Importance of Combating Gray Market Activity

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In a study conducted recently by Components Director for a well known semiconductor supplier of both digital and analog devices, found out that over 90 million units of the products that got sold were gray market sales.

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Importance of Combating Gray Market Activity

  1. 1. Importance of Combating Gray Market Activity In a study conducted recently by Components Director for a well known semiconductor supplier of both digital and analog devices, found out that over 90 million units of the products that got sold were gray market sales. About 80% of the product were located in Asia, 8% were present in North America, and rest in parts of the Middle East, Europe and Africa. The products sold were not newly manufactured with 29% of the products having date codes of less than a year and about 15% carried date codes older than 11 years. Such is the propensity of gray market sales today, where old goods or faulty goods travel through unauthorized channels with heavy discounts to the hands of consumers. Though the consumers seem content initially but as the product quality falls within a short span of time the consumers blame the original brand, not realizing that it is the brand violators who are at fault. Gray market concerns have existed for a while now. Back in 2008, a study conducted by KPMG and the Alliance for Gray Market and Counterfeit Abatement (AGMA) reported that about $58 billion of high- tech goods passed through gray markets. This results for approximately 6% to 8% of the overall market share. If the same is applied to the $300 billion semiconductor industry, then the gray market impact on components supply chain can result up to $20 per year. The high-tech brands are not the only ones that suffer from gray market sales. The consumers’ at large and other technology end-users, comprising defense and military are also negatively affected when the goods are advertised as authentic and brand new where in reality they can either be old, refurbished or even faulty. The repercussions of using faulty goods can lead to dissatisfaction and even pose threat to public health and safety in case of pharma products. Today you find the magnitude of gray market issues present in every product category. The capacity to track the product flow is restricted as the supply chain provides various potential points of entry and various scopes for brand violators to carry on their fraudulent activities. Hence, it is essential to combat gray market activity in a focused manner. To aid this service providers specializing in enterprise risk management solutions have introduced SaaS- based software that helps to take steps against brand violators. The software scans for pricing, discount
  2. 2. percentages and amounts of every product. The users can view all the information in user-configurable charts on the dashboards. The software also offers a Company Risk Index that categorizes the suspects and also displays them on the dashboard. This index enables users to identify the companies that are the cause of lower revenues and brand violation. Furthermore, the software helps companies to minimize the impact of gray market sales on your enterprise. Read more on - Enterprise Brand Protection, Report All MAP Violations

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