What is a grey market solution? Well, have you ever been on Amazon and seen a cell phone or pricey purse that you’ve been wanting to buy listed at a reduced price? It seems great, but you hesitate to purchase the item because you aren’t sure that the seller is legitimate or the product is “the real deal.” Everyone loves a bargain, and it’s tempting to jump at a listing that makes it appear as though you’ll be getting exactly the item that “everyone else has” for so much less money. Yet, you don’t add that item to your cart because you have a not-so-good feeling about it: you wonder, “What if I spend all this money and I end up receiving a fake or a knock-off product?”
Grey market solutions are similar. In fact, they are a growing issue in the technology industry. Grey market providers offer businesses software and services outside of a legitimate distribution channel. Then businesses pay the price when they discover that the benefits of working with legitimate partners and manufacturers don’t apply to them.
What does grey market mean?
The term grey market simply means that someone is selling a product or service outside of legitimate distribution channels. It does not necessarily mean that the product is a fake. But, it does mean that the person selling the product or solution lacks permission to do so. This can have serious consequences when your business relies on the software to run smoothly.
Because grey market providers do not have any official affiliation with the product manufacturer, they also do not have the most up-to-date information about the product.
Problems with Grey Market Solutions
Because grey market providers do not have any official affiliation with the product manufacturer, they also do not have the most up-to-date information about the product. This can lead to a number of problems for businesses:
- No product updates. Grey market providers aren’t getting updates and patches from the manufacturer, which means neither is your business. Of course, this can be critical if the patches are designed to address vulnerabilities. But, even if they are simply usability updates, you’ve lost out on having the most modern solutions.
- Lack of support. Hit a problem with your project? Grey market provider unable to figure it out? Well, unfortunately, there’s not too much that can be done. You’re without backup when you work outside the boundaries of legitimate distribution channels. There is no “next level” support team that can help resolve your issue at this point, and you could experience significant unnecessary downtime because of this.
- Extra development costs. Grey market providers aren’t educated by the product manufacturer. This can lead to costly mistakes being made, projects taking longer than necessary to complete or even paying more for features that might ordinarily come with the product.
- Dangerous security impacts. In the end, if you’re working with a grey market provider, you simply don’t know what you’re really buying. You don’t know how the code has been modified, which means that you don’t know if the provider has maliciously or accidentally done something to the product that will open your business up to future risks.
But, it looks like the right product.
Oftentimes, grey market providers will continue to use a company’s logo or other identifying information as they sell their services. Here, these companies are crossing a line as, generally speaking, logos and other intellectual property are trademarked. This means that it’s illegal for them to use these types of identifying information without permission. Yet, they do.
In the end, working with a grey market provider still leaves your company at risk, because unless you're reading every line of code yourself, you really don't know what product you're buying.
So, it is certainly possible that you might be researching solutions for your business, identify a product that is the best fit for your needs, and then find what looks to be a legitimate solution being offered at a lower price. But before you enter into any contract with this company, be sure to ask:
- Are you authorized to sell this product? Do you have a letter from the manufacturer enabling you to do so?
- What are the licensing details?
- Will my contract allow me to get support from the product manufacturer, if needed?
- How has the software been modified from the original version to accommodate my needs?
- How will you protect my data and that of my customers? What recourse do I have if there is a breach?
- How will you maximize my use of this software? Will I be able to take full advantage of all possible product features without the cost of custom coding by your team?
In the end, working with a grey market provider still leaves your company at risk, because unless you’re reading every line of code yourself, you really don’t know what product you’re buying. It’s always best to work directly with an authorized partner or the product manufacturer directly so that you get the best service and most secure solution possible. Keep in mind that at the end, what looks cheaper might result costing a lot more.
At OTRS, we have had numerous businesses reach out to us after having worked with grey market providers who have steered them wrong, so it’s a matter that I feel passionately about. So, if you have questions about the topic or OTRS grey market providers, please feel free to get in touch with me today.