Gray luxury market is emerging from the shadows: what it is and how it works

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Imagine that you are looking for a pair of square toe sandals from Bottega Veneta, one of the most celebrated luxury brands of the moment. A new-season pair can cost upwards of $ 550, if purchased from the brand’s website, an old-guard department store like Neiman Marcus, or a new e-commerce player like Net-a-Porter.

However, what if you decide to buy them from Cettire, a website that offers discounts of up to 30 percent on the latest fashion styles? You would be entering the multi-billion dollar luxury “gray” market, a rapidly growing retail sector that until now had operated out of the sight of most Western consumers. However, in recent years, with the arrival of companies such as Baltini in Italy, Italist in the United States and Cettire, which began trading on the Australian Stock Market at the end of 2020, gray sales have ended in millions of baskets. digital shopping.

Unlike the counterfeit and illicit merchandise commonly found on the black market, the gray market sells authentic luxury goods, but at a substantial discount, typically 15 to 35 percent, and without brand contact. . Using a practice sometimes called parallel importation, gray market sellers often take advantage of changing pricing strategies and tax requirements for luxury goods from different regions to procure certain items popular with those who want to buy them for less.

One of the best-known examples is the “daigous”, or purchasing agents that satisfy the Chinese demand for foreign products, particularly luxury goods. Daigous often buy products in a region outside of China where they are cheaper, then mail them or travel back to the country with them to sell them and make a profit.

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The price differences between markets can be impressive. According to research recently published on, a customer in Europe can pay just over $ 2,800 for a Sac de Jour bag by Yves Saint Laurent, but the same bag costs more than $ 3,700 in South Korea. A shopper can purchase a Fendi white Baguette duffel bag for about $ 2,620 in continental Europe. That same item costs around $ 3,350 if purchased from mainland China.

Taking advantage of these disparities has become a lucrative business. Last year, the gray market was estimated to be worth as much as eight percent of the $ 257 billion market for luxury personal products, said Luca Solca, an analyst at research firm Sanford C. Bernstein.

“In the past, many luxury brands turned a blind eye or even benefited from gray market sales, as they represented quick money and an opportunity to improve the figures reported by their wholesale and retail partners, especially on the slow moving inventory or surplus stocks, ”explained Solca. “But in recent years, that attitude has had to change as the market becomes increasingly difficult to control.”

Some daigous have formed large-scale collectives, and companies like Beyond have also emerged to facilitate cross-border transactions from the United States to China. Of late, businesses in the West have emerged using similar gray market tactics at scale, including Cettire, which grew rapidly during the pandemic, and unauthorized watch dealers such as and Chrono24.

Cettire was created in 2017 by Dean Mintz, a lonely young founder with no experience in the fashion industry, and offers customers around the world deep discounts on some of the best brands in the luxury sector, including Prada, Gucci, Chanel and Saint Laurent. According to the prospectus for its initial public offering, sales between March and June 2020 grew 331 percent compared to the previous year. Cettire raised $ 49 million when it went public in December, and its share price quickly soared more than 400 percent.

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