Gray Market

Definition: an unofficial market in which goods are bought and sold at prices lower than the official price set by a regulatory agency. Also Gray Market is an unofficial market where new issues of shares are bought and sold before they become officially available for trading on the stock exchange. The sale or import of goods by unauthorized dealers.

Trading in gray or "when-issued" markets can provide a good indication of demand for a new issue. In some parts of the world "gray" is spelled "grey". In this case, items that were manufactured abroad and imported into a country without the consent of the trademark holder would be a gray market good.

Gray Market Merchandise

American consumers are purchasing bargain priced merchandise that was originally not intended for sale in the U.S. marketplace, in increasing number
This "grey market" merchandise ranges from perfume and watches, to electronic items and cars, and is usually sold through the mail, at specialty stores, discount outlets and at some larger retail outlets.
While not usually illegal, grey market merchandise can result in unexpected disadvantages to the buyer, the Better Business Bureau warns.
In many cases, the disadvantages may outweigh the cost savings. For example, grey market goods may not be covered by the manufacture's warranty or if the product does come with a warranty, it may not be valid in the U.S. If such a product breaks or is defective, the manufacturer may not be willing or even required to rectify the problem. Other disadvantages may be nuisances; for example, instructions may be printed in a foreign language.
In some instances, the product may not comply with U.S. laws and may require costly adjustments prior to being used legally within the U.S. Grey market cars, for example, may not comply with federal pollution and safety standards, and thereby will require a number of costly alterations in order to become legally titled and licensed in the U.S.
The BBB recommends that before you buy a grey market item, decide whether any potential savings are worth the trade off. Have the merchandise inspected by someone knowledgeable about the product. In the case of cars, you can check the vehicle identification number with the manufacturer's authorized representative. Keep in mind that these goods are seldom eligible for manufacturers' price rebates, may be models no longer available in the U.S., and may require work not offered by the U.S. distributor.