Rolex shortage, ways to possibly alleviate it?

[Tavli3]

All these posts about what Rolex should and needs to do is insinuating that Rolex is run by a bunch of idiots when in fact they are the shrewdest retail marketers in the world.

The gray market exists cause people buy at gray market prices which increases the desirability of the watches at retail prices.

The current situation is the new normal. Oh and by the way it’s just not Rolex try buying a new Richard Mille or an AP or an PP or an Ferrari. It’s the same or worse.

[fsprow]

Just think of buying a watch the same way you think of buying a home. There is no MSRP. It’s a price (with resellers) which is agreed to by willing sellers and buyers.

[CashGap]

Originally Posted by Tavli3

All these posts about what Rolex should and needs to do is insinuating that Rolex is run by a bunch of idiots when in fact they are the shrewdest retail marketers in the world.

The gray market exists cause people buy at gray market prices which increases the desirability of the watches at retail prices.

The current situation is the new normal. Oh and by the way it’s just not Rolex try buying a new Richard Mille or an AP or an PP or an Ferrari. It’s the same or worse.

We need a "like" button. Would save so much typing...

[teck21]

The shortage is only at MSRP.

Considering this is a non-essential luxury good, calling it a problem probably overstates it.

I do enjoy the shortage though. It feeds my ego. I am after all, only human.


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[JakeK]

I don’t think the inability to buy the Rolex you want is a problem that Rolex needs to solve. Their job is to generate more revenue and profit than the year before while maintaining or improving their brand equity. That’s it. The grey market is a by-product of their success. They don’t care about it.

The current practice of ADs ensures Rolex sells all the watches they can produce, while strengthening their brand equity. I think it is brilliant execution.

[Kevin of Larchmont]

Originally Posted by RyanJ

Rolex does not need to fix anything. There is no problem. They produce watches, they sell all of them.

Rolex doesn't care if you get the watch you want. Their only care is brand image and right now that is doing just fine.

In my opinion, Rolex should do absolutely nothing.

This answer is perfect.

[ndrs63]

Why would they do anything? I certainly wouldn’t if I were in their shoes. It’s like giving suggestions to a watch brand on how to produce more of their limited edition watches


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[Token74]

Originally Posted by JakeK

I don’t think the inability to buy the Rolex you want is a problem that Rolex needs to solve. Their job is to generate more revenue and profit than the year before while maintaining or improving their brand equity. That’s it. The grey market is a by-product of their success. They don’t care about it.

The current practice of ADs ensures Rolex sells all the watches they can produce, while strengthening their brand equity. I think it is brilliant execution.

Correct


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[Nicolamilton]

An idea to achieve it could be introducing a defective new caliper, and not solving the problem at least during the first 6 years after launching.

[Leicaman]

The problem is down to all the mugs who will cough up and pay twice what a watch is recommended to be sold at by the manufacturer. I don’t blame the greys. They are just feeding off those willing to shell out. Personally I have zero interest in buying from a grey. I don’t need a watch that much, especially if it’s my second , third or twenty third watch. The people buying from grey just make me shake my head and laugh at them.

[Ihatecheese]

I dont see what Rolex would ever want to do to change the current status?
The pricepoint is achievable for the regular person, an aspirational piece for many and still resonates from a brand perspective to the non watch person. Hence the popularity and collectability with rolex written on the dial.

A problem is that someone with 10 or 20K spare sometimes feels they have more right to a purchase than if they were to spend $100- That is the disconnect. Its sold out the same way a timex might be sold out, until they receive some more stock, where your peers who read the same things and have the same aspirations, will also be on the same game.

The foornote is that paying more than retail for something that Rolex is popping out of its watch factory multiples per hour/day may suggest that the purchaser isn't the most adept at money mangement long term and has a few skeletons (Who admits aboug being ripped off paying double retail price to their partner- BUT I NEEDED THE BLUE COLOUR TOO)- but that probably isn't a suprise, there is that dream of selling it for more than the initial first two scalpings of course!

[Jpccarguy]

Maybe another way to look at the issue is the time value of money. RRP for a blue SS SD is $14,800 USD, 12,193 Euro, 10,800 Pound Sterling. Current GM price for this is approx $25K, difference is $10,200. In four years of waiting, it would have cost you about $7.00 a day if you had bought it grey then, to now. I get that you have principles, but is it worth all your hand wringinig over four years, when you could have bitten the bullet way back when? Agree, hindsight is 50/50, just saying...

[996marty]

If you’ve got the money just go grey why wait around for years not knowing if you’ll ever get the call

[Tavli3]

Originally Posted by 996marty

If you’ve got the money just go grey why wait around for years not knowing if you’ll ever get the call

Well there can be a good argument made for that. But to me I couldn't do it cause I feel the current state of affairs is not the natural state. To me I feel the grays are a necessary part of the ecosystem just like in nature certain creatures provide a check and balance to the natural ecosystem. Before the frenzy I envisioned the grays as providing a necessary service by cleaning up excess inventory or buying and reselling unpopular models and in return they got a few plums also. Thats the way it should be clean up the overstock and provide a few plums to those willing and able to pay. BUT today they have ALL the plums!

