Grey goods on Black Friday

?Here’s what you need to know about parallel imports.

The #blackfriday craze is a fairly new phenomenon to South Africa.  But, when it came in a few years ago, it came in hot.  Historically, Black Friday stems from the USA and occurs on the Friday after Thanksgiving Thursday, with tech driven sale on the Monday following Thanksgiving weekend called Cyber Monday.  As a result, a long weekend of shopping mania is almost upon us.

I have yet to see the kind of real savings here in South Africa that Americans see to make it worth my while to queue at shops before they open their doors.  However, I must admit that I have done some online window shopping to see what might be on offer this week.  The thing that peaked my interest was how often online shops offer parallel imports or grey goods for sale without really explaining what this means for customers. 

A parallel import or grey good, contrary to some beliefs, is a genuine product made under the same conditions and to the same standards as any other product made with the consent of the original trademark owner.  What makes the good a parallel import has nothing to do with the “genuineness” of the product, but rather with regard to how the product ended up for sale in South Africa.  Confused?  Simply put, what this means is that this product, when it was manufactured, was done so with the express permission of the trademark owner, but has ended up in South Africa without the authorisation of that owner. 

For example, a genuine NIKE trainer is manufactured in Vietnam and imported into South Africa by Company A who is the authorised distributor of NIKE.  Company A might sell this NIKE trainer in South Africa for R100 (bargain!).  Company B finds this exact NIKE trainer in Dubai being sold for R20, and works out that by importing the trainer into South Africa and paying the necessary tax, they can still make a profit by selling the trainer at R75 (more bargain!).  Therefore, Company B parallel imports the genuine trainer into South Africa without the consent of the trademark owner and offers it for sale.

Whilst technically allowed in terms of South African law, various pieces of legislation lay down requirements for selling parallel imported products here.  Primarily regulated by the Consumer Protection and Trade Mark Acts, anyone selling parallel imported goods needs to abide by the following:

• A product must be clearly marked as a parallel import or grey good at the point of sale.  For online products, this means that the disclaimer must appear before the customer is able to purchase the product.
• The notice referred to above must be big enough so that customers can see it, and displayed on all forms of advertising such as websites, catalogues, in-store promotions and packaging.  In other words, an inconspicuous notice or one in a tiny font online is not going to cut it.
• The notice must also, in plain language, advise the customer that the trademark owner will not honour any warranty, nor will their official or licensed importer of the goods.

Going back to our example, if you purchase the NIKE trainer online as a parallel import, you will not be able to take it into a NIKE store in order to return the item if you are unhappy with it.  Any issues arising with the product will need to be taken up directly with the company from who you purchased the item in terms of their returns policy, or in line with any warranty that they offer independently.

You may also be surprised when your NIKE trainer arrives at your door next Friday without its box.  Well, that’s because South Africa is currently a bit confused when it comes to the laws regulating parallel imports.  This probably deserves a separate post all on its own, but essentially it means that our copyright laws have a loophole that can’t stop someone selling a genuine product, but can stop someone selling it in its genuine packaging.  Weird, I know.  The lawmakers are trying to change this in line with most countries, but it’s taking a long time.

Some final words of advice, before you fall victim to the hysteria that could see you buying an automatic feeding, 3-metre-high, laser shooting cat jungle gym (for a cat you are yet to own) just because it was 75% off, perhaps think twice about some of the strange legal terminology that shoppers usually skip past.  Also, the best way to save a buck this #BlackFriday is to stay at home, and offline.