In the current connected world, parallel import and grey market are greatly on the rise, which, many enterprises or business owners seek ways to overcome or minimize it.

But why is parallel import and grey market damaging to the brands?

Grey market involves a selling of trademarked goods through channel of distribution that is not authorized by trademark holders (Duham & Shefft, 2008). An estimated $7 billion to $10 billion worth of products are sold every year in the United States outside manufacturers’ authorized distribution channels.

Such revenue brings along problems like product defection, price erosion, warranty issues, etc. When not handled properly, these problems can escalate to customers’ dissatisfaction and in the end, affects brand reputation. Distributors may loss trust in brand owners resulting in loss of marketing and post-sales service support.

As such, more businesses have tried various ways to minimize any potential of parallel import. Some companies implement new guidelines in the selection of distributors or resellers to ensure they abide and align with the brand’s rules, restricted from selling products to other territories while enjoying the discounted rate offered for bulk purchase. Some may offer greater support for distributors on marketing; better margin or even after-sales support. And others may educate their customers on possible issues such as warranty claiming if they purchased from grey market. While these ways may help to reduce grey market activities, it does not provide data for a company to analyze its channels and customers’ behaviour.

To achieve the capability to gather big data, companies can also look into solutions that turn their product into a smart product. This can be done by tagging each product with a unique identity (ID) on their packaging and track them.  The unique ID served as an interactive code where consumers can use their smartphone to scan and obtain information such as the authenticity of the product, product overview, etc.

Every scan of a product ID will be captured as data in a backend system. These data may contain information such as a profile of the user who scanned a product, where was it scanned, what was scanned, and more. With a unique ID on every product, business owners can track the movement of any single product, ensuring products are delivered to an intended market. Any location diversion of where goods should be can be easily viewed in the backend system. Furthermore, business owners now have visibility on their product inventory level across distributors and retailers, allowing them to have better inventory planning for their supply chain.

Find out how businesses can prevent the parallel import and grey market: