Does anyone know with certainty how and where dealers obtain goods for sale as gray items? Do they simply buy heavily discounted from local dealers in whatever country? I ask because when I calculate the price (regualr German retail pricing) of say...a M 135/3.4 APO (which is getting a lot of posting time recently) at € 1850 including 16% MwSt, then remove the tax, so the total is € 1595, then convert to USD at $1.00 = €0.88, I get USD$ 1403.00!!! That is below even the Smile Photo ads!

How do they do it? I used to order my gear from the US and pay c$70.00 to have it shipping, but anymore I don't need to look much outside of my neighbors to the north. PS Don't even think about buying gear in Switzerland - we are always 33% minimum above US and German prices, but there are good values when they BUY your gear here.

-- Reto (redcave@schweiz.com), March 12, 2002

Answers

gray market goods -- i.e. products brought into a country by someone other than the authorized regional distributor -- are obtained in different ways. sometimes an official distributor who has received product from the mfr. will want to offload some of his stock for cashflow reasons, etc. he will sell on the sly to a grey marketeer at something close to (or, in a distress situation, maybe below) his wholesale price. the graymarketeer then takes the goods into another market and sells them at a price well below the MSRP both because the product is being sold without the extra built-in cost of a warranty, and because the grey marketeer typically will have lower overhead costs than a full blown official distributor (have you seen leica USA's office complex??). just to be clear, warranties are typically paid for by the distributor. a grey market product will not have an official warranty, and therefore can be sold at a price that reflects that cost savings. now some clever grey market sellers (like b&h) will add a warranty back in, paid for by them, to make the goods more enticing. this "aftermarket" warranty will usually not be as good, and so not as expensive, as the official warranty. apart from getting goods on the Q-T from official distributors, grey marketeers sometimes buy products legitemately in markets where, due to a mfr's global pricing strategies, exchange rates, or variations in warranty coverage (remember the five year passport??), the goods are much cheaper than in another part of the world. by moving the product around, it is possible to make a nice profit. in this situation, the products also will likely have no enforceable warranty.

-- roger michel (michel@tcn.org), March 12, 2002.