The Canon USA Gray Market War Continues

The Canon USA Gray Market War Continues

Yesterday, Eric Reagan of Photography Bay provided us with an update on the ongoing saga of Canon's attack on the Gray Market. To recap, "Gray Market" refers to the sale or exchange of goods legally, but through unintended means. In many of these instances, products manufactured for Asian markets are channeled through to US markets. This means that these companies sell the products legally, but not via the intention or desire of the manufacturer. The main setback of purchasing Gray Market is the product will be insured through the Asian market (or whatever market it originated from) and not through the US market.

In an earlier November post, Photography Bay reported that Canon USA had filed suit in Federal Court against Get It Digital, LLC and All New Shop, LLC and that they had filed a second suit against F&E Trading LLC. Get It Digital has officially submitted their response to the allegations by denying any wrongdoing. They are citing three main defenses to the allegations:

  • First Sale Doctrine
  • Laches
  • Acquiescence

In this post by Photography Bay, you can find the details and explanations of these defenses. I personally would not have understood what the Laches defense is, but the article does well in explaining all three. Also in the article is a brief summation of what will come next in the suits filed.

I also recommend reading the previous post from Photography Bay from last month, which announced the suits and explains the basis of Canon USA's federal suits.

If you are looking for a further explanation of what Gray Market is, you can refer to this article from Consumerist. Also on topic is Casey Berner's article on Fstoppers, which takes a stance against purchasing Gray Market products.

[via Photography Bay]

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Michael Kormos's picture

To me, it's a simple matter of risk. Is the difference in price between a gray market and a genuine product worth the risk of having the manufacturer refuse any and all service for your product, and assume non-existent warranty? I hear Nikon will flat-out refuse repair on any gray market product. This may not be a big deal on lenses, which don't break often, but how about a camera body? I've sent my D4 for maintenance a few times. Just having the rubber grips replaced cost me around $340.

Besides, out of the 86 Nikkor lenses for sale at B&H, only 16 are sold as gray market now. Same goes for bodies. 65 Nikon models are sold as USA products, and only 2 as gray market.

Something tells me Canon isn't the only one cracking down on this, and frankly, rightfully so.

Guy Brown's picture

Cracking down on grey market gear is just opening a whole new market for the black market fake stuff.

Mr Blah's picture

Yeah but industry giant aren't exactly notorious for embracing any new kind of market...
They usually have the "war on drugs" approach where they throw cash and lawyers at the issue until it's resolved or clear that they won't win...

Michael Hickey's picture

Canon doesn't refuse to service gray market, they only refuse the warranty. They'll perform gray market repairs at your expense.

Anonymous's picture

In my experience as a CPS member, they honored the warranty from a Canadian retailer (light gray market, I suppose...) but alas the damage, corrosion, wasn't covered by the warranty.

Thorsten Merz's picture

"Is the difference in price between a gray market and a genuine product..." - that suggests that gray market is not genuine product. I don't believe that's correct; just because something is gray market it doesn't make it fake.

Chris Adval's picture

I'm still wondering if the great Digital Rev is on the cross-hairs of Canon... I know I got my Canon 6D for $300 less from them, which was an amazing savings than any US retailer (for a new 6D).

Mike Vidales's picture

Hey Chris, did you have any issues with digital rev in your buying process? I was thinking about buying a lens from them but was a little skeptical

Chris Adval's picture

it was shipped very very quickly from China, pretty much overnight, no cost I think. I think the issue was their payment system wouldn't accept my debit/CC transaction. I had no choice but to use paypal to go around the issue even though the bank claims they were not blocking the transaction and said it was a website issue. Digital Rev support gave me a work around as of course they wanted to resolve the issue quick as possible to ensure I am happy and they sell the item quick as possible. No other problem honestly. I did get a combo/kit box though for my DSLR/body only purchase, so reselling it with that will cause some loss in value if I decide to do that ever, but I've been very happy with it.

I do have issues lens connection issues time to time, but reconnecting the lens usually solved that.

Derek Yarra's picture

The biggest victim of gray market sales is your brick and mortar camera shop. It's hard enough for them to compete with what ever sales or low prices big mail orders like B&H or Adorama can offer. It is impossible for them to match gray market dealers. I did not read the linked articles, but I'm sure this is a huge reason why Canon and other manufacturers crack down on this. It's hard to deny how much money can be saved, but every gray market sale is a step to any local camera store going under.

Travis Alex's picture

Agreed. There is a local camera shop here that is fortunate to be a small chain, and right now, for the last few years, they are doing very well. However, going in there, talking to the manager, and seeing how customers are always bringing up "Lower prices online", you can't help but notice and feel from their staff, they feel the pinch, especially during the Holidays. I heard one of them lose a big sale yesterday because they found a camera shop online selling a 70D w/ 18-135, bag, memory card, tripid, filters for $850. It's way under MAP, and obviously grey market, but you can't convince customers of that, they just don't understand and don't care.

