Also referred to as the parallel market, grey market is a market in which a certain product is purchased and sold outside of a trading channel that is not authorized by the product’s manufacturer. To put it easily, grey market is the market segment where unofficial trading happens.
Products sold in the grey market are usually less expensive when compared to the products that are purchased from official distribution channels. However, the products may not be of good quality. The products sold in these grey markets may be counterfeit or may have come defective parts. For instance, the products may be of second-hand quality or some of their parts are of second-hand quality, but are presented to the customers as new. However, this is not always the case. There are some cases when the products sold at grey markets are authentic but are being distributed illegally. Another important thing is that the products on grey markets do not support warranties, updates or any other support.
However, grey markets may not be confused with black markets. While grey markets involve trading imported goods at a different price. Importing prohibited and illegal products and services such as drugs or firearms cannot be categorized under the grey markets. Trading such comes under the black market. Typical grey markets are small businesses built by individuals who are not authorized retailers of the goods being sold.