Tag: Grey Market

  • 80% of Online-Only Smartphone Sales in India Go to Grey Market

    80% of Online-Only Smartphone Sales in India Go to Grey Market

    A recent report by The Economic Times highlights a worrying trend in India’s online smartphone market: a large percentage of phones sold online are ending up in the grey market. Trade bodies claim that up to 80% of online-exclusive smartphones are being diverted by aggregators who exploit loopholes to purchase them in bulk and resell them at higher prices.

    Tax Losses and Counterfeit Risks: The Dark Side of India’s Online Smartphone Market

    These aggregators act as wholesalers, using numerous user accounts to circumvent online retailers’ purchase limits and acquire popular models in bulk. This creates artificial stock shortages on e-commerce platforms, frustrating genuine customers. The aggregators then sell these phones to retailers across states at inflated prices, who can further exploit the limited online availability to justify even higher markups.

    This diversion results in a dual negative impact. Firstly, it causes government revenue loss due to tax evasion. Aggregators often buy these phones using business accounts, allowing them to claim Input Tax Credit (ITC) on the 18% GST paid. However, when they resell these phones at a higher price through unofficial channels, the additional profit escapes GST taxation. Industry estimates suggest this could be a potential $600 million GST rebate fraud.

    Consumer Vulnerability and Brand Impact

    Secondly, consumers are left at risk. By purchasing from unauthorized sellers, they risk receiving counterfeit products or facing warranty issues later on. Additionally, they miss out on exclusive deals and offers often available through authorized online retailers.

    Smartphone brands like Poco, OnePlus, iQOO, and Realme are reportedly the most affected by this grey market activity. These brands are taking measures to curb the practice by issuing warnings to retailers and requiring them to sign undertakings promising to sell only through authorized channels. Moreover, some brands are appointing distributors to cater specifically to offline retailers.

    Need for a Multi-Pronged Approach

    The smartphone industry requires a multi-faceted approach to tackle this issue. E-commerce platforms need to enhance their systems to detect and prevent bulk purchases using multiple accounts. Additionally, stricter regulations and enforcement are necessary to deter tax evasion practices by aggregators. Finally, consumer awareness campaigns are essential to educate buyers about the risks associated with purchasing from unauthorized sellers.

    This is an ongoing story, and it remains to be seen how effectively these measures can reduce grey market activity in India’s online smartphone market.

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  • Sky-High Prices in China’s Grey Market Attributed to Strong Demand for Apple Vision Pro

    Sky-High Prices in China’s Grey Market Attributed to Strong Demand for Apple Vision Pro

    Apple’s Vision Pro Mixed Reality Headsets Face Soaring Prices in China’s Grey Market

    As Apple prepares for the global launch of its highly-anticipated Vision Pro mixed reality headsets, a peculiar trend is emerging in China. Tech enthusiasts in the country, eager to get their hands on this cutting-edge gadget, are encountering a challenge – a thriving grey market where prices are skyrocketing.

    Customers Paying Double the Original Price

    The Vision Pro has created a frenzy among buyers in China, leading resellers to take advantage of the situation by doubling the asking price. Reports indicate that eager customers are willing to pay twice the official rate to secure this high-tech device. The original price range of $3,499 to $3,899, depending on the model, has been dwarfed by the prices in the grey market.

    The Revival of the Daigou Market

    This trend is not entirely new. The practice, known as Daigou, involves agents traveling overseas to purchase luxury items, which are then sold back home at marked-up prices. While the pandemic had dampened this market, the easing of travel restrictions has seen a resurgence. With Apple’s new product launch, Daigou sellers are once again active, promising deliveries from the U.S. to China.

    Apple’s Potential Game-Changer in the Mixed Reality Sector

    The Vision Pro is expected to make a significant impact in the mixed reality sector, an area where companies like Meta and Pico have previously ventured with limited success. Apple’s entry is seen as a game-changer that could potentially revitalize the market. Industry experts believe that this could be the turning point for VR/AR technologies, projecting a substantial growth in headset shipments this year.

    Shifting Dynamics in the Industry

    However, the industry also faces its challenges. For instance, Pico, a major VR brand, recently scaled back operations due to lower-than-expected sales. But with Apple stepping into the arena, the dynamics might just shift in favor of augmented and virtual reality technologies.

    Diversifying Revenue Streams for Apple

    For Apple, this venture goes beyond adding another product to its lineup; it is about diversifying revenue streams. With the iPhone being a significant revenue generator, the Vision Pro offers a new avenue, particularly in tech-hungry markets like China.

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