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It's in black & white: there's grey everywhere

03-September-2005
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It's in black & white: there's grey everywhere

Spending Rs 3,500 to buy a VCD player from a showroom does not sound like an attractive deal , especially when its available for Rs 1,000 at Palika Bazaar. It's no surprise that the grey market accounts for 50% of the total VCD sales in India. And if all low-end electronic products are included, then dealers say that 35-40% of the sales are dominated by the grey market.

A market survey conducted by ET shows how customers get attracted towards the use-and-throw options. For instance, a particular model of Sony digicam, priced at Rs 24,000 in a showroom is being sold at Rs 16,000 in the grey market. Though such offers do not come with a guarantee, a price differential of more than 30% does influence the customers.

A few more examples include Sony Playstation, which costs Rs 12,000 in the showroom, being sold for less than Rs 8,000, Casio's scientific calculator, whose original price is Rs 550, being sold at less than half the price at Rs 250 and an Olympus camera with a showroom tag of Rs 2,600 available at Rs 1,500. In fact, most of the shops in the grey market keep both choices available, but also add that there is a huge difference in the sales.

Even industry officials agree that the grey market has a bigger share for low end products. Says Ravinder Zutshi, deputy MD, Samsung India,” As the high end products do not sell much in the grey market, their supply also remains low. It is the low end products, which have great demand there.”

A large share of the products sold in the grey market, particularly playstations and digicams, appear to belong to the Sony stable because. When contacted, the company refused to comment on the issue.

The loser in the whole deal, of course, is the authorised dealer. Rahul Das of Dass Studios, an authorised dealer of Sony in Connaught Place says: ”The grey market has badly affected our sales. For instance, the lowest model of a Sony digital camera, which costs around Rs 12,000 is available in the grey market at less than Rs 8,000. So consumers end up purchasing those products.” But experts say this might not be the case for long and the price gap between the grey market and official market is declining.

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