Grey days

Are vendors really committed to cleaning up the channel?

Tags: United Arab Emirates
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Grey days Keeping track of product flow in the Middle East and Africa remains an issue that some vendors find challenging. (ITP Images)
By  Andrew Seymour Published  December 12, 2010

Efforts by vendors to control the grey market have improved tremendously in recent years.

The introduction of rigorous auditing programmes, sustained awareness campaigns and enhanced sales policies have all led to a greater level of enforcement being seen in the Middle East. 

Larger vendors with the ability to throw money at the issue, such as Cisco and HP, have enjoyed some notable victories over companies found to be violating their sales rules, while other product suppliers have been vociferous in vowing to get tough on perpetrators.

This week, communications vendor Avaya confirmed it was finally starting to put the systems in place to get a better handle on grey marketing than it has done in the past.

Investments in serial number tracking systems, as well as a general tightening of Ts and Cs surrounding special bid contracts, have given Avaya renewed impetus to crack down on a problem that - although not necessarily showing any signs of exacerbating - is still a thorn in its side.

Having had the chance to speak to several large authorised distributors operating in this region during the past week, it is clear that any attempts by vendors to clamp down on companies deliberately trading grey kit are encouraged. After all, authorised partners are the ones who stand to lose the most from grey marketing, not least because it undermines investments they have made in the market.  

For those that play by the rules, the prospect of having to comply with more stringent auditing and verification procedures in future is something they actually welcome. And fortunately for them that is the way it is going.

Make no mistake about it, the Middle East channel will be forced to accept a greater degree of transparency and compliance than it has ever known before in the coming months and years, simply because the stakes for vendors caught breaking the rules these days are so much higher.

But this is also where it gets interesting. Because if vendors are requesting a whiter than white approach from their channels, they are really going to have to demonstrate the same level of commitment themselves. And in a region where so many of them profit from the high volume of re-export activity which takes place, that's a big ask.

There is no doubt that vendors in the Middle East will carry on pledging to take an uncompromising stance with grey marketeers, but the issue will only ever be properly dealt with when they bring an end to the very antics that so many of them turn a blind eye to.

And at the end of the day, it is going to take a very brave vendor to do that when there is a strong chance it will be highly detrimental to its own sales numbers.

What, in fact, we are more likely to see is this continuation of vendors highlighting isolated incidents as examples of their efforts to apprehend grey marketeers, without having to get so close to the root of the issue that it damages their sales prospects.

Grey market activity transpires because of all sorts of factors, from basic price discrepancies between regions to the lack of local channel infrastructure in a given market. And while new systems and procedures are being introduced to plug those holes every month, authorised partners will never be completely protected until vendors take a truly unconditional approach to addressing the bigger picture.

For now, though, too many vendors are still the cause of the very problem they claim to be working hard to find cures for.

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