The gray market has gone thru some grotesque metamorphosis like a Dr Jeykl turned into Mr Hyde. Whereas they are now the defacto Rolex ADs with every desirable model passing right thru the ADs just long enough to take care of the obligatory paperwork and going right to the grays website as if they bought it direct from Rolex. So while AD cases sit barren as if they are going out of business, the Gray cases are full with sometimes dozens of the same brand new watches. So its not a matter of crying about not getting your precious little watch, its the fact that there are plenty of watches to go around there is no shortage there are literally hundreds of every hot model available. So the issue is the route these watches take once they leave Rolex. We all know they must be delivered to an AD, it is from there the waters get murky. They either go direct to a gray or they go to a flipper/speculator. Thus bypassing the legitimate consumer/WIS. If the gray stock was comprised of watches sold by consumers/WIS that for whatever reason no longer felt an attachment to their watches and wanted to move onto the next piece that would be different. Sadly this is not the case and it seems all too unnatural to me.

So while I bear no ill will to any gray I think whats going on is an unhealthy aberration and not good for anybody in the long run. And again its just not Rolex its with many luxury items and now even the stock market where nickel and dime traders in mommy's basement can bankrupt multi billion dollar hedge funds. Nice to see these hogs bleed a little but again its not the true nature of the way things work. So I don't think much good is going to come of this either.

[HiBoost]

Rolex have always been lauded for their mastery of marketing and psychology. 10 years ago their products were highly regarded but still widely available. But in recent years their game has been upped another level. Who else can simultaneously mass produce 1 million products a year AND have those same products seem exclusive? That sounds almost laughable, but here we are. Whether or not the gray situation demands intervention depends on the actual numbers. Earlier in this thread an example was thrown out that 70% of watches go to gray, 30% to retail AD customers. In my opinion, the numbers can't be anywhere close to this. Think about it. At any time we can jump on ebay or chrono24 and find 10 NIB LBs and 10 NIB Daytonas for sale. The temptation is to think that "all" watches are going to the grays. But come on, there have to be 10s of thousands of new Subs being made. If even 10% of them were going straight to grays the online markets would be overflowing and would never sustain the values we see. I feel like the vast majority of the watches are still being sold direct to consumer by the ADs. And as long as that's the case then I agree there is nothing to do.

Just because a watch isn't in the display case doesn't mean it's not at the dealer and won't be sold directly to a customer. But of course, we have to consider what is the motivation of that customer? The ebay pricing and instagram hype will surely lead many of those who are "offered" a watch to buy it based on perceived financial gains. "I don't really like green, but this LV makes me $10k the second I walk out the door, so might as well throw it in the safe, can always flip later". Meanwhile the guy who would kill his mother for the same piece based on true lust can't ever get one. Yeah, that sucks but there's nothing we can do about it.

[georgekart]

Originally Posted by HiBoost

Whether or not the gray situation demands intervention depends on the actual numbers. Earlier in this thread an example was thrown out that 70% of watches go to gray, 30% to retail AD customers.

I used 70/30 as an example. I think it is more close to 50/50 on particularly hot models. But basically more watches go to greys, the more close the grey price is to real price. If 99% of watches end up at greys, grey price could basically be retail. If 1% ends up at grey... I don't think there would be such a great difference between grey and retail. So i'd say 50/50 on something like a blue SkyD or white 500c or a BLRO or an LV and something like 90/10 on your average black Sub.

[HiBoost]

Originally Posted by georgekart

I used 70/30 as an example. I think it is more close to 50/50 on particularly hot models. But basically more watches go to greys, the more close the grey price is to real price. If 99% of watches end up at greys, grey price could basically be retail. If 1% ends up at grey... I don't think there would be such a great difference between grey and retail. So i'd say 50/50 on something like a blue SkyD or white 500c or a BLRO or an LV and something like 90/10 on your average black Sub.

But let's be honest, you are just pulling numbers out of the air. I also disagree that the percentage going to gray determines the gray price. What is the logic here? If Rolex makes 25,000 black Subs, but there are 100,000 people worldwide who want them, the grays can charge 1.5-2x retail regardless of whether they have 5 watches or 5,000 (in either scenario the ADs are still going to be sold out). As long as there are more buyers than sellers, secondary market price will go up. Has little/nothing to do with what percentage of the total supply this represents.

