An Inside Look at the Luxury Watch Market
Similar to most high-end products, the inner workings of the luxury watch market are closely guarded and walled off to outsiders. Industry players deem it necessary to maintain a level of secrecy in order to charge clients hefty premiums for their timepieces. While the Internet has made way for some of that mystery to erode thanks to the rapid way information is now shared—whether from journalists, consumers, or even industry insiders—there is still plenty to uncover.
At Heritage Watch Dealers, we believe that knowledge is power and transparency is key to gaining our clients’ trust. Armed with the right information and a greater understanding of the luxury watch landscape leads to better decisions when shopping for fine timepieces—particularly when buying pre-owned. Our ethos is to “Find the best watch, at the best price…every time” for our clients. As we take you behind the velvet rope for an inside look at how the luxury watch market works, you will see why Heritage Watch Dealers is perfectly positioned to do just that.
The Luxury Watch Marketplace
According to Bain & Company’s 2019 Luxury Goods Worldwide Market Study, the global secondhand market for luxury goods grew to $30 billion in 2019, with watches and jewelry accounting for over 75% of all purchases. The Fondation de la Haute Horlogerie’s 2018 Watchmaking Trend Report predicts that pre-owned watch sales will equal or exceed the market for new watches in the near future. This is especially impressive given that the market for secondhand luxury watches is relatively new and flourished thanks in part to the rise of e-commerce.
But where are people buying and selling their secondhand watches? There are quite a few available options where to buy and sell pre-owned timepieces, each with their own set of pros and cons.
Auction and Bidding Websites
Auction and bidding platforms include websites like eBay and stockX. Although these types of platforms offer plenty of inventory with a range of watch brands and models to choose from (granted, not all of these outlets are watch-focused), there are expensive transaction and commission fees to consider. Plus, fraudulent buyers and sellers abuse the lack sufficient vetting and weak protective measures making them highly risky places to trade expensive watches.
Resale exchange companies like Bob’s Watches and Crown & Caliber buy watches directly from people looking to sell unwanted watches and then list them for sale on their websites for potential buyers to browse. They do offer authenticity protections with in-house watch inspections. However, these businesses require large operational teams, substantial inventory to pay for, and hefty advertising budgets. As a result, their margins have to be substantial to pay for high overhead so they can only pass on limited savings to the end consumer. They are also incentivized to always steer customer to their own inventory regardless of where the best deals exist.
Gray Market players like JomaShop account for as much as 20% of luxury watch sales. They support Authorized Dealers by filling their inventory with slow-moving watch models purchased under the table at bulk discounts (without consent from brands) which they can then sell at marginally lower prices to end consumers. However, the result of Authorized Dealers breaking the manufactures MAP (Minimum Authorized Price) agreement is that factory warranties are lost.
The success of the gray market has prompted brands to further restrict stock to maintain brand reputation and employ technology to try and track offenders. Omega famously bought out gray market reseller Watchfinder in an attempt to avoid their products reaching the gray market. Some brands are responding by offering in house re-sale services or opening rebuying gray market inventory. Yet others like Rolex and AP are vastly reducing their network of AD’s or bringing all sales in house with self-branded boutiques.
Some watches are sold via classified ads, whether on general websites like Facebook and Craigslist or watch forums like Rolex Forums or WatchUSeek. Although occasionally there are deals to be had if you are well-versed in watches, the lack of protection for buyers and sellers poses high risk for novice buyers to get caught up in scams.
Even more dangerous, however, is the possibility of physical harm if meeting with strangers while conducting high-priced transactions. The popularity of luxury watches has increased cases of assault and robbery worldwide to the point that cities like London are posting public signs cautioning alerting people to the presence of watch thieves in certain areas.
For VIP clients who want the newest-to-the-market watches regardless of price or constraints, authorized dealers are a viable option. However, except for a handful of brands and models, most new watches depreciate significantly (think 40-70%) the minute they leave the AD. Desirable models on the other hand present buyers with an open-ended waitlist that can stretch out years
Professional Private Dealers
Despite advancements in technology professional private dealers continue to be the foundation of the luxury watch market. A good dealer will go out of their way to offer topnotch service, impeccable products, and fair prices for their clients. The world of private dealers is relatively small and those who lack integrity are permanently banned by the professional community for even a single infraction. Long term relationships built on mutual trust are earned over decades.
