Carphone Warehouse in Nokia grey-market tangle

Carphone sold large volumes of Nokia 5530 into grey market after miscalculating sales on August exclusive. Significant numbers traded back into UK, disrupting official Nokia distribution channels

Carphone Warehouse is being investigated by Nokia UK for facilitating the export of large volumes of its Nokia 5530 Xpress Music handset, intended for Carphone’s UK retail channels, into overseas markets. The Nokia 5530 originally went on sale in Carphone in the UK on August 11 on a six-week exclusive, and Carphone’s onward trade of the device is likely to have breached the terms of its exclusivity deal with Nokia UK. Carphone is understood to have purchased around 130,000 units from Nokia UK as part of the original deal. More than half were offered to the UK trade at rock-bottom prices, explicitly for export outside of Europe, Mobile News understands.

Significant volumes were offered to its preferred UK trading partners within the six-week window, claimed trade sources. Recently, several thousand ‘CPW’-marked Nokia 5530s have re-emerged in the UK distribution channel, offered at rates that significantly undercut the best prices achievable by UK-accredited distribution partners – up to £10 per box in some cases. Certain official Nokia UK distributors are consequently sitting on large volumes of Nokia 5530s they cannot shift at a profit, Mobile News understands.
Mobile News has seen emails from Carphone’s purchasing department to certain UK trading partners that relate to the onward sale of Nokia stock purchased originally by Carphone in the UK.
The emails state variously conditions for the sale of Nokia UK stock by Carphone: that Nokia UK stock from Carphone "must be exported outside of the EU" and must be moved on "sensitively". They refer to certain Nokia devices, including the 5530.
Nokia disapproves of the export of UK stock into overseas ‘grey’ markets because it skews country sales figures, associated marketing budgets and local logistics operations.

It also disrupts normal activity within its official country trading channels. In the UK, Data Select, 20:20 Mobile and Brightpoint are accredited distributors for Nokia products.
A Nokia spokesperson said: "We take the matter very seriously and are looking into the alleged activity."
A Carphone spokesperson said: "There are a combination of reasons why we would look to sell product outside of our standard channels. These include returns and repairs, end-of-life stock, and over-stocked products. In this respect, we are no different from any other retailer in the industry.
"Equally, if we do have to sell stock in this way then we want to ensure there is the least disruption possible in the markets that we trade in."

Nokia, like other manufacturers, has been vigilant for grey market trade activity recently. Nokia encountered high volumes of grey trading of its handsets in the first quarter of the year, with its distribution relationships under particularly close scrutiny.