[UK_]

Originally Posted by HiBoost

Rolex have always been lauded for their mastery of marketing and psychology. 10 years ago their products were highly regarded but still widely available. But in recent years their game has been upped another level. Who else can simultaneously mass produce 1 million products a year AND have those same products seem exclusive? That sounds almost laughable, but here we are. Whether or not the gray situation demands intervention depends on the actual numbers. Earlier in this thread an example was thrown out that 70% of watches go to gray, 30% to retail AD customers. In my opinion, the numbers can't be anywhere close to this. Think about it. At any time we can jump on ebay or chrono24 and find 10 NIB LBs and 10 NIB Daytonas for sale. The temptation is to think that "all" watches are going to the grays. But come on, there have to be 10s of thousands of new Subs being made. If even 10% of them were going straight to grays the online markets would be overflowing and would never sustain the values we see. I feel like the vast majority of the watches are still being sold direct to consumer by the ADs. And as long as that's the case then I agree there is nothing to do.

Just because a watch isn't in the display case doesn't mean it's not at the dealer and won't be sold directly to a customer. But of course, we have to consider what is the motivation of that customer? The ebay pricing and instagram hype will surely lead many of those who are "offered" a watch to buy it based on perceived financial gains. "I don't really like green, but this LV makes me $10k the second I walk out the door, so might as well throw it in the safe, can always flip later". Meanwhile the guy who would kill his mother for the same piece based on true lust can't ever get one. Yeah, that sucks but there's nothing we can do about it.

You my friend, are 100% right.


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[Madman37]

Originally Posted by HiBoost

But let's be honest, you are just pulling numbers out of the air. I also disagree that the percentage going to gray determines the gray price. What is the logic here? If Rolex makes 25,000 black Subs, but there are 100,000 people worldwide who want them, the grays can charge 1.5-2x retail regardless of whether they have 5 watches or 5,000 (in either scenario the ADs are still going to be sold out). As long as there are more buyers than sellers, secondary market price will go up. Has little/nothing to do with what percentage of the total supply this represents.

To work this out you need to work out how many watches Rolex make a year. Then how many of those are blue sky dwellers and then divide that by say the number of adults in the whole world who can afford one. Let’s say any adult who earns £40k or over as an example. That will estimate how many are available for that population type around the world percentage wise who could afford it. Although this doesn’t take into account people who save well. Take out loans for a watch etc.

[richard371]

We could get a million people on Reddit to pass the word Rolexes have bad QC and to buy other brands. Then the demand will drop and we could buy what we like.

[UK_]

Originally Posted by georgekart

I used 70/30 as an example. I think it is more close to 50/50 on particularly hot models. But basically more watches go to greys, the more close the grey price is to real price. If 99% of watches end up at greys, grey price could basically be retail. If 1% ends up at grey... I don't think there would be such a great difference between grey and retail. So i'd say 50/50 on something like a blue SkyD or white 500c or a BLRO or an LV and something like 90/10 on your average black Sub.

This is not how supply and demand works.

There is an overall demand, from customers.

There is an overall supply, from the factory.

Demand is outstripping supply (and this lack of supply actually drives up demand).

Greys are just in the middle of it trading. It’s the overall demand verses the supply that makes the market price - now how many go ‘directly’ to greys.


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[Madman37]

Originally Posted by richard371

We could get a million people on Reddit to pass the word Rolexes have bad QC and to buy other brands. Then the demand will drop and we could buy what we like.

Ha ha yeah imagine that. Rolex would just stop making them and say due to Reddit users raising a QC issue we need two years address it so no watches being made for 2 years.

[richard371]

Yup good point. Id just like to add an SS GMT or Sub to my 116500 and my collection will be complete. If my AD does not come through I may add a new Speedmaster 3861

Originally Posted by Madman37

Ha ha yeah imagine that. Rolex would just stop making them and say due to Reddit users raising a QC issue we need two years address it so no watches being made for 2 years.

[Goin2drt]

Originally Posted by fsprow

Just think of buying a watch the same way you think of buying a home. There is no MSRP. It’s a price (with resellers) which is agreed to by willing sellers and buyers.

Not even CLOSE to being the same. If it was then folks would be ok with that.

EVERYONE pays the same price for that same house. Everyone can make an offer and it will go to the highest bidder or if the house is listed too high then it will will sell for some price below that. None the less that exact house sells and is offered at the same price to EVERYONE.

A SS Daytona is NOTHING like this example. Some people get them at $11K and others at $29K. That would be like a house selling to one person for $1M but the next guy that walks into the same house the next day he has to pay $3M

Not the same at all.

[goodolejr]

Originally Posted by Goin2drt

Not even CLOSE to being the same. If it was then folks would be ok with that.

EVERYONE pays the same price for that same house. Everyone can make an offer and it will go to the highest bidder or if the house is listed too high then it will will sell for some price below that. None the less that exact house sells and is offered at the same price to EVERYONE.

