Gray Market: Where a $200 Watch is $140

Gray Market: Where a $200 Watch is $140

Postby koimaster » February 20th 2018, 10:51pm

safe is filled with Seiko watches, tens of thousands of them stacked in boxes and cartons, destined for discount stores all over the United States.

They are part of a "gray market" in brand name imports that come into this country legally, but outside the regular distribution channels. Most are purchased overseas at prices that are far below what the authorized American distributors pay and are sold at heavy discounts through outlets as varied as the K mart chain and W. Bell & Co. catalogue stores.

New York City, through such outlets as the low-overhead 47th Street Photo, serves as the center of the country's gray market activities.

https://www.washingtonpost.com/archive/ ... c09896048e
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Re: Gray Market: Where a $200 Watch is $140

Postby artman » February 20th 2018, 10:59pm

Wow I gotta visit 47th Street!
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Re: Gray Market: Where a $200 Watch is $140

Postby conjurer » February 20th 2018, 11:26pm

When you go gray, you know what's ghey!
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Re: Gray Market: Where a $200 Watch is $140

Postby biglove » February 21st 2018, 5:33am

I don’t buy the manufacturers’ crying foul. A watch/camera sold is still money in their pockets.

1984 article and all the companies mentioned are still intact.
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Re: Gray Market: Where a $200 Watch is $140

Postby foghorn » February 21st 2018, 5:56am

I bought a bunch of Vivitar lenses from 47th st. photo back in the day.
I remember the back third of all the photo mags was taken up by ads for these places.
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Re: Gray Market: Where a $200 Watch is $140

Postby DocKlock » February 21st 2018, 7:30am

foghorn wrote:I bought a bunch of Vivitar lenses from 47th st. photo back in the day.
I remember the back third of all the photo mags was taken up by ads for these places.


Yeah, I got a lot of my 35mm lenses and cameras from Abe's in Maine. Never had a problem. My $5,000 (or more) 35mm camera equipment is worth maybe a hundred bucks. Kodak and I never saw it coming.
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Re: Gray Market: Where a $200 Watch is $140

Postby conjurer » February 21st 2018, 9:45am

A good indicator about gray market watches is Jomashop (where I've bought from a few times). Checking out the Omegas available, most are discounted around 37%; I got my SMP from them for around 40%. If you check out the Rolexes up for sale there, some aren't discounted a penny, while most seem to be discounted around 5%, with a rare few discounted upwards of 20%. It should be pretty clear which company is doing more to protect their brand.

I would contend that Rolex prices their watches, no matter where they sell in the world, pretty closely to what they sell for in, say, Germany or the USA, just in whatever currencies. You can either buy one or not, from an AD, which are tightly controlled as to how they might offer modest discounts. Omega, on the other hand, probably prices their wares to whatever the local market will support; an SMP in, say, Kuala Lumpur might be priced at half of what the US market will support. Gray market brokers swoop in, buy up excess stock (possibly getting a further discount for volume purchases) and then sells 'em in the US, on a far smaller margin than a US AD.

The winner is the consumer. I was able to buy an SMP for about $2800 from Joma, whereas if I had gone to an AD, if I had gotten any discount at all, it would have been around 10%, which would have covered my location's sales tax, leaving me paying the MSRP of around $4400. The SMP is a great watch for $2800, and doubt I would have sprung for one full boat.
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Re: Gray Market: Where a $200 Watch is $140

Postby bedlam » February 21st 2018, 5:28pm

conjurer wrote:The SMP is a great watch for $2800, and doubt I would have sprung for one full boat.

This is the issue isn't it. There was no lost sale cos you weren't otherwise going to buy.

A lot of product makers cry foul about things like grey markets, and certainly about digital piracy...but research on the consumers consistently finds they were not ever going to make a purchase at the RRP the makers were asking. In the digital piracy area they also found low income people like students were the largest sharers of pirated content, but they were also the largest purchasers of content later when they had financial resources.
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Re: Gray Market: Where a $200 Watch is $140

Postby conjurer » February 21st 2018, 5:38pm

bedlam wrote:
conjurer wrote:The SMP is a great watch for $2800, and doubt I would have sprung for one full boat.

This is the issue isn't it. There was no lost sale cos you weren't otherwise going to buy.

A lot of product makers cry foul about things like grey markets, and certainly about digital piracy...but research on the consumers consistently finds they were not ever going to make a purchase at the RRP the makers were asking. In the digital piracy area they also found low income people like students were the largest sharers of pirated content, but they were also the largest purchasers of content later when they had financial resources.


Quite so. Omega did indeed make a sale, and it allowed them to keep production going. They sold the SMP (wholesale) to some greaser AD in the Middle East (or wherever) for an agreed upon price, so in that way Omega didn't lose any money at all.

Certain brands (like Rolex) have the name-power to keep their prices high, and still (apparently) sell everything they produce, at a uniform price, around the world. Indeed, they actually put their foot on the necks of some Far East ADs last year who were asking a premium for hot models, like the Daytona. Omega doesn't have that advantage.
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Re: Gray Market: Where a $200 Watch is $140

Postby Mark1 » February 21st 2018, 6:00pm

Rolex may have more control over their products but WatchRecon is still full of third party Rolex sellers. Who knows what markdown they got from the AD to move the watch but it probably wasn't much because these sellers aren't usually knocking much off retail.
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Re: Gray Market: Where a $200 Watch is $140

Postby artman » February 21st 2018, 8:44pm

conjurer wrote:When you go gray, you know what's ghey!

