The worldwide grey market for IT hardware is costing the industry £3.1bn in lost profit, and its annual market worth is £25bn, according to research by consultant KPMG.
The study, sponsored by the Anti-Grey Market Alliance, found that, although the grey market acts as an alternative source of equipment for some in the channel, it can also damage brands and erode profits for vendors and VARs alike.
"Grey-market activity can involve breach of agreements with brand owners, including abuse of incentive and discount programmes," said KPMG.
However, the study found that 71 per cent of distributors feel it necessary to purchase grey-market products to be competitive.
"This is a problem for VARs. It creates a complex selling environment with no quality assurance," said Stanimira Koleva, channel sales director at 3Com.
Simon Welch, marketing manager at Clarity, said: "The quality vendors set contractual obligations for accredited VARs. Grey-market VARs with no commitments undermine them."
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