A SS Daytona is NOTHING like this example. Some people get them at $11K and others at $29K. That would be like a house selling to one person for $1M but the next guy that walks into the same house the next day he has to pay $3M

Not the same at all.

Not really, though. The guy who paid $11K for a Daytona had to first buy $100K in other merchandise that subsequently took a 30-50% (or more) bath the moment he walked out of the store. Unless that buyer independently wanted all that less-desirable merchandise--which is the exception, not the norm--factoring in depreciation, it can be argued the gray price is effectively lower.

[superpop]

I have said it a million times but Rolex could easily fix this by allowing the AD network to charge a premium for in demand watches. This would reward the AD's that have spent a ton of capital on floorspace for this brand and would allow Rolex to keep the MSRP where it is at. Right now Rolex is letting some back alley punk profit off of their popularity. The AD should be enjoying this profit, they have made the investment and will suffer when the hype bubble pops. For Rolex, this really is hurting the brand long term because the true buyers are turned off by these games. Ferrari, Porsche and most other luxury brands let the AD set the street price in situations like this. Doing this would certainly smooth out demand as well as you would lose an entire layer of the distribution that is manipulating the market. Contrary to what what some have said, Rolex is asleep at the wheel on this one.

[UK_]

Originally Posted by superpop

I have said it a million times but Rolex could easily fix this by allowing the AD network to charge a premium for in demand watches. This would reward the AD's that have spent a ton of capital on floorspace for this brand and would allow Rolex to keep the MSRP where it is at. Right now Rolex is letting some back alley punk profit off of their popularity. The AD should be enjoying this profit, they have made the investment and will suffer when the hype bubble pops. For Rolex, this really is hurting the brand long term because the true buyers are turned off by these games. Ferrari, Porsche and most other luxury brands let the AD set the street price in situations like this. Doing this would certainly smooth out demand as well as you would lose an entire layer of the distribution that is manipulating the market. Contrary to what what some have said, Rolex is asleep at the wheel on this one.

There is no harm being done.

The people are getting frustrated seem to be the people who want one SS watch tomorrow.

They are not top of the list for Rolex to worry about.

The people who Rolex really wants to sell to are getting all the watches they want.

I think Rolex know exactly what that are doing - when when it all dies down (as it will eventually, fashion changes), they won’t have to discount, which is not a good look for a luxury brand (it doesn’t matter if it’s the AD or Rolex lowering the prices either).


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[fsprow]

Originally Posted by Goin2drt

Not even CLOSE to being the same. If it was then folks would be ok with that.

EVERYONE pays the same price for that same house. Everyone can make an offer and it will go to the highest bidder or if the house is listed too high then it will will sell for some price below that. None the less that exact house sells and is offered at the same price to EVERYONE.

A SS Daytona is NOTHING like this example. Some people get them at $11K and others at $29K. That would be like a house selling to one person for $1M but the next guy that walks into the same house the next day he has to pay $3M

Not the same at all.

Guess your experience is different than mine. I have bought and sold a number of houses and each one was an individual negotiation not a fixed price.

[superpop]

Originally Posted by UK_

There is no harm being done.

The people are getting frustrated seem to be the people who want one SS watch tomorrow.

They are not top of the list for Rolex to worry about.

The people who Rolex really wants to sell to are getting all the watches they want.

I think Rolex know exactly what that are doing - when when it all dies down (as it will eventually, fashion changes), they won’t have to discount, which is not a good look for a luxury brand (it doesn’t matter if it’s the AD or Rolex lowering the prices either).

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We will have to agree to disagree. The harm being done is to the brand, with the true end users of Rolex products. Why do you think Rolex insists on a dedicated area within an AD shop, and very expensive displays. Rolex does understand that people rich enough to buy a 10K+ fashion bauble, want a nice, safe experience. They do not want to buy it from some clown on facebook. Several other luxury brands manage this so much better. I mentioned Porsche in my last post, they allow the dealer to add whatever they want to a hot car. They do not force the dealer to sell at MSRP and have some flipper profit off of the car. The way it is now, is a complete turn off for future customers that Rolex will need at some point.

[LFDAmelio]

Originally Posted by superpop

Rolex could easily fix this problem by simply allowing the AD network to charge market rates for the watches. This would eliminate the flippers and bring some added equilibrium to the market. A lot of other luxury brands do this, like Porsche, where you do pay an ADM to buy a hot car. Rolex is completely missing the boat on this and it will bite them at some point as more people get turned off by the experience.

As a Porsche guy, i can tell you that this is no fix. It doesn't make more product or affect the underlying cause - imbalance of supply and demand. Allowing ADs to charge mark up just shifts the hate to the dealer rather than the manufacturer or grey. Go on Rennlist or any other Porsche forum. Just substitute "SS Daytona" or "Pepsi GMT" for "GT3" or "GT3RS" and you'll be reading the exact same thread.