How to Fight Grey Markets While Creating ValueManufacturers from several industries have to deal more and more with grey markets as globalization & new supply chains develop. In the case of technology products alone, goods worth an estimated $58bn are sold every year outside authorized distribution.
For manufacturers, the grey market not only means lost margins; it often also leads to problems with appointed official distribution and branding. Obviously, the effective management of sales channels and targeted investigations can help to reduce the grey market but it requires a lot of resources that companies might not have… Furthermore, current solutions do not tap into hidden data that could help the brand turn grey market into an opportunity to create value.
“We often help companies that struggle with spare parts, cosmetics, accessories, drugs, ….”
An issue for the brand…
Grey market goes beyond simply reducing your turnover. Indeed, customers may wonder what’s wrong with the product or with the brand for it to be sold so comparatively cheaply. Conversely, it may seem like the regular retail prices are inflated for no reason if customers become used to the lower price. Grey market has a significant long-term effect on your brand image. Furthermore, electronics from unauthorized dealers may come with incompatible charging cables or a specific drug might not comply with local regulations. When consumers experience this, they are likely to blame the brand for the inconvenience.
When it comes to distribution, grey market negatively impacts the quality of a brand’s distribution network by damaging the trust distributors have in your brands. Grey market products also make it hard to maintain different prices in different markets, especially if the authorized sellers have agreed to a MAP policy.
How to fight the grey market using technology
We recommend brands to take a global approach to the grey market issue across borders instead of by region and leverage data. Indeed, it is possible to create a full traceability system through advanced QR codes based on Blockchain principles to track a product from the factory to the end-user. We have developed a solution that enables managers to see precisely, in real-time, where products are being scanned and if it fits with your database of non-sequential and unique QR codes. Furthermore, by using AI features, we have built a solution that helps consumers check the authenticity of their products through a single picture of the front packaging. This picture combined with the QR code helps us provide your company with the exact GPS data. In the case of grey market products, we can pinpoint the unauthorized sales of products to the point of sale responsible.
“A real game-changer for managers in fighting grey market”
Another element we recommend is for brands to educate their customers on the importance of shopping from authorized dealers. As you may know, many consumers follow their favorite brands on social media, but if they aren’t made aware of the grey market, they may fall prey to deep discounts of unauthorized dealers. grey market content should be incorporated into a brand’s media presence to make consumers more aware of the issue. However, this is not enough. We have built our solution with the goal of improving your consumer’s experience. Indeed, through our AI counterfeit solution, we also give a reward for someone doing the authenticity check. These rewards can be extended warranty, invitation to events, discounts, etc. It all happens on a web application (no mobile app to download).
Mastering the distribution of your products is definitely a strategic element to work on. Computer vision combined with advanced QR codes can truly be an eye opener to better monitor products (from factory to retailers), and reinforce your brand image while getting relevant data.
Professionals specialized in grey market products can remain under the radar by removing bar codes or copying a traditional QR codes but our technology adds an extra safety layer. Through our approach, when the grey market product is discovered it can immediately be traced back to the grey link in the distribution chain.
Discovering the truth about your supply chain
After several successful implementations, we often found that some authorized resellers were part of the issue… Indeed, official distributors offer goods to unauthorized dealers to improve their own turnover. We were able to pinpoint the exact location of these resellers and proceed with facts rather than assumptions.
To leverage all these data, the use of an intelligence platform is required. Our solution comes with a customized platform that can be employed to compile, analyze and visualize the data from authenticity checks being made all around the world. It becomes possible to analyze every single product in the market and study how it ended up in your consumers hands. Through the use of GPS data analysis, unsuspected connections may be revealed, for instance about perpetrators cooperating for years. The data created will grow constantly and, ultimately, help you take more decisions based on precise and fresh data.
The results of authenticity checks can lead to legally valid action being taken against the grey market players. The data delivered is in accordance with GRPD laws to comply with the legal requirements applicable in the respective country. For the optimal flow of information, the authorities can also be given a direct insight into the intelligence platform.