In recent years, grey market products have begun to infiltrate global e-commerce sites, delighting online shoppers in all corners of the world. With worldwide e-commerce sales expected to exceed $4.4 trillion by 2021 sales of grey market goods are expected to increase in tandem. While buying grey market products online carries some minor risks, consumers continue to seek cost-effective, easy ways to acquire them. Below is a look at the growing popularity of grey market products and the key reasons why consumers across the globe are turning to cross-border e-commerce stores to acquire them.

What are grey market products?

"Grey Market Product" is a term that describes a product with an advertised price that is significantly lower than the price charged by the original manufacturer or authorized dealer. Grey market products are typically acquired and sold using channels that are outside the normal channels of acquisition and marketing. The use of alternative channels to acquire grey market products enables consumers to enjoy substantial savings on products that they otherwise might never be able to acquire or afford. In light of their attractive pricing and worldwide manufacturer popularity, there is a strong demand for grey market products and their presence on global e-commerce sites is steadily rising.

What is the allure of buying grey market goods online?

The popularity of online shopping for grey market products has skyrocketed because consumers appreciate the convenience and ease of sourcing grey market goods online. From superb accessibility to the ability to purchase goods that are not available in their local markets, shoppers are turning to global e-commerce companies for key purchases. Below are some of the top reasons why people choose to purchase grey market goods online.
  1. Customers have access to a robust inventory. Retail stores typically carry a limited inventory due to spatial constraints and cash flow. Customers are increasingly turning to e-commerce businesses because they have access to a more comprehensive selection of products.
  2. Online stores never close. Unlike retail outlets, which may have limited hours of operation, e-commerce companies are always open for business. Customers are not forced to shop for products during "regular business hours." They can browse online inventory at their convenience, day or night.
  3. There is no pressure to complete a purchase. Retail outlets often hire salespeople who engage in high-pressure sales tactics in an effort to coax customers to purchase products. Online shopping is a more pleasant experience for many people because they do not have to contend with pushy salespeople.
  4. People can shop from the comfort of their homes. With online shopping, consumers can complete their shopping in the location of their choice. They do not have to get dressed up, spend money on transportation, or contend with parking hassles.
  5. Shoppers can purchase goods that are not offered in their countries. E-commerce businesses in the United States, Germany, and the UK are often popular with consumers in other countries because they offer grey market goods that are not readily available in other countries.
  6. Prices are attractive. The attractive online prices of grey market goods are simply too irresistible for some international shoppers to ignore. In comparison to the high prices charged by local retail outlets, online prices for grey market products such as cameras and electronics are sometimes hundreds to thousands of dollars lower.

Are there any drawbacks of purchasing grey market goods online?

As outlined above, there are many reasons why consumers are increasingly turning to e-commerce stores to purchase grey market goods. However, there are a few drawbacks that consumers should consider before they move forward with a purchase:
  1. Lengthy lead times: In contrast to retail shopping, which offers consumers immediate gratification, cross-border e-commerce purchases are often marked by lengthy lead times. Consumers are not able to simply walk into a store, purchase an item, and carry it home. Instead, they sometimes must wait several weeks while their goods are shipped and clear customs.
  2. Warranty constraints: Cross-border purchases sometimes do not include a warranty because sellers worry that they might not be able to support a product from afar. Some products include limited warranties while others require customers to go through the hassle of returning defective goods in order to receive a replacement.
  3. Compatibility issues: Some products are manufactured for use in specified environments. For instance, there are products that are only designed to be used in 110-volt countries. Some electronic products might lack the proper power cord or power supply to function properly outside of their country of manufacture.
  4. Logistics challenges: An easy, seamless delivery and return process is critical to the success of e-commerce businesses. While delivery and returns are not typically complicated for domestic customers, there are often logistics challenges that can prevent a smooth, satisfactory customer experience.
  5. Tax considerations: The majority of e-commerce companies that sell grey market goods internationally do not charge tax or importation fees. The buyer is then saddled with the responsibility of determining these additional costs and ensuring that they are paid. This process is not always straightforward and can be stressful to cross-border shoppers.
Fortunately, consumers can usually overcome these drawbacks by carefully reviewing product descriptions and purchasing grey market products from a trusted e-commerce company with expertise in global sales.

The bottom Line

The number of global consumers who order goods online continues to grow at an impressive rate. In particular, the online purchase of grey market products in the cross-border e-commerce industry is steadily increasing. Consumers are drawn to the extensive variety and low prices offered by online merchants and are increasingly willing to overlook potential drawbacks such as logistical challenges or longer lead times. Ideally, buyers should seek the guidance of an expert in the global e-commerce industry before finalizing a major purchase from an e-commerce company, especially a company that is located in another country.