Vendor pact sets sites on grey marketing

Vendor pact sets sites on grey marketing

Five IT vendors have banded together to tackle the growing scourge of parallel importing and grey marketing scams to form the Anti-Grey Market Alliance - AGMA.

Networking vendors 3Com and Nortel Networks have teamed up with PC manufacturers Apple, HP, Compaq and document company Xerox Corporation to educate the market place about the illegal or unauthorised flow of products to the market.

With combined fiscal year 2000 revenues of $US150 billion, the alliance has the potential clout to be a significant force in the crack down against dodgy importing practices. Furthermore, the group has put out the call for any IT companies around the world to join the consortium.

Initially, the alliance members will work on educational programs and will provide a single point of contact for authorised distributors, resellers and others to call to report unauthorised grey marketing activity. The group will also embark on benchmark studies, the formulation of non-binding industry guidelines, and, as appropriate, advocate for public policy in areas like law enforcement and customs.

The grey market in the US is estimated to be worth $20 billion in revenues every year, according an industry body. Meanwhile in Australia, newly appointed 3Com country manager Mike Clarke says it's almost impossible to quantify how big an impact grey marketing has.

"It's amazing, we've bumped up against it in some deals where there is no way the [products] could be offered at that price," says Clarke.

Clarke claims the alliance will attempt to kill parallel importing at the source with increased tracking and Web site verification of serial numbers available in any given region. "In this day and age, this kind of [monitoring] is not that difficult to do," he adds.

While vendors lose revenue from grey marketed products, and customers run the risk of purchasing inferior and non-warranty product, the legitimate channel faces the worst of both situations says Clarke.

"The real problem for the channel is when you go out and do all the work on a deal, only to have the customer turn around to you and say they've received a fax from someone you've never heard of with a solution [priced] much lower than yours," argues Clarke. "That's where the loyal channel gets stung."

Photograph: 3Com's Mike Clarke

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