When you want to buy a gadget like a cellphone, where do you plan to buy it? Is it at an authorized outlet? distributor? Or through the black market? Which, of course, offers a much cheaper price.

 

As an illustration that we easily encounter every day, for example, when you buy an iPhone with the latest series, there are various options to buy at various official stores or the black market.

 

The choice does not end there; there is also the option to choose in the gray or gray markets. Did you know about this?

 

What is Gray Market?

 

As the name implies, Gray Market is a market that sells goods legally but without going through the official distribution process set by the manufacturer or brand holder.

 

Why is it said to be gray? Because this market is between the legal or official market (white) and the illegal market (black), the goods sold do not violate the law but also do not fully comply with existing distribution regulations.

 

Because it is located between white and black, the gray market is said to be gray.

 

Gray Market in Securities

 

 

In securities, the gray market is where stocks and other financial instruments are traded informally before officially being listed and traded on the stock exchange.

 

In this market, investors trade shares of various companies that are in the process of listing on the stock exchange or initiating an initial public offering (IPO) before the shares are available on the public market.

 

As an illustration for Indodax friends, this is more or less the trading process:

 

• IPO Announcement

The company announces plans to list on the stock exchange and go public by releasing the company’s financial and business reports.

 

• Gray Market Trading

Investors who wish to purchase shares before the IPO process can do so in the gray market, where prices fluctuate depending on supply and demand.

 

• Indicative Price

The price of shares in the Gray Market can give an idea of how the shares may be traded when the IPO begins.

 

The Gray Market provides several benefits to the launching company (issuer) & the underwriters involved in the IPO process, among others:

 

First, Gray Market can be a benchmark for whether or not investors are interested in a company.

 

Second, data from the Gray Market can serve as a benchmark for determining the amount of the company’s share price during the IPO. It can also help optimize the amount of funds to be raised.

 

Third, responses from investors in the Grey Market can be used as an illustration to prepare a marketing strategy shortly after listing on the stock exchange.

 

You must also consider the risks associated with being in the Gray Market, such as less stringent regulations, high price volatility, and liquidity risks that make it difficult to buy and sell shares before the IPO.

 

Gray Market in Commodities

 

Not only in the field of markets and securities, Gray Market also exists in the goods commodity sector, where there are goods that are traded, but not through official procedures according to regulations.

 

Goods in the Gray Market are usually gadgets, high-end cars, luxury clothing, cosmetics, and beauty products.

 

In discussing the Gray Market, some things must be considered.

 

When unauthorized dealers import goods from other countries, they exploit price differences and product scarcity in various markets.

 

Advantages and Disadvantages of Gray Market

 

Advantages

 

The benefits or advantages you can get if you utilize Gray Market include the price of goods, which is certainly much lower for consumers because it does not go through an official distribution process.

 

In addition, you also have access to products that may be difficult to find in the official market.

 

Disadvantages

 

Like a double-edged sword, Gray Market also has a negative side or disadvantages that you can get such as the absence of warranty and after-sales service.

 

You also run the risk of product safety and compliance, such as your gadget not having an IMEI (International Mobile Equipment Identity) number as an official identification number.

 

Lastly, Gray Market has an impact on brand reputation, as the goods sold may not have proof of warranty, so in the event of damage, users may blame the brand and lower the quality of the brand in the eyes of consumers.

 

Difference between Authorized, Grey Market, Black Market & Fake Products

For those of you who are confused or still in doubt about the difference between official products, gray markets, black markets, and counterfeit goods, calm down, don’t worry. Here’s an explanation:

 

1. Authorized Products

Namely, goods sold through an official distribution system according to regulations and approved by the manufacturer as the brand holder.

 

The characteristics are that there is evidence of an official warranty, consumer service, and a guarantee of consumer data security.

 

For example, smartphones can be purchased from official stores like Apple and Samsung.

 

2. Gray Market

Genuine goods are sold through unauthorized distribution channels. This means that the product is imported without permission from the country’s official manufacturer.

 

The characteristics include, among others, that although the original item usually has an official warranty, it is usually cheaper because it does not go through an official distributor.

 

For example, the latest gadgets are bought from online stores and imported directly from abroad without official permission.

 

3. Black Market

This is an item sold illegally. It can include stolen goods, goods resulting from fraud, or goods that violate the law. Of course, you need to know this to prevent unwanted things in the future.

 

Of course, the characteristics are that there is no post-sale warranty card, high-risk goods such as goods from criminal acts, and goods that do not meet the order criteria.

 

Examples include electronic products sold without tax, stolen goods, or medicines sold without a prescription.

 

4. Fake Products

These counterfeit goods are made to imitate genuine products with well-known brands but are not produced by authorized brand holders.

 

The characteristics of the goods resemble those of the original goods, but the quality is far inferior to that of the original goods.

For example, branded bags, such as fake Gucci bags, are sold at low prices and are not produced by the brand.

 

Impact of Gray Market on Companies

The presence of a gray market certainly affects or impacts companies that issue and distribute official goods, including a decrease in sales of official products in the market.

 

Companies will also feel damage to brand equity, which can reduce product quality in the eyes of consumers.

 

Manufacturers face challenges at authorized distributors, as they can experience tension and decreased trust, disrupting cooperation and stability of official distribution.

 

How to Identify Gray Market Products

 

 

For those who don’t understand how to identify Gray Market products, here are some things to look for.

 

First, products sold at a much lower price than in official stores can be a sign that they come from Gray Market.

 

Secondly, Gray Market products often come with a manual or instruction manual in a foreign language or only a photocopy, not the version that should be adapted to the local language.

 

Thirdly, a product without a warranty or official after-sales service from the manufacturer is an accurate signal that it is from Gray Market.

 

Strategies to Avoid Gray Market Risk

Here are steps to avoid Gray Market risks for consumers, manufacturers, or brand-holding companies.

 

Consumers should always make sure to purchase from authorized stores, check the warranty and customer service, and avoid buying goods at too low a price.

 

For manufacturers, always improve production services, never get tired of educating consumers regarding the quality of goods, and finally

 

Conclusion

At its core, Gray Market certainly offers the advantages of lower prices and faster product availability.

 

However, consumers face risks such as a lack of official warranty, after-sales support, and potential quality issues. Consumer awareness of the risks of Gray Market is essential to avoid future losses and not regret them later.

 

Moreover, companies should implement protective strategies such as distribution monitoring and consumer education to maintain brand equity in the eyes of consumers and maintain relationships with authorized distributors in the general market.

 

Invest in Crypto Assets with OTC on INDODAX

Before closing the discussion about Gray Market, it would be helpful if we also invited you to join a safer and more reliable investment opportunity.

 

If you want to invest in crypto assets, consider using INDODAX’s OTC trading (Over-the-counter) service.

 

What is OTC at Indodax? This service allows you to make large transactions at a more stable price and a faster process without worrying about price fluctuations in the public market.

 

With INDODAX, you get guaranteed security, transparency, and full support from Indonesia’s largest crypto exchange platform.

 

However, you should note that crypto investing requires patience, careful research, and a deep understanding of the fundamental factors underlying each crypto asset.

 

Before deciding to invest, it is important to do in-depth research, follow education, and recognize the crypto assets to be invested in.

 

The more knowledge you have, the wiser the investment decisions you can make. You can read the latest information about the crypto world and blockchain technology at the Crypto Academy, which provides the latest articles and updated information about the crypto world.

 

By reading and studying the material in the crypto academy, you can improve your understanding and skills in investing in crypto assets.

 

Start your crypto investment now at INDODAX. Equip yourself with adequate knowledge from INDODAX Academy to make the right and profitable investment decisions. Happy investing, and good luck!