The History of Gray Marketing Continues

Gray marketing is an issue in any industry and it’s place in snowboarding in the last few years has been progressively getting bigger. As more companies over produced while raising minimums, shops in many areas who were forced to over buy started dumping the product elsewhere. The classic example was Burton boards and bindings ending up at Cost Co. a few years ago and how they spent hundreds of thousands of dollars to pull the product from the store. After that fiasco Clark Gundlach did an interview with Transworld Business about the whole situation and Burtons stance on gray marketing. Fast forward to early 2011 and while Burton has the founder Jake Burton Carpenter back at the helm, gray marketing still persists to the point they had to release an official statement.

Here’s the official release courtesy of Boardistan.

BURLINGTON, VT (February 11, 2011) Burton Snowboards recently terminated dealer agreements with several US shops suspected of re-selling products through unauthorized channels. This move reflects Burton’s ongoing efforts to protect and support its global network of specialty retailers by aggressively combating gray marketing.

“I’ve said it many times, and I’ll say it again – I have absolutely no tolerance for gray marketing,” said Jake Burton, Founder and CEO of Burton Snowboards. “I don’t get why a snowboard shop in one part of the world has a right to shit on a local shop in another part of the world for short-term gains. I often think of it in the context of a Japanese dealer shipping product back to Walmart in the US. We want to build a global network of specialty retailers that cares about the sport, the brand, the product and each other. So we’re not afraid to end relationships with dealers that gray market anywhere in the world.”

Cutting off suspected dealers is just a part of Burton’s latest efforts to hammer home the message that gray marketing will not be tolerated. A few months ago in mid-season, Burton took unprecedented action by cancelling millions of dollars in US orders that were most likely intended for the gray market in Japan. In addition to tightly monitoring orders and inventory, Burton is closely tracking product that ends up in the gray market and tracing it back to the source.

For the sake of all its retail partners around the world, Burton’s goal is to ultimately eliminate gray market activity. The company will continue to do whatever it takes to protect the long-term health of its global specialty dealer network.

Now the interesting thing about this press release is that in a time when Burton is trying to save face with it’s “core” retailers it does nothing to label who it was that broke the buying agreements. While if we look back to just last season Burton had no problem pointing fingers at Sierra Snowboards when they broke these same agreements. In the late 90’s this was still an issue and fingers were pointed, case in point the article Power and Risk: Who calls the shots in the rapidly changing snowboard ordering process? In this article we see where history starts repeating itself.

Gundlach says Burton has to take gray marketing very seriously: “We can trace our product from unauthorized shops back to our dealers. If we think there’s a problem, we ask the retailer for documentation on those sales. If the dealer cannot support the authenticity of the sale with documentation, we’re forced to terminate that dealership. Every dealer signs a contract that clearly prohibits the trans-shipping of product.”

Gundlach says he realizes that company strength comes with brand strength, “but I don’t want people to think that we’re this big controlling smokestack in the industry-because we’re not. We care about the sport and our dealers, and care about the product the consumer is riding.

Anyone notice the same lip service now served up over the last 13 years? Why is it with a problem that has spanned two decades it hasn’t been resolved? If you do a bit of research you can find tons of gray market Burton products. Sites like eBay are not the only culprit as the Asian market has started thriving this seems to be the place where all brands are now fighting the gray market. Sites like Alibaba.com have allowed these markets to dump product. A search of Burton on there yields hundreds of results yet Burton is not alone brands like K2, Ride, and Mervin also appear.

With Asia being the biggest emerging market as China establishes a middle class larger than the population of the United States this is going to continue. Manufacturers need to establish a better understanding of buying agreements amongst their retailers as well as product inventory control in this wild west gold rush market. If the industry is going to expand to a market that is turning into a world super power we as a collective whole need to establish not only rules and guidelines, but our cultural beliefs in terms of supporting the local shops and markets. By not naming names of who has broken agreements it allows for history to keep repeating itself as other manufacturers slip in to the void left by ones that have been burnt. We’re not as big of an industry as we would like to believe and if the companies don’t start talking to each other to help strengthen it we are going to become weaker and smaller.

8 Comments

  1. [...] This post was mentioned on Twitter by Shred Union, SkiAndBoarding. SkiAndBoarding said: RT @ShredUnion: angry's POV – The History of Gray Marketing Continues http://bit.ly/fA95Ck #snowboard [...]

  2. tooscoops says:

    there will always be ways around it anyway… open the packaging, consider it used, and there ya go.

    the big brands are there to build boards… its up to the retailers to do the right thing. the brands can only babysit so much. as much as the gray market stuff is a detriment to the industry, i don’t think its the kind of thing that will just go away if burton cancels some contracts and publicises it.

    the only way to get rid of it?… factory stores that sell 100% of the brands goods. no other stores carry the brand, otherwise this will continue. i don’t like that option, so i’ll stick with accepting that the gray market exists.

    good article though.

  3. justarider says:

    Yawn….the grey won’t stop, it’ll just get shopped to other Shops, Some will bite, others won’t. The world keeps running the way it always has. And isn’t it funny how once again all fingers pointing at the big bad B when there are plenty of other brands who look the other way, take the orders and collect the checks…..big brands. Big brands that everyone sux the teet on…boatloads going over….no mysteries here….

  4. lex says:

    Big B is the biggest kid on the block, so fingers/lovers/haters are always pointed at Burton. The current way things are done, factories are pushing for earlier orders to A)deliver on time B) to allow for the factory to be working in late winter to avoid lay-offs & OT pay. Shops on the other hand want the product early but want to order late. All makes sense, but these 2 models don’t work together. A ton of companies were late with product last year, shops are still struggling…resulting in gray market. Also, as noted above, shops/distributors can over order for a number of reasons….even American made boards get gray marketed, if a distributor say in asia is sitting on a couple thousand American made boards….well there’s a chance these could have this fate.

  5. [...] was doing some more reading and I came across this recent post by the Angry Snowboarder: The Angry Snowboarder Blog Archive The History of Gray Marketing Continues about Burton canceling distribution contracts with some major people because those places had [...]

  6. gravityhomer says:

    I wonder if REI.com was one of them, they have absolutely no 2010/2011 burton products listed right now. Had tons of stuff last year, it’s where I got my custom.

  7. gravityhomer says:

    nevermind, plenty of boards there now. weird.

  8. terryterryhibbert says:

    By not naming names of who has broken agreements it allows for history to keep repeating itself as other manufacturers slip in to the void left by ones that have been burnt.

    Agreed, as you said Burton had no qualms with naming Sierra (and others) fr their transgressions why no name and shame now?

    Could it be that these new perpetrators are well known ‘core shops’ dumping huge quantities of soft goods to Europe?

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