Why Are Watchmakers Entering the Secondary Market?

Why Are Watchmakers Entering the Secondary Market?

Postby koimaster » June 5th 2018, 9:18am

Richemont’s recent surprise announcement that was taking over London-based pre-owned retailer Watchfinder is the latest in major developments taking place in the secondary market for watches over the last six months.

First came in the news in November 2017 that Hong Kong-based Watchbox had raised US$100m to fund expansion, with an eye on the goal of achieving US$200m in pre-owned watch sales in 2018. Starting with Philadelphia’s Govberg Jewelers, which is both an authorised retailer as well as pre-owned watch specialist, as the foundation of the enterprise, Watchbox recently partnered with Singapore-based Revolution publication to build a storefront on the magazine’s website. According to Revolution co-founder Dr Bruce Lee, that alone is expected to generates sales of as much as US$60m in the first year.

Over on the other side of the fence the ground was shifting well before the Watchfinder takeover. Earlier in the year Audemars Piguet embarked on an experiment at Boutique Montres Prestige located in the Grand Hotel Kempinski in Geneva. A multi-brand store offering several high-end brands but owned by Audemars Piguet, the shop is the first to sell a small number of factory authorised, pre-owned Audemars Piguet watches. Richard Mille, Breitling and MB&F have also indicated they are planning to dip their toes into the secondary market.

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Re: Why Are Watchmakers Entering the Secondary Market?

Postby conjurer » June 5th 2018, 9:26am

Thar's money in them thar pre-owned watches.
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Re: Why Are Watchmakers Entering the Secondary Market?

Postby Rusty » June 5th 2018, 5:04pm

Pricing control.
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Re: Why Are Watchmakers Entering the Secondary Market?

Postby biglove » June 5th 2018, 6:12pm

A $ made is why. Profit motive.
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Re: Why Are Watchmakers Entering the Secondary Market?

Postby TemerityB » June 5th 2018, 7:33pm

Frankly? I think it's all pretty smart: Instead of dumping watches for liquidation or recalling older stock that hasn't moved, move it yourself at a discount in your own web portal or retail outlet. Add pre-owned and other brands as well? Hey - it's worked for the auto industry for decades.
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Re: Why Are Watchmakers Entering the Secondary Market?

Postby James Elsener » June 6th 2018, 6:15am

Watch companies are a patient lot. Companies like Richmont, Patek Philippe, Audemars Piguet, etc. knew from their distributors that there was quite some money to be made in pre-owned and vintage watches. They too knew that it takes a long time to wrestle this market from their dealers.

Most of them started out some 15 years ago with building their brand's value in the pre-owned set by carefully nurturing the auction market and vintage watch trading scene. They built up and fleshed out their own collections of their watches at the same time.

The first step, however, was putting value to all these archives. They were organised in a professional way. Keep in mind that luxury brands had always a very close relationship with their customers. Most of the watch companies like Patek, Vacheron Constantin, etc. know from their archives whom a given watch was sold to and at what price. And on top as most of these watches are serviced regularly they also know the path it took when changing hands. This information is price-less when it comes to assessing the star-value of a given watch and hence its price as a pre-owned piece in auction. And the prices paid for at auctions is what the watch lovers talk about.

Over the last five years the market for pre-owned watches has increased dramatically. In my research it dwarfs the market for new watches by a magnitude of 2.5 from a margin point of view.

Buyers of pre-owned watches buy, trade in and sell watches a lot more readily than buyers of new watches. They are on average also a more affluent lot than buyers of new watches. And what makes this market even more interesting is that these buyers love to hunt the watch of their desire.

I do expect the Asian markets to explode in the coming ten years from a pre-owned watch point of view. Asians at large have a lot more intimate feel of history because the history of their countries is stretching back over a lot longer period than most other continents'. Asians are used to think in cycles and they have learned that history is moving in cycles. This has made them very patient in general and suspicious of short-cuts. Trust is the main thing. That's why they want to buy from the source whether it is bricks-and-mortar or online.
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