The Online CMO by Philip Hallenborg

A gifted colleague of mine brought my attention to the grey market of products that is emerging in the aftermath of the financial crisis.

The simple facts are:  

• Increased bankruptcies of companies as well as whole sellers and  retailers are driving an emergence of a grey market. Products such as electronics and accessories etc that are not used, but “not new” are becoming increasingly available and sought after. For a Swedish example check auctioneer www.kvd.se
• These units are anticipated to “flood” the market over a foreseeable future (Q1-Q3). http://www.bloomberg.com/apps/news?pid=20601103&sid=ag5pxFL3YpFY&refer=news
• As customers increasingly seek value, the portion of customers looking for distressed stock and “new” products that are not sold directly from a manufacturer or traditional retailer will increase.
• Many etailers with an appropriate strategy to address this can increase sales.

Bottom line recommendation

• Create an extended sales strategy taking end of life or soon obsolete products into an outlet business model.
• Cease to offer these products in your natural site environment.
• Drive demand using on-line vehicles only. Target this specific market only (e.g. search terms “de-stock”, “outlet”, “new used ”, “distressed stock”, “bankruptcy retailers”).
•  Set up a dedicated landing pages with an outlet look and feel for the limited products that link to a special store set up (Dell SMB still fronting). No links to this landing page from our main site to minimize cannibalization.
• Balance units and margin$ using the new outlet channel.