ROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEX
|
9 September 2017, 02:29 AM | #1 |
Banned
Join Date: Nov 2015
Real Name: Karl
Location: Kuwait
Posts: 5,228
|
Grey Market : FT article
|
9 September 2017, 02:31 AM | #2 |
"TRF" Member
Join Date: Oct 2012
Real Name: Wayne
Location: California
Watch: Rolex, PAM
Posts: 3,302
|
Can't read without subscribing. Cliff notes?
Sent from my iPhone using Tapatalk |
9 September 2017, 02:52 AM | #3 |
Banned
Join Date: Nov 2015
Real Name: Karl
Location: Kuwait
Posts: 5,228
|
No one is immune to a bargain — not even those who can spend £30,000 on a watch. At Watches of Switzerland, an authorised dealer, an Audemars Piguet Royal Oak automatic in rose gold sells for £42,600, but the same watch is on offer at website Chrono24 — on the “grey market” of unauthorised sales — from US dealer Watch My Diamonds for $34,850 (£27,227). Impossible to ignore, the grey market is becoming a powerful force in the watch industry.
Unauthorised watch dealers such as Jomashop.com, Authenticwatches.com and IconicWatches.co.uk discreetly buy stock that authorised dealers have failed to sell, and offer them at a lower price, often with an equivalent warranty. Chrono24, an online marketplace similar to eBay where dealers and consumers can meet, is another heavyweight in the sector, with more than 10m monthly visits. Discounts of 30-40 per cent on new TAG Heuer, Breitling and Rolex watches, delivered overnight and offering responsive customer service, appeal to price-conscious shoppers. The term is not necessarily loved. “You can call it the grey market, but at the end of the day it’s the same watch for a lot less,” says Peter Grant, general manager of Authenticwatches.com, which lists 10,000 watches. (The company declined to give its revenues.) “The number one driving factor is price, the number two is accessibility and service.” |
9 September 2017, 02:53 AM | #4 |
Banned
Join Date: Nov 2015
Real Name: Karl
Location: Kuwait
Posts: 5,228
|
The grey market is “growing massively” based on the number of products on their sites and their search penetration, according to Brian Lee, associate director at L2, a business intelligence service. Online is “the first touchpoint in the search. A lot of brands don’t list the price still, so then people will go to the grey market” to find a watch price and often end up buying there, he says.
The overall global watch market is worth $62.5bn, according to Euromonitor, and the grey market largely affects the higher end of mechanical or designer watches. These have had two terrible years: according to the Federation of the Swiss Watch Industry (FHS), exports of Swiss watches fell 12.6 per cent to SFr19.4bn ($20.3bn) between 2014 and 2016. They have risen 0.7 per cent this year so far. In this difficult period for the industry, the grey market has come to account for about 20 per cent of the global market for watches that retail for above $5,000, according to Jon Cox, an analyst at Kepler Cheuvreux in Zurich. Previously, the grey market was about 10 per cent of the global total, he adds. Brands themselves sell unsold and obsolete stock directly to the grey market “It does provide a useful function, no matter what some of the producers say: it does allow them to discreetly turn a blind eye to some of their retail partners getting rid of non-moving stock and replenishing with parts that are growing faster,” he says. He notes that Richemont has been an exception, seeking to stamp out the grey market by buying back (and destroying) stock in Asia. Grey-market websites are “second-hand dealers”, says Raynald Aeschlimann, chief executive of Omega, dismissively, noting that manufacturers will not uphold the warranty if bought on the grey market. But brands are in a quandary too: they are unwilling to penalise their distributors who sell on watches, nor do they wish to compete with them online. Moreover, the grey market is as much of a solution (to overstocking) as it is an attack (on price integrity). How brands deal with the machinations of the grey market is of great importance. These are no small businesses. Chrono24, where (mostly) unauthorised dealers offer watches, has listings for more than 300,000 new and used timepieces with a value of €2.5bn. The most popular watches on Chrono24 are Rolexes, says Tim Stracke, co-chief executive, with an average selling price of €6,000. It does not pitch itself as a discount site: there is no “redlining”, an industry term for highlighting of discounts, though a search will show you the lowest offers. |
9 September 2017, 02:54 AM | #5 |
Banned
Join Date: Nov 2015
Real Name: Karl
Location: Kuwait
Posts: 5,228
|
Mr Stracke expects the site, which is based in Karlsruhe, Germany, will have about €1bn in transactions this year and will double that in five years’ time. (Grey market dealer Jomashop.com had sales of $269m last year, according to a person close to the company.)
