The Gray Goods Dilemma

As a dentist who built a practice from scratch many years ago, and now someone who is focused on the sales/marketing side of the industry, I completely understand that it is important to control costs. Today, the average general dental practice operates at approximately 70% overhead (up 15% from just 15 years ago). Obviously, supplies are the (most) important component of operating a practice, and responsible for a significant % of the expenses that comprise the aforementioned overhead numbers we are currently seeing.

This leads us to a long standing problem within the dental industry…gray goods. We are all somewhat familiar with the term, although defining it isn’t always easy to do as its meaning is becoming broader and broader in scope. Traditionally speaking, gray goods are defined as products that are manufactured in one place (i.e. U.S.) and meant to be sold in another market (i.e. Third World country), but end up back in the country of origin and sold to dentists by unauthorized means and methods. Years ago, we referred to it as “backdoor” selling. There are, of course, even with this definition, many circumstances that spell trouble when products are DIVERTED, which is what is going on here. 

For example, a product could be FDA approved here but not there, and it ends up where it was intended. Or it ends up sitting around in a place for a while and needs to be refrigerated, and/or it has a limited shelf life, or has to be handled a certain way… you get the picture? You don’t know “where it’s been” is the bottom line.  The dentist sees a low price advertised somewhere online as “XYZ manufacturer product” and says “great deal…let’s buy it”. Now, we aren’t even going to get in to the “legality” of all of this because there are a number of angles to it and some of it is technically illegal and some of it may not be. Just think initially here as to what could potentially result from a safety standpoint to your patients and/or practice if any of those examples were to be happening.

Now, let’s take it a step further. We all know that when something is lucrative (like it is to just have unauthorized people selling these diverted gray goods), what follows is “what can be MORE profitable?” Up to this point, we’ve been at least talking about “real” goods even though they have been sold through unauthorized means.  Now, we are seeing “black market” goods all over the place, which are counterfeit products. This is a big problem, and so we have to recognize it and address it as an industry.

Where do we start? It has to be proactively taken on at every level and from every angle. We are making some progress. The government is doing some – the FDA has a UDI identification system that will help. Obviously, some manufacturers are doing what they can. For example, they can clearly change packaging or units of measure that they intend for different markets. That helps, but not all manufacturers can “afford” to do this, and even those that do, the gray market people can still get away with things.

Why? Two reasons. One is simply that because much of selling is done online, there is the old “bait and switch” technique that works well.

The second reason is that the DENTAL OFFICE…the dentist AND the entire team…have to start becoming more aware of things. Much of the problem is that several people within the practice are part of the ordering process. The dentist sees something he/she wants. The office manager orders it. It arrives, and the assistant unpacks it, and puts it in the operatory, shelf, etc. The dentist doesn’t see it again (or the office manager) to check that it’s the actual product you thought you were buying. So, the first step is to have a more formal process within your practice to confirm your purchases.

The simplest way to ensure that you are eliminating all the potential hazards of purchasing gray goods or black market goods is good old COMMON SENSE! We’ve all heard the expressions “You get what you pay for” and “If it seems too good to be true, it probably is!”. If your “gut” tells you the price is a “steal” – it should be a red flag.

We want a few things when dealing with supplies – a company that offers a great selection of products, at solid, fair prices “across the board”, offers great customer service, takes impeccable care in how they handle and ship products, and is, of course, authorized to sell every product they carry! This hopefully isn’t a surprise to you, but you have choices out there that fill all those “wants”…Safco being one of them!

We (dentists) are smart people! Let’s use our heads! Yes, we want to control costs. Is it really worth saving a few dollars to receive expired, spoiled, ineffective, or downright fake goods? I don’t think so!

Dr. Anthony Stefanou, D.M.D. – “Dr. Tony”
www.dentalsalesacademy.com
tonydmd@gmail.com