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The Gray Market Evolution

In a world of changing economies, it is hard to determine where the next challenge will arise. And in some cases, that is a risk hard to understand.

In recent years, most of the fashion industry has been primarily focused on the challenge of online counterfeit, and as it continues to grow the fight for blocking its adoption by the mainstream public is essential. And yet, as one challenge expands, another begins to take flight.

Digital has created a number of canals to build or reinvent business strategies, but it has also opened the door to subsidiary markets that can upend a company’s presence. Today, the Gray Market is on the rise across digital, and is currently on track to surpass that of counterfeit revenue with over $58 Billion in technology products alone, sold over the last year (Wiley).

Consumers are now making their way to the Gray Market, because it provides a conduit to obtain the products they dream of, at a reduced price. Where else can you get original timeless pieces at a reduced price, and not have to incur the problem of counterfeit, but through the gray market. According to the Federation of the Swiss Watch Industry, last year exports fell nearly 10% to $19.4 billion, its steepest decline since the global financial markets collapsed in 2009. (Barron’s)

The evolution of the Gray Market is continuous, and it will only get more difficult to manage. Recently, the market has become the newest channel for even counterfeit dealers to sell their products, and tap into this healthy revenue stream. Counterfeiters now have the capability to generate high-quality Fakes, which can sometimes fool even the pros in product and packaging. What better way to get the best quality fakes out to the public, than by fooling them on the Gray Market.

Imagine the flight of the consumer who thought they bought a real Swiss Watch on a site that sold Gray Market products at a discount, and it turns out to be fake. It is not just the photo, text, or even price that can fool you… it could also be the hologram security sticker. The gray market can be just as dangerous as the counterfeit market, if you are a consumer. And for the brands that are suffering from digital sales, the cost is even higher. Decreasing brand value and reputation is consistent in both markets, but it can be even greater if consumers are fooled into buying counterfeit at a slight discount to a real product.

The diversification of digital market segments is only to be expected in a world of new innovation, but it is becoming even more important to be vigilant as consumers or brands. As consumers we have to know the signs of what is too good to be true, probably is. And, the other side of that coin is in the hand of brand owners, who can obtain the power to detect and impede intrusions to their identity, by analyzing the signs and addressing the problem at its core. Just as technology has created an avenue for those who intrude on brand identity, there exist intelligent solutions capable of being the impetus to their growth or existence.

The future of digital will have further innovations and variations to its foundation, but success is dependent on staying ahead of the moving ball. If you can answer the question of where, when, and how the next intrusion will occur, then you are ahead of the illustrious game.