution area (gray market), the manufacturer will NOT accept a warranty claim if the product is defective. So if you buy a product on the gray market, 60 days later it dies, and you try to ship it to the manufacturer for repair thinking it’s covered under the 1-year manufacturer warranty, think again. They will cross-reference the serial number and their system will show it as an exported item for foreign sale. They will send the item back to you and it won’t be repaired. You will have to pay someone other than the dealer to fix your item, and it will usually be expensive. Had you bought that same item at the local authorized retailer, the warranty would be covered in full and you wouldn’t have to pay a dime for repairs. While you can save hundreds of dollars on gray market items, you take a risk in that repairs will be equally as expensive should something go wrong. If you don’t mind taking a risk, you can save quite a bit of money buying off the gray market.
So how do you know if it’s a gray market item? First, take a look at the price. If it’s considerably less than what the local retailer is selling it for, that should raise an eyebrow. Second, if the online retailer doesn’t mention “FACTORY WARRANTY” or “MANUFACTURER WARRANTY”, beware. They may advertise something like “US WARRANTY” which is different. A US warranty just means there is a company other than the manufacturer that can perform repairs, and will usually sell this service in their own warranty. That’s not to say it’s a scam, it just means they know how to fix the product. If you do buy a product that mentions it has a warranty, read over the fine print carefully as they sometimes do not cover all damages.
