What’s the “grey market” and why is stuff sometimes cheaper online?

A client recently questioned our pricing on a switch that they found substantially cheaper on Amazon and were asking why such a price difference exists.  Well, the first reason was that we provided this quote in May and HP actually dropped the price in early June, but this didn’t explain the size of the gap in pricing. The second reason is that they likely are looking at grey market equipment. 

“Grey market” products are original, new-in-box products that come from HP, Dell, Cisco, or another manufacturer, but was sold in a way that comes with risk for the buyer.  For example, these sorts of technology manufacturers will often sell equipment into developing countries at discounted prices to encourage economic growth.  Some hustler in that country then buys a switch for $900 US and flips it back to the US for $1200 via Amazon, eBay, or some other online B2B site for a quick $300 profit, when the local price in the US is $1600.  If you ever need to call the manufacturer for support, they know that the serial number was exported and they’ll deny the warranty.

Grey market products may provide up-front savings, but lack of updates and support make the product obsolete very quickly, making the total cost of ownership much higher.  If a deal seems too good to be true, it likely is.