For a 30% discount off a new Submariner I'd consider taking one up the bunghole.
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Re: Gray Market: Where a $200 Watch is $140

Postby TemerityB » February 21st 2018, 9:02pm

conjurer wrote:A good indicator about gray market watches is Jomashop (where I've bought from a few times). Checking out the Omegas available, most are discounted around 37%; I got my SMP from them for around 40%. If you check out the Rolexes up for sale there, some aren't discounted a penny, while most seem to be discounted around 5%, with a rare few discounted upwards of 20%. It should be pretty clear which company is doing more to protect their brand.

I would contend that Rolex prices their watches, no matter where they sell in the world, pretty closely to what they sell for in, say, Germany or the USA, just in whatever currencies. You can either buy one or not, from an AD, which are tightly controlled as to how they might offer modest discounts. Omega, on the other hand, probably prices their wares to whatever the local market will support; an SMP in, say, Kuala Lumpur might be priced at half of what the US market will support. Gray market brokers swoop in, buy up excess stock (possibly getting a further discount for volume purchases) and then sells 'em in the US, on a far smaller margin than a US AD.

The winner is the consumer. I was able to buy an SMP for about $2800 from Joma, whereas if I had gone to an AD, if I had gotten any discount at all, it would have been around 10%, which would have covered my location's sales tax, leaving me paying the MSRP of around $4400. The SMP is a great watch for $2800, and doubt I would have sprung for one full boat.


I have a friend who sells Rolex at one of the authorized retailers here in NY; out of respect for him, I won't mention where since we talk semi-"insider" stuff all the time. Last autumn - we're talking, late September, early October - he was telling me that Rolex wasn't even accepting orders from his company after that time, and that nothing more would be shipped until about, well, now, the second month of 2018. So regardless of demand for their products, Rolex, with an iron fist, wouldn't unleash any more watches to that retailer ... just before the holidays. If that isn't protecting product flow, I don't know what is.

Frankly? Many watch companies simply make too many watches, flooding retailers with product, somehow believing that some new model is going to have some sort of collector's market or implied prestige, only to end up selling for 55 percent off at Ashford or Jomashop after they lay around stores for 18 months or so. Mix that in with the types of distribution detailed in that article, and it all produces a type of watch consumer who is educated to get deals, and if he or she waits things out, today's Baselworld hype becomes February 21, 2020's Jomashop deal of the day.

Really great article.
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Re: Gray Market: Where a $200 Watch is $140

Postby conjurer » February 21st 2018, 11:02pm

TemerityB wrote:
conjurer wrote:A good indicator about gray market watches is Jomashop (where I've bought from a few times). Checking out the Omegas available, most are discounted around 37%; I got my SMP from them for around 40%. If you check out the Rolexes up for sale there, some aren't discounted a penny, while most seem to be discounted around 5%, with a rare few discounted upwards of 20%. It should be pretty clear which company is doing more to protect their brand.

I would contend that Rolex prices their watches, no matter where they sell in the world, pretty closely to what they sell for in, say, Germany or the USA, just in whatever currencies. You can either buy one or not, from an AD, which are tightly controlled as to how they might offer modest discounts. Omega, on the other hand, probably prices their wares to whatever the local market will support; an SMP in, say, Kuala Lumpur might be priced at half of what the US market will support. Gray market brokers swoop in, buy up excess stock (possibly getting a further discount for volume purchases) and then sells 'em in the US, on a far smaller margin than a US AD.

The winner is the consumer. I was able to buy an SMP for about $2800 from Joma, whereas if I had gone to an AD, if I had gotten any discount at all, it would have been around 10%, which would have covered my location's sales tax, leaving me paying the MSRP of around $4400. The SMP is a great watch for $2800, and doubt I would have sprung for one full boat.


I have a friend who sells Rolex at one of the authorized retailers here in NY; out of respect for him, I won't mention where since we talk semi-"insider" stuff all the time. Last autumn - we're talking, late September, early October - he was telling me that Rolex wasn't even accepting orders from his company after that time, and that nothing more would be shipped until about, well, now, the second month of 2018. So regardless of demand for their products, Rolex, with an iron fist, wouldn't unleash any more watches to that retailer ... just before the holidays. If that isn't protecting product flow, I don't know what is.

Frankly? Many watch companies simply make too many watches, flooding retailers with product, somehow believing that some new model is going to have some sort of collector's market or implied prestige, only to end up selling for 55 percent off at Ashford or Jomashop after they lay around stores for 18 months or so. Mix that in with the types of distribution detailed in that article, and it all produces a type of watch consumer who is educated to get deals, and if he or she waits things out, today's Baselworld hype becomes February 21, 2020's Jomashop deal of the day.

Really great article.


By some accounts, Rolex produces between 800k and a million watches a year (determined from COSC records, as Rolex doesn't say) and probably sells just about everything they produce. Assuming there are 5000 ADs worldwide, that's only 160-200 watches per AD, per year. Indeed, the lower the number of ADs, the easier it is for Rolex to police. When I was a youngster in retail, the store I worked at sold Mont Blanc pens and Hartmann luggage, and both companies were said to employ secret shoppers, who went into retailers and demanded sizable discounts; if they caught the retailer doing this, they would stop selling to them. There were ways around this, for instance, I could sell a "floor model" at 20% off, or 25%, if that meant closing the sale.

I would be pretty surprised if I went into, say, Ben Bridge jewelers, towards the end of the month, with $7500 in cash, and not walk out with a Submariner, discounted because it was a "floor model." Could I do this the week before Christmas? Probably not.

Interestingly, Omega seems to excel in douchebaggery with ADs. At one point a couple of years ago, the talk was that they were strongarming ADs to carry a deep backstock on their more popular models, like the SMP. Most dealers would carry (at most) one watch in backstock, and one in the case. There was also the court case where Omega USA sued Costco for selling Omega watches, which were no doubt gray as charcoal, for deep discounts, and lost.
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--pacerguy, tonguing Jawbone's distended ballsack, at WITless.


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