At Heritage Watch Dealers, we’ve spent years guiding clients to the best deals. While we do take in inventory from time to time as a service to our client our goal is to help you obtain, the best deal possible supported by data. We leverage our vast global wholesale network on your behalf to help you achieve that. We have access to the true dealer-to-dealer wholesale market where the best deals are done—and because our overhead is low, we can pass on those significant savings to our clients.
Not only do we stand behind every product we sell as 100% guaranteed authentic but we also test every watch on a timegrapher to verify it meets COSC standards. What’s more, clients can also benefit from our complimentary one-year service warranty for timekeeping on all watches.
How Luxury Watch Pricing Works
Much like the car market, most brands and models in the watch market can take substantial depreciation hits once sold at retail. While this may not be good news for the person who initially bought the watch, it is a fantastic opportunity for buyers of pre-owned luxury timepieces. For instance, it is not uncommon to find mint condition Ulysse Nardin and Hublot watches priced at $0.40 to $0.50 on the dollar in the secondary market.
Some ultra-coveted watches, particularly those from Rolex, Patek Philippe, and Audemars Piguet, sell for higher prices in the secondary market than at retail. Factors like limited supply, booming demand, and precious metal price fluctuations can all drive pre-owned prices well above MSRP. In these cases, buying from an Authorized Dealer can be the less expensive option—however, the price to pay is time with some waitlists spanning multiple years
Similar to stocks, the price of pre-owned watches moves up and down on a monthly and/or weekly basis, driven by market trends, press, and speculation. Therefore, it’s important to depend on a private dealer that not only understands these market fluctuations but that can also guide you on when is the best time to buy a watch or sell your watch.
Secrets of the Luxury Watch Market You Should Know
Whether to prop up prices, maintain an impression of exclusivity, or attract the largest number of potential buyers, the luxury watch market is severely lacking transparency giving rise to thieves, scammers, and fraudsters. Understanding the market at large should be key to you buying decision
For instance, most public online listings are, in fact, the same watch listed by the same company across multiple platforms at different price points. This type of redundant inventory is an attempt to draw buyers from a multitude of sources with the hopes that some will stick. While there is nothing wrong with this it’s important to understand that platforms like Ebay and Chrono24 encourage these listings by charging expensive “Final Value” fees penalizing sellers when watches sell elsewhere.
The result is that there are far more listings than actual inventory and sites like eBay and Chrono24 end up being less about sales and more about fishing for buyers. Scammers in turn take advantage of this by stealing pictures and putting up phony listings or hacking accounts in an attempt to imitate legitimate dealers and siphon on sales or steal the money outright.
There is also the so-called Authorized Dealer waitlist, which in theory is a first-come-first-served list of clients who want to put their name down to purchase a watch. However, in reality, most ADs prioritize clients who spend hundreds of thousands of dollars on jewelry and bump them to the top of the list when a coveted watch lands in the shop.
More brazen ADs simply tell interested parties that they have to buy less popular models before they can gain access to the hottest pieces. Some Authorized Dealers have even been caught selling desirable pieces to friends that will immediately sell them back so the dealer can double dip the profits by putting hype models back in their “used” case at above retail prices.
It is also important to note that it is insiders that drive the majority of the pre-owned watch inventory. From ADs offloading slow-sellers to Gray Market companies to professional flippers counting on their contacts to source impossible-to-get models to re-sell at sky-high premiums, these maneuvers keep prices high and some watches out of reach for the end consumer.
In short, building a personal relationship with a trustworthy private dealer like Heritage Watch Dealers will always be the safest and most affordable option when buying luxury watches. Despite all the advancements in luxury watch sale distribution, the industry is still driven by relationships built on trust. “Buying the seller” will always be the first and best way to avoid swindlers that frequently operate in the pre-owned luxury market.