The gray market refers to the trade of goods through unauthorized channels, outside the brand’s official distribution network. Unlike counterfeit goods, gray market products are genuine but are sold in regions or markets they weren’t intended for. This is often done by fraudsters seeking to take advantage of price differences between countries or to bypass regional distribution restrictions.

The appeal of the gray market for fraudsters lies in the potential for high profits. They can buy products in a low-cost region and sell them in a high-cost region, undercutting official channels. However, this practice harms legitimate businesses, leading to loss of revenue, undermining of official distributors, and potential harm to brand reputation. For example, a spirits brand might sell its products in countries with high taxes, making the retail price significantly higher. Gray market sellers take advantage of this by purchasing the spirits in countries where taxes are lower and then reselling them in high-tax regions at a lower price than official distributors. This practice undermines the brand’s profitability and damages its pricing strategy, which is designed to account for local taxes and market conditions. It also risks lowering brand exclusivity and harming relationships with authorized distributors.

Authentic Vision’s advanced anti-counterfeiting technology plays a vital role in combating gray market activity. Each product protected by Authentic Vision’s solution is linked to a unique digital fingerprint, and every scan of the product label is geolocated. This allows brands to track where their products are being scanned in real time, providing visibility into distribution channels and identifying gray market activity.

Through Authentic Vision’s intelligent backend, companies can assign a target country for each product. If a product is scanned outside of its intended region, the system can immediately flag it. Brands can even set up alerts or display specific warnings to consumers, letting them know if the product they are scanning has been sold outside its authorized market. This helps protect brands from the financial and reputational damage caused by gray market sales, while offering insights that can be used to enforce distribution strategies and protect against unauthorized sales.