Like fellow internet businesses, Chrono24 garners plenty of data from its almost 1m registered shoppers, who can place watches on a personal clipboard. “We know a lot about the users,” Mr Stracke says. “We know from previous visits what they like and dislike, we know how many years you’ve been with us, we know what you’ve bought before, sold before, what you’ve looked at before.” These data are useful for algorithm-driven recommendation engines, suggesting further appealing purchases. The business makes money by charging a monthly fee for dealers to list watches on the site, from €69 a month up to several thousand euros for those with over 1,000 watches on its site. Dealers pay a 3.5 per cent transaction fee and private sellers are charged 2.85 per cent on their purchases. Mr Stracke says Chrono24’s “core business is very profitable”, although investment in growth means earnings are “slightly negative” — a situation familiar to other internet businesses. How the grey market finds its watches is a point of contention. Industry figures say watches come from authorised dealers around the world who are struggling to sell timepieces — official sales in Hong Kong, for example, fell 25 per cent in 2016, according to the FHS, and left retailers with a glut. One grey-market executive says his site often buys watches at the end of the quarter, when brand managers, seeking to meet their sales targets, are forcing retailers to take additional stock. Even authorised dealers see the advantage of the grey market: one watch company executive says its retailers buy on the grey market to build their own stock of popular items cheaply. Watch brands are publicly strict about trying to stem this trade. Several say they will penalise or even cut off authorised dealers if they find them selling to the grey market, and one grey-market dealer says he has seen threatening letters from brands to retailers. “We protect our suppliers’ identity, it’s the number one thing we do,” says Mr Grant of Authenticwatches.com, adding that his site typically buys in bulk from authorised watch dealers in the US who are struggling to shift stock. (Dealers can sell within the authorised network.) But brands will not necessarily take action to stop it. An executive at a mid-sized luxury watch brand says the only way to avoid its items entering the grey market is to buy back unsold stock from its dealers, which larger brands are not willing to do. Sometimes, in fact, brands perpetuate it: they themselves sell unsold and obsolete stock directly to the grey market, another senior watch executive says. Some watch dealers even buy in one country where a product may be in oversupply, and thus cheaper, and sell in another country with greater demand and a higher price point. “The biggest areas [of supply] are still very much in Asia and you are seeing that [Asian watch retailers] are talking about controlling their stock levels. All the brands are taking a much more stringent view on this,” says John Guy, head of European luxury at Mainfirst Bank. “At the end of the day, you can try to control the dealer but they do what they want to do,” says Theo Staub, chairman of watch brand Moritz Grossmann. “The tools you have when you sell to the dealer are quite limited.” |
9 September 2017, 02:55 AM | #6 |
Banned
Join Date: Nov 2015
Real Name: Karl
Location: Kuwait
Posts: 5,228
|
If watch brands are serious about stopping the flow of their products on to the grey market, diminishing both their profit and their control, they can apply legal threats at several points.
