Page 6 - Simply Electronics Grey Market Article

Wholesaler Functions Retailer Functions Grey Market Vendor

Buying the product Buying the Product Buying the Product

Promoting/Contracting with Promoting/Contracting with Contracting with
Retailers to Sell It Consumers to Buy It Consumers to Buy It

Inventory Risks & Facility Costs Inventory Risks & Store Costs Negligible Inventory

Assembling Product Assortments In-store Merchandising N/A

Sorting: Break down into small Shelving N/A
quantities

Delivery to Retailers Delivery to Customers Delivery to Customers

Financing Retailer Buys Financing Customer Buys N/A

Grading the Product Handling Returns Handling Returns

Market Info Feedback to Market Feedback to Wholesaler N/A
Manufacturer

Table 2

Negative and Positive Impact Of The Grey Market On The Manufacturer

Negative

The grey market can also create customer dissatisfaction which can impact adversely on the brand and its
image especially if products that normally command premium prices are offered at a discount by grey market
vendors. Many customers will desert the official retailer and purchase from grey market vendors who are
free-riding on the manufacturer’s reputation and brand image (Table 2).