ough unauthorised distribution channels. While the products are authentic, they bypass the brand’s authorised retail networks, which creates a range of challenges for both retailers and brands. And there’s your first myth busted – many people confuse the grey market with counterfeit goods. So let’s be clear, the grey market involves the distribution of genuine products, not fakes. One other common misconception is that selling grey-market products is illegal, but in most cases, it’s perfectly legal. (What? How?) The key principle here is called international exhaustion, which is a concept in intellectual property law. (Don’t worry, I’m not going to get too technical, I’m a marketer not a lawyer). When a brand sells a product in one market, its control over that product’s resale in other markets is exhausted. This means the product can legally be resold through unauthorised channels, even if it wasn’t intended for that market. This legal loophole explains why you’ll often find luxury beauty products, including high-end fragrances, available at ridiculous discounts at bargain retailers. To counteract this, many beauty brands create region-specific versions of their products, with slight differences in packaging, formulation, or even product names, making them harder to resell across borders. Brands also employ strict distribution agreements with authorised retailers, limiting how and where their products can be sold. These strategies help brands regain some control, but they don’t entirely solve the problem. Reputation and pricing  Another common misunderstanding is that grey-market products are of lower quality. In reality, these products are generally the same as those sold through official channels. However, issues often arise around warranties, instructions, and regulatory compliance.  For instance, a beauty product that meets EU regulations might not align with Australia’s safety standards, which could lead to risks such as allergic reactions or safety hazards if the product is improperly labelled for the local market.  Hot tip: This one is especially important when purchasing SPF. The Australian Competition & Consumer Commission (ACCC) has stated that local manufacturers aren’t responsible for problems with grey-market goods. If there’s a consumer guarantee issue, the unauthorised seller is obligated to provide a solution. They cannot refuse to assist or direct the consumer to the manufacturer or local authorised sellers.  Additionally, if the product includes a manufacturer’s warranty, it may not be valid in Australia. Manufacturers and local authorised sellers aren’t required to honour warranties or provide support on grey-market items if their warranty terms exclude these products. So, while consumers might enjoy cheaper prices, these purchases come with hidden risks. Brands, on the other hand, face legal consequences and damage to their reputation if grey-market products fail to meet local regulations or, worst-case scenario, harm customers. Even though the brand didn’t directly supply the product in that market, the consumer, (understandably), holds the brand accountable. This can damage trust and weaken brand loyalty. Not what any of us is looking to achieve. The grey market doesn’t just affect a brand’s reputation; it also undercuts its pricing strategy. When unauthorised sellers offer products at lower prices, authorised retailers are forced to either lower their prices to compete or lose customers. This leads to price erosion, where the perceived value of luxury products is diminished. It’s a price war that often dominates marketplaces like Amazon. Recently, an announcement that premium Swedish fragrance brand Byredo is now available online through Chemist Warehouse’s Ultra Beauty, at a surprising 25 per cent off the recommended retail price, caused quite a stir among customers. Traditionally, Byredo has been sold exclusively in Australia by beauty giant Mecca, so the news quickly sparked widespread interest on platforms like Reddit, where customers speculated on whether the products might be counterfeit or part of the grey market. Once an industry term, grey market is now becoming familiar to consumers as they start to recognise how these unofficial channels work. Solutions So, how do brands fight back? One common strategy is price harmonisation across different regions. By aligning prices globally, brands reduce the incentive for resellers to buy products in one country and sell them in another at a profit. With fewer price discrepancies between regions, the grey market becomes less attractive to resellers. Some brands are also turning to technology to manage their supply chains better. Blockchain technology is being increasingly used to track products from the moment they are manufactured to their final sale, providing brands with greater control and transparency over their distribution channels. This not only helps prevent unauthorised sales but also allows brands to maintain product authenticity and quality. By the way, if you haven’t heard of Blockchain already, do your research. Trust me, it’s worth it. Another effective tactic is consumer education. Brands are working to raise awareness about the risks associated with grey-market purchases, such as lack of warranties or safety risks due to improper labelling. By emphasising the importance of buying from authorised retailers, brands can encourage consumers to make informed choices and avoid grey-market goods altogether. This is why retailers and distributors partner with brands to be listed as official, authorised stockists on their websites. Brands need a multi-layered approach to tackle the grey market. It’s not simply about blocking unauthorised sales, it’s about creating region-specific products, strengthening distribution agreements, and educating customers on the risks of buying outside official channels. Like it or not, as long as there’s demand for bargains, the grey market isn’t going anywhere. Staying informed is the best way to stay ahead and safeguard your brand’s value.  And that’s the black-and-white of it.