The first is for a brand to police its own retailers. If it has a selective distribution system that prohibits retailers selling outside its network, the brand could sue for breach of contract, says Julia Dickenson, a senior associate at law firm Baker McKenzie, who works with luxury brands. “But practically speaking, those retailer relationships are often important, long-term and valuable . . . so some brands may well take a view they don’t want to be as strict as they could be if they have seen leaks coming from them.” Moreover, the brands may not know where the leaks are coming from in the first place as traceability can be difficult, she adds. Most of the top brands are meeting us here in our office, talking with us and discussing ways to partner TIM STRACKE Targeting the unauthorised dealers is often more palatable. This is most easily done by finding those grey-market vendors who buy products outside of the European Economic Area and sell within the EU, infringing the brand’s trademark, according to Ms Dickenson. If the watch is both bought and resold in the EU by unauthorised dealers in a way that could damage the brand’s reputation, then it may also be able to claim a breach of its trademark rights. Using unfair competition law which strongly upholds the rights of brands could also be an option, while the law of tort could cover unlawful interference with contract and profiting from a breach of contract. The difficulty for watch brands comes in the online market, where the courts and competition authorities are still catching up. Whether or not a brand can prevent their authorised retailers selling through an online marketplace is still uncertain. In July, a case before the European Court of Justice (Coty Germany v Parfόmerie Akzente) came out with a non-binding opinion that beauty brand Coty can prevent the German retailer from selling its items on online marketplaces. A ruling is expected in the coming months. Watch brands may have to join the grey market if they cannot beat it. The scale of Chrono24’s audience and the data the company has on it are driving reticent watch companies to work with them directly, says Mr Stracke. This does not necessarily means brands will lower their prices but does help them retain control of their image. “The top, top brands are in a very open dialogue with us right now. They are very conservative, they are not ready to put their brands on our platform, but most of the top brands, and I’m talking about chief executives of the top brands, are meeting us here in our office, talking with us and discussing ways to partner,” Mr Stracke claims. One brand that has decided to work with the grey market is Frederique Constant, whose “affordable luxury” timepieces start from around $870. “We have been feeling the impact for two or three years that the grey market is getting stronger and stronger,” says Niels Eggerding, vice-president of sales at Frederique Constant. “It’s very hard to control your brand against that,” he says, with thousands of points of sale and distributors all potentially leaking. That was part of the reason why, since March 2017, the brand has been selling on Chrono24 within its own boutique, at its regular prices. It is the highest-profile of the watch names there and is offering some of its timepieces at full price, alongside accessories, a company history and videos about its smartwatch. Mr Eggerding hopes that working with Chrono24, rather than against it, will help in “educating our consumers a bit better”. But the same watches will probably be available through other dealers on the site, no doubt at a discount to the brand’s preferred price. “People say, ‘Oh, you’re really progressive,’ or people say, ‘You’re crazy to be on this platform with such a high-end product,’” says Mr Staub of Moritz Grossmann, which also has a Chrono24 “boutique”. The brand, which makes two-thirds of sales in traditional stores, has been “positively surprised” by early sales and expects rivals to follow it. If they do, they will regain some profit and perhaps a degree of control in the unwieldy online marketplace — but at the risk of looking like they have capitulated to those who have made millions from ignoring their rules. |
9 September 2017, 03:14 AM | #7 |
"TRF" Member
Join Date: Oct 2012
Real Name: Wayne
Location: California
Watch: Rolex, PAM
Posts: 3,302
|
Thanks for posting. Very interesting!
Sent from my iPhone using Tapatalk |
9 September 2017, 03:18 AM | #8 |
"TRF" Member
Join Date: Jun 2017
Real Name: Sal
Location: London
Posts: 2,496
|
Cheers for posting mate, interesting read
|
9 September 2017, 03:57 AM | #9 |
Banned
Join Date: Aug 2014
Location: Calumet Harbor
Watch: ing da Bears
Posts: 13,568
|
Thanks Karl. Interesting read.
|
9 September 2017, 04:10 AM | #10 |
"TRF" Member
Join Date: Jul 2014
Location: Washington, DC
Posts: 5,356
|
Thanks for the post, interesting read. Now, can you copy the rest of the FT for us?
|
9 September 2017, 04:45 AM | #11 |
"TRF" Member
Join Date: Sep 2012
Location: USA
Posts: 1,207
|
Thanks for the post and sharing that article, it really is fascinating learning about the "grey market"
|
9 September 2017, 09:50 PM | #12 |
"TRF" Member
Join Date: Sep 2011
Real Name: Kevin
Location: Somewhere in PA
Watch: All of them...
Posts: 10,355
|
Thanks Karl! That was a very interesting read.
Sent from my iPhone using Tapatalk
__________________
Patek Philippe Rolex |
9 September 2017, 10:46 PM | #13 |
"TRF" Member
Join Date: May 2017
Location: Hong Kong
Watch: AP
Posts: 3,825
|
Thank you for posting that!
|
9 September 2017, 11:22 PM | #14 |
"TRF" Member
Join Date: Jun 2015
Location: OC
Posts: 1,466
|
Interesting
|
9 September 2017, 11:31 PM | #15 |
Banned
Join Date: May 2014
Real Name: John
Location: La Jolla, CA
Watch: Platona
Posts: 12,194
|
Much thanks for posting. A very interesting article. The trend is clear with watches and many other goods: the internet is killing brick and mortar stores. Some brick and mortars will survive, but some won't.
