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Category: Grey Market

Authorized vs. Unauthorized Dealers: What’s the Difference?

When it comes to buying authentic products, it’s important to know the difference between “authorized” and “unauthorized” dealers.

What is an “Authorized” Dealer?

An authorized retailer has a contractual relationship with a manufacturer. Simply put, authorized dealers are granted official rights to sell the brand’s merchandise.

This relationship benefits both the retailer and the manufacturer. For manufacturers, authorized dealers ensure supply chain transparency and related sales research, pricing consistency and greater profits.

An authorized retailer benefits from recognition by the brand as authorized seller, which gives their store reputability and verifies their merchandise as authentic. Additionally, their products are covered by the manufacturer’s warranty.

What is an “Unauthorized” Dealer?

On the contrary, an unauthorized dealer does not have official rights to sell a brand’s merchandise. Also known as gray market dealers, unauthorized retailers generally obtain genuine merchandise overseas and bring it back to the U.S. for sale. However, their merchandise can be acquired from questionable sources including damaged, defective, used, or stolen goods.

Due to the questionable nature of goods sold by unauthorized sellers, manufacturers discourage the purchase of such items. In fact, brands will not honor the manufacturer’s warranty of items purchased from unauthorized retailers. This is why so many gray market sellers offer their own in-house extended warranties.

Why Sell Unauthorized Merchandise?

From Costco to Amazon, even big box stores have engaged in unauthorized retailing. Why? Quite simply, to offer lower prices. An unauthorized retailer can often purchase and then re-sell products at a lower price than an authorized retailer.

Are Unauthorized Goods Legal?

In the UK, the sale of gray market goods was recently made illegal. In the U.S., because gray market goods are not counterfeit or pirated, it’s generally legal.

What’s the Big Deal?

Those who sell gray market goods seek to profit from differences across markets, such as currency fluctuations, tax differences and manufacturer’s regional pricing differences.

Because most gray market goods are obtained overseas,  they pilfer purchases from stateside retailers. When a brand’s products are purchased overseas and then resold in the U.S. marketplace, it negatively impacts the brand’s U.S. sales.

Gray market goods can also negatively affect sales price. Authorized retailers are forced to sell their merchandise for less in order to compete with lower-priced authentic foreign products.

While some consumers may appreciate the discounted price of gray market goods, it comes at a cost to brands and legitimate regional sellers.

How to Spot a Grey Market Watch

This is the final post of a three part how-to series offering guidance for luxury watch buyers.

Although grey market products aren’t necessarily ‘illegal,’ customers assume certain risks when buying grey market watches. Grey market watches won’t have a manufacturer’s warranty or the same resale value as a watch from an authorized dealer.

Here are 5 ways to spot a grey market watch:

1. Discounted more than 20%
As a rule of thumb, authorized dealers are contractually authorized dealers are contractually restricted to offering no more than 20% off manufacturer’s suggested retail price (MSRP). If a watch is discounted 30-40% off current list price, it’s most likely grey market. Although there are legitimate occasions where an authorized dealer may offer more than 20% off current list price, these are typically limited to discontinued models, a watch that was previously purchased and returned, or stock acquired before a manufacturer’s price increase.

2. Invalid or missing manufacturer’s warranty
A watch is only covered by a manufacturer’s warranty if it includes the original warranty card, stamped with the authorized seller’s name, and is issued for US service.Warranty card checklist

An original manufacturer’s warranty card is required for in-warranty service by the manufacturer. A watch sold without a card or one that’s photocopied is not eligible for in-warranty service.

Warranty cards are often removed from grey market watches to protect the supplier who sold their merchandise to unauthorized dealer. This is because valid manufacturer’s warranty cards are stamped with the authorized seller’s name. A watch described as having ‘open papers’ means the warranty was not validated by the authorized dealer. In either case- a watch missing a warranty card altogether or one that is not stamped with the authorized dealer’s name- will not be covered by a manufacturer’s warranty.

Other times, a grey market watch will include a foreign warranty card (i.e. written in a foreign language). This is because the watch was originally intended for sale outside the US, and will not be covered for service in the states. Just think about what you’d pay in shipping and insurance to obtain service in China… So, you’ll want to verify the warranty qualifies for in-country service.

3. Third party warranty coverage
Because grey market items are generally not eligible for manufacturer’s warranties, grey market dealers will offer their own warranties. However, dealer warranties are not honored by any other dealers or the manufacturer’s authorized service centers. Furthermore, the warranty is only valid as long as the dealer is in business. Thus, it’s important to consider the reputation and stability of the dealer. Otherwise, any repair will be at your expense.

4. Missing serial number
To protect the supplier, it is common practice for grey market watches to have the serial number removed from the caseback. A watch missing a serial number is an immediate red flag and can have serious implications for the buyer:

  • You could be charged with stolen property. Some state laws consider it illegal to possess an item that has had its serial number removed.
  • The manufacturer may refuse to service the watch and even confiscate it when sent in for service.
  • Your insurance company may deny a claim if your watch is lost or stolen.
  • It will impede the resale of the watch and your ability to obtain a decent sales price.

5. Product inserts in foreign language and/or photocopied
The booklet/manual accompanying a product should be printed in the county’s native language. For example, an item manufactured in the U.S. should include English text. If product inserts are printed in a language other than the country’s native tongue, it is indicative of a grey market product. Product inserts should also be original, not photocopied. If they are photocopied, this is an additional sign that it’s grey market. product.

How can you avoid buying a grey market watch? Ask a lot of questions. If the deal seems too good to be true, it probably is.

The Better Business Bureau suggests some advice to avoid buying grey market items:
Ask for seller status – Ask the seller if they are an authorized dealer. If not, you should consider shopping from a brand’s authorized dealer.
Ask about the product – Point blank, ask the seller if the item is grey market. Sellers are obliged to disclose whether they are selling a grey market product.
Confirm the warranty – Ask if the item has a valid warranty in the United States. If not, confirm whether the non-US warranty will be honored. If it will be honored, who do you call when you need repairs covered by the warranty (the dealer, manufacturer or service agency)? If you’ve already purchased a watch and come to discover it has an invalid warranty, you may be able to return the item for a full refund.
Verify the serial number – Contact the manufacturer to verify the serial number. If you discover that you’ve purchased a watch with its serial number removed, you should immediately contact the seller and insist to be refunded the full purchase price or that they provide a replacement with its serial number intact.
Use a credit card – A credit card allows you to dispute charges for a purchase of grey market merchandise misrepresented at the time of sale.

RELATED: HOW TO SPOT A FAKE LUXURY WATCH

Trusted.com encourages you to buy luxury watches from authorized dealers whenever possible. Trusted.com has partnered with TAG Heuer and Richard Mille to offer eTitle authentication. To instantly verify the authenticity of a TAG Heuer or Richard Mille timepiece, enter the serial number into our Trusted.com Check Authenticity search bar. To find a Trusted.com Authorized Retailer offering eTitles for TAG Heuer and Richard Mille timepieces, we welcome you to visit our store locator page.

Brand Protection Best Practices: Accessibility

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