The grey market for electronic components refers to the trade of products on the open market and not through official channels
According to Alessandro Nardo, founder and sales manager of Electronic Partner, an independent distributor with proven track record over 22+ years as a professional and reliable supplier, electronic components found on the open market are often genuine, but are sold outside the official distribution networks for various reasons:
According to Nardo, the grey market is an important source that should not be overlooked for a number of reasons, including:
He warns, however, that buying on the open market carries significant risks. “Some of the risks include the activities of unscrupulous traders and fly-by-night vendors looking to make a quick profit, as well as the increasing risk of counterfeiting,” he states. Other risks buyers need to consider, include:
Says Nardo: “By understanding the factors that characterize the grey market, companies can make informed decisions about their sourcing strategies and avoid the potential pitfalls associated with grey market purchases.
Nardo adds that the issue of manufacturer’s warranties versus open market warranties are another key issue for buyers to be aware of. He explains that official manufacturer’s warranties for electronic components usually have the following features:
“On the other hand, open market suppliers are generally only liable for replacing the defective component or refunding the buyer for the purchase amount,” Nardo says. “Some companies believe they can mitigate this with an all-risks product insurance policy, but they need to be sure that the policy covers collateral damage from electronic components purchased without a manufacturer’s warranty.”
He adds, “There is also another crucial factor in managing non-conformities in cases where a distributor stocks the items until required on behalf of their customer as a value-added service. This is a case that requires carefully determining what recourse the customer and the distributor have if the batch proves to be defective, or if there are problems with the open market supplier.”
According to Nardo, it is important to be aware of these warranty differences and to communicate them to customers prior to delivery for a number of reasons:
While the grey market can ensure cost savings and provide access to a broader range, hard-to-find or obsolete components, it also comes with significant risks and potential legal issues. Understanding this is crucial for buyers of electronic components to make informed decisions.
He says, “One important way buyers can protect themselves is by partnering with a professional independent electronic component distributor like Electronic Partner, who deeply understands the dynamics of the open market, has tried and tested procedures for managing the risks, and has a proven track record over time.”
He concludes that this type of partnership allows companies to better navigate the complexities of the grey market and make choices that align with their needs while mitigating the potential risks.
Article originally published in Italian in the print edition of Elettronica AV.
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