|
9 September 2017, 11:34 PM | #16 |
"TRF" Member
Join Date: Feb 2016
Location: Indiana
Watch: GMT BLRO
Posts: 1,754
|
Thanks for sharing, I bet majority of members on this forum source watches from grey dealers. Rolex pulled the contract from the two jewelery stores in my town several years ago. I have a relationship with the one but they just started carrying used and "grey" watches themselves and selection is limited. I would rather buy from them and I don't feel like driving 2 hours one way to thget next major city to buy my watch so online dealers is where I head.
|
10 September 2017, 07:13 PM | #17 |
2024 SubLV41 Pledge Member
Join Date: Dec 2008
Real Name: Xenophon
Location: UK
Posts: 2,728
|
Very interesting, Karl. Thanks for taking the time to post this
__________________
The sea! The sea! Θάλαττα! θάλαττα! |
10 September 2017, 08:05 PM | #18 |
"TRF" Member
Join Date: May 2016
Location: Wiltshire, UK
Posts: 19
|
Interesting post - thank you!
|
10 September 2017, 08:34 PM | #19 |
"TRF" Member
Join Date: Dec 2011
Real Name: Guy Gadbois
Location: Norcal
Watch: Rolex,Omega,Seiko
Posts: 1,759
|
I had a nice conversation with the Las Vegas AD for AP a couple years ago were the lady behind the bench said they moved more AP's than all the other AD's in the US but wouldn't discount from retail more than $800 on a 15400. I didn't want to delve too deep with her how they made those sales (I.e. Gray) but I know better. Honestly, at the time, I would have pulled the trigger on a white dial RO now that I think about it had they made a deal. I had a "few" drinks and was feeling froggy. Ended up going with a bluesy but I won't forget that AP experience.
__________________
Day-Date President, Datejust (flipped), Bluesy 16613, Omega 14kt Seamaster, Seiko Cocktail Time, Seiko Alpinist, REC 901-2 (Porsche 911), REC TTT Escape (Steve McQueen Triumph). A few Bulovas, cars, and fountain pens |
11 September 2017, 12:25 AM | #20 |
"TRF" Member
Join Date: Sep 2016
Location: USA
Posts: 670
|
Enjoyed the article. Personally when spending this amount on a watch peace of mind for authenticity is worth the AD cost to me.
|
11 September 2017, 05:11 AM | #21 | |
"TRF" Member
Join Date: Sep 2017
Real Name: 007
Location: NJ
Watch: DateJust41 MoP
Posts: 303
|
Quote:
Sent from my BBB100-1 using Tapatalk |
|
11 September 2017, 12:38 AM | #22 |
"TRF" Member
Join Date: Jul 2017
Real Name: Bob
Location: Santa Cruz, CA
Watch: SD43
Posts: 200
|
Thanks for posting - really enjoyed reading that. Such an interesting place, this high end watch world.
|
11 September 2017, 05:59 AM | #23 |
2024 Pledge Member
Join Date: Mar 2014
Real Name: Clive
Location: The Alps
Watch: collections change
Posts: 6,284
|
Thanks for posting this. Very interesting article...and interesting that the FT is writing about this.
Personally, I only use Chrono24 as a reference for prices. We've all read horror stories here of Chrono24 being less than helpful to customers when things have gone wrong... Two years ago I popped into a Rolex AD in a small town in Italy. I was in the market for a GMTc LN but wasn't expecting to purchase on that trip. They had what I wanted in stock, list price 7300€. Whilst in the shop I checked Chrono24, where the best price Italy was 6500€. That was what I paid. The AD didn't even argue. Chrono24 has its uses, but I would never buy directly through it.
__________________
. The path from WIShood to WISdom can have many turnings... . 16803. 16570. 18038. 114300. GMW-B5000D. |
11 September 2017, 05:13 PM | #24 |
"TRF" Member
Join Date: Aug 2017
Location: US
Posts: 1,119
|
Superb post!
Sent from my R1 HD using Tapatalk |
11 September 2017, 08:00 PM | #25 |
2024 Pledge Member
Join Date: Oct 2011
Real Name: Seth
Location: nj
Watch: Omega
Posts: 24,834
|
Great read. Thanks.
__________________
If happiness is a state of mind, why look anywhere else for it? IG: gsmotorclub IG: thesawcollection (Both mostly just car stuff) |
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests) | |
|
|
*Banners
Of The Month*
This space is provided to horological resources.