Traditionally, meaning up until a few years ago, most luxury watch brands did not “officially” allow their timepieces to be sold online. By “officially,” I mean through their authorized retail partners or directly to consumers by the brands themselves. The thinking was that customers wouldn’t feel comfortable buying a watch online or that they would prefer the type of shopping experience you can only get in-store. While there is probably some truth to that for certain individuals, the reality is quite different. Now, due to the ongoing coronavirus pandemic, the push toward online retail is accelerating, with most brands forced to expedite roll-out plans already in place.
Regardless, brands’ reluctance – or stubbornness, depending on who you ask – to actively engage in e-commerce created a sizeable hole in the market. For decades now, entrepreneurial third-party sellers have stepped in to fill this space and serve those customers looking to buy a luxury watch online. Some are lone dealers who only operate within their own small region, while others are massive multinational businesses with distribution networks that rival the brands themselves.
So whats the catch? Well, not all sellers offer the same thing.
Some exclusively sell “new” watches, while others offer a range of pre-owned watches in varying conditions. Others might focus solely on the vintage market or specific niches, such as independent watchmakers. Then there are marketplaces like Chrono24, which offers a broad selection from all of these seller categories.
For newcomers trying to make sense of it all, things can quickly become confusing. In this article, we attempt to distill some of this complexity, answer common questions that come up, and put to bed some of the myths that still permeate the world of online luxury watch sales.
Broadly speaking, there are three ways to buy a new luxury watch:
- Directly from the brand itself;
- From one of the brand’s authorized retailers (either in-store or online); or
- Through a third-party, unauthorized seller (often at a discount – more on that in a moment).
For obvious reasons, luxury watch brands take the position that the first two options are the only options. Non-authorized, third-party sellers offering “new” watches are broadly grouped under the “gray market” umbrella and are to be avoided at all costs. The irony, of course, is that these sellers acquire their stock directly (though unofficially) from the aforementioned authorized retailers, and in many cases, from the brands themselves.
In reality, the luxury watch industry has had an issue with surplus inventory for many years now. Brands are simply producing more watches than the market can handle. This is not true across the board, however. For example, popular models from the likes of Rolex and Patek Philippe always seem to be in short supply. Whether this is a deliberate strategy or merely an inability to meet staggering global demand is a debate for another day. The point, though, is that these “extra” watches don’t sell through authorized retail channels and need to go somewhere – and that somewhere is gray market resellers.
Resellers often offer these new watches at substantial discounts (usually somewhere between 10% and 40% below the recommended retail price, depending on the model). How is this possible, you ask? It’s simple. When authorized channels sell to unauthorized channels, they typically do so in bulk and well below the official list price. In many cases, retailers are just looking to recoup their costs at a marginal profit. This is the market’s way of pricing watches at what it thinks they are actually worth. It’s similar, though not quite the same, to when you drive a new car off the lot and its value instantly depreciates.
It’s at this point that we should make the distinction between what the market thinks the watch is worth and what it’s worth to you. Many people will likely only ever buy one or maybe two of these expensive timepieces in their lives. As a result, they may choose to pay the full retail price for a watch that might have found cheaper online because they want the full experience of visiting a nice boutique and being treated like a king or a queen for a day. Or perhaps they want to establish a relationship with their retailer so that they will be considered for exclusive models that otherwise sell for sizable premiums on the gray market (such as the Patek Nautilus 5711).
Now that we’ve covered the market for new watches, let’s shift our attention to pre-owned/used watches, a.k.a. the secondary market. This is where you go to buy a watch previously owned by someone else. Although, as with the primary market, the secondary market is massive and comes with a degree of nuance. While it’s not as (yet) large as the primary market, some estimates put the total value of annual secondary market sales at around $5 billion. And that number is growing fast.
Generally speaking, the secondary market is populated by watch dealers who buy and sell watches from private individuals. This market has evolved to fill the gap created by companies – and some authorized retailers – that were unwilling or unable to buy back their own products from customers looking to upgrade or sell. This is slowly changing with certain brands and retailers now experimenting with Certified Pre-Owned programs. This involves buying back older models, servicing them, and then certifying they the genuine before offering them for resale. In reality, the secondary market is far too large and well-established to feel any significant impact from this change. Instead, it just adds another layer of choice for consumers.
Several factors determine pricing on the secondary market. There are the usual suspects like age, condition, desirability, availability, and whether the watch comes with its original box and papers. Of course, there are also all the little nuances, such as certain variations of a specific model commanding huge premiums. However, if you do your research and are willing to hunt around, you can find some great, reasonably priced watches on the secondary market. For example, when analyzing the sales numbers and median sale prices of several pre-owned models offered as a complete set (i.e. including box and papers) on Chrono24 in 2020, we found it’s possible to save up to 10% compared to the official retail price.
If you’re lucky, your watch(es) may even appreciate in value in the future. Be sure to do lots of research first, though nothing is guaranteed.
Pre-owned is not synonymous with old(er). The industry’s growing flipper culture means that there are plenty of current models that are technically pre-owned but available in “unworn” condition. This generally means that the person who first bought it, usually through an authorized channel, did so intending to sell it on the secondary market at a profit, though this is not always the case. Sometimes people just let a watch sit untouched in the safe for a few months before deciding it’s not the watch for them.
The Best Option?
There are benefits and drawbacks to each of the watch markets: primary, gray, and secondary. Some prefer to buy only through authorized channels because it gives them added confidence – not only that they are getting the genuine article but also that they will be well covered if something goes wrong. (Although I’m sure more than a few people reading this will have their own horror stories about servicing and repairs under warranty.) Others are less concerned about this and would prefer to save their money and shop on the gray or secondary market instead. And to be fair, if you do your due diligence beforehand and only buy from reputable sellers, the risks are relatively low.
At the end of the day, there is no one best option. There’s simply what you feel most comfortable with and what will result in you getting your dream watch.