George Perez's picture

I actually bought a Canon 6D through the gray market. The shutter blade ended up braking, so I sent it out to Canon and they fixed it for me. I thought it was going to cost me a couple hundred dollars considering that I bought it from the gray market, but they fixed it for free because it was under warranty.

Travis Alex's picture

You got lucky then.

B Jones's picture

Canon and their attitude towards forcing MAP in the US is what is drives gray market. If Canon would let the market drive prices gray market would not be a factor. Brick and mortar stores are also not competing in the 'new market' economy. I can't tell you the number of times I go to a physical store and they have nothing or only limited versions of something I am looking for. So of course I will go on-line, where the selection is vast and cost lower. I am ultimately driven by my budget concerns too!

Lenn Long's picture

What happened to fair market value? Capitalism says I can buy that camera at any price I want to and a vendor in China can sell it to me at whatever they want. As a consumer, I do assume some risk. In this case, it's a little too complex to make a fake Canon 5D Mark3, so I assume that it is a true Canon product. The other risk is that I have to have it warranty repaired in China. Again thats a risk I assume, so why should I complain if I am aware of that fact?

Prefers Film's picture

I'm hoping Canon is doing this to protect consumers and its legit US retailers. But they had no problem assisting me with my EOS M2, which was shipped directly from Japan.

I Hope I can help shed some understanding here. I have been in the photo industry for over 30 years and have served on advisory boards to Canon, Nikon, Konica, Minolta and Sony. I also have owned an operated stores in the US.
History of past events.
Why we have MAP policies and why they are legal. Before MAP online companies were selling camera equipment at a loss. Since the market was growing along with the economy these mostly online merchants were paying yesterday bills with today's sales. This model works as long as you are growing each month. The problem came when the housing market crashed and people stopped buying equipment. No longer could the major players pay their bills and the went into bankruptcy. Consumers were getting fantastic deals on products and the manufactures were the ones that got stuck with the bill. They raised prices and for their protection they were granted the legal use of MAP to prevent dealers from selling at a loss. The reason MAP was deemed legal was because the profit was caped at 20%. No camera manufacture works anywhere near 20%. Canon is at and below 5%. Of that 5% the credit card company gets more than half. So a company has to pay employees, rent and all other expenses from that remainder. The industry has squeezed every percent of profit out and there is no where left to go for profit to grow. The only move left is to go after areas that cause profit loss. Thus the attack on grey market. From a consumer stand point it is a gamble. Up until now Canon USA has often done warranty repair on grey market products. They are going to stop according to senior management. Before they do stop they want to do their due diligence by cracking down on suppliers. Believe it or not most consumers are not photo savvy as Fstop readers. They see a cheaper price and they make the purchase never aware that what they bought is different than what they saw at Best Buy. They will find out only when they send it to Canon for repair. The consumer unaware is now mad at Canon when they own responsibility for being an uneducated shopped. I believe that Canon in this litigation will at the very least hope to force grey market resellers to explain in detail the risks with grey market.
In my experience consumers only buy grey market once and then they become our best customers. MAP allows a consumer the luxury to buy a product at a great price and from any authorized reseller they chose.
If you see a product below MAP it is going to be from an company that is not authorized to sell from the manufacture. That means that you are not a valid consumer and have no warranty. The consumer is the person that originally purchased to product from Canon or its authorized dealer. If you buy a camera this way you might find out that you have no warranty. In the end the safest bet is your local store or B&H online.

Mark James's picture

If they just sold their products for the same price everywhere with no restrictions on the resale price this wouldn't be an issue. It seems like manufacturers are trying to price gouge wealthier countries which might have worked in the past, but with this new global market place we find ourselves in it's much harder for them to hide their pricing strategy. This goes for many global businesses, I'm not just talking about Canon here.

Jim Lawrie's picture

I don't get it. All any of the companies have to do is sell their products across the world at the same price. Do this and everyone will be much better of. Why do businesses in the Asian countries purchase the products for cheaper than everyone else? Why does the USA, Australia and others pay a premium for the same product from Canon, Nikon etc. They have created their own problem, not the buyer.

Travis Alex's picture

I'm torn here. On one end, I do not blame Canon for wanting to attack these grey market dealers. Everyone in the industry is feeling the pinch, and Canon (the company feeling the least in my opinion next to Sony)wants to assure their future in photography. However, Canon has blame in this for more making a fair market value from country to country. This mentality of "They did this to us!" will only drive black market sales and make things worse in the long run.

Canon, Nikon, Sony, etc, really need to start asking themselves what's more important now.