AD Strategy (and finding logic/peace with it)

[CHRONOLEX]

This post is for those people who have been on the list at ADs for a long time and/or feel like they're very qualified buyers who have never (or rarely) gotten "the call" from an AD and can't figure out why.

I'm someone who thought the AD strategy didn't make a lot of sense (other than it was clear they weren't just going to give you immediate positive equity in a watch by selling you something at retail much lower than it's worth on the secondary market, without something in exchange) and also felt pretty offended that I very infrequently got the call to buy something at retail, especially after I'd been loyal to the Rolex brand for 30+ years and to some of these ADs for a long time as well.

After thinking about it, a few things occurred to me, which may be obvious to some but I doubt all.

1. Rolex makes 1 million watches a year but not all are popular models. Some are very popular and some just aren't. But they must all be sold.

2. To get people to buy the unpopular stuff, the AD has to hold out the prospect of "possibly" being granted the opportunity to buy the more popular stuff "some day" -- if you do certain things first. For some ADs, that "certain thing" is to buy a bunch of unpopular models over some protracted time period, and for others it might (also) involve buying some of their own goods (jewelry) along the way.

3. The idea here is if we can make Subs, GMTs and Daytonas seem very exclusive, we can get you to buy 3, 4, 5 (or more) unpopular models along the way just to be able to get that one Sub, GMT or Daytona. We will get you to buy these at some scheduled interval so we can budget for those sales over time.

4. The whole point of the "wait list" is not to just make you wait patiently and silently for the phone to ring (as many think). It's actually an "audition period" where you walk in, place your interest in a watch, then they see what you do over some defined period. Do you buy more, do you buy nothing, what do you do? The length of time you're on the wait list depends on how much you start buying. Come in and get an Explorer, Air King, basic 31 OP and a Datejust (as examples that I've seen offered) over a 6-month period and I bet you will get a Pepsi or black SS Daytona shortly thereafter. If you express interest in smaller size PM (or watches that trade way lower than retail on the secondary market that they have a tough time selling because people know that), it could come even faster. If you don't buy anything, you will most likely not get the call.

5. If you start buying a lot (and also showing interest in buying some of the unpopular stuff), it means you are willing to play the game and understand (or at least believe) you will have to buy a bunch of things just to get that Sub, GMT or Daytona at retail...and they will certainly let you do so. If they can get you to buy some of their own jewelry as well (where they have an even higher margin), all the better for them.

6. Those people who walk in and get a popular watch like a Sub LV right away are probably just there at the right time when the AD needs to make a sale.

By doing the above, they mostly (exclusively?) target people who demonstrate that they're bought into the process and will buy 3-5 (or more) watches just to get one single watch and they can thus sell you many watches instead of just the one. They can turn that one-watch buyer into a many-watch buyer by getting you to do the repeat sales on the front end, not on the back end. The process is similar for people on the higher end, if they show a willingness to buy a series of PM pieces.

Which brings me to peace with why I have very rarely ever gotten called -- and why people say don't talk a lot about your collection if you want to get a call. I always thought that warning was to avoid looking like a flipper. In reality I think the warning is because by listing out all the great watches you already own, you immediately disqualify yourself as someone who would ever even consider "starting a relationship" at that AD on the lower end of the lineup, especially to buy watches that they know -- that you know -- are unpopular (or at least lower end than what you've already said you own). So they look at people like that and say well that guy just wants ___ to finish off his collection and then will be gone; I'd rather convince someone else that same watch is ultra desirable and then sell them 5 watches first before they get that one.

I know a lot of this is common sense, at least in part, but it fully occurred to me that it's not particularly sinister or bad faith or jerky or anything else. It's just a strategy for selling a lot of watches every year, when that's what you're expected to do - every...single...year. In fact, it might be the best (only?) strategy for doing that. I know I certainly wouldn't want the pressure of selling hundreds of watches every year when I know only a handful are actually truly popular and widely desirable.

I get it. But now I also fully realize why I will never get the call and can feel better about just going grey from the start.

Thanks for reading. I hope this brings some peace out there.

[S’portEye]

I try not to think about it this much. Life is short.

[1259]

In the end, it’s just a watch. Get the watch don’t get the watch it’s not that serious.

[njlam]

Nice summary by the OP. however I think he left out one aspect of the AD's business: Bundling to grey market dealers.

While it is true that an AD hopes to sell unpopular models to retail clients before they offer them the popular models, this takes time and it is expensive (especially when interest rates are high) to hold inventory.

Why not bundle the popular and unpopular models and sell them to a grey and forgo the waiting/expense? This method allows the AD to move serious volume (Hello Rolex, we are out of our allocation, pls send us more), and not have to worry that PM or diamond models are slow movers). The bundling concept also explains how grey dealers can sell new (recent warranty card) PM models below MSRP and stay in business (their losses are offset by the Daytona's they are selling at 2x).

Grey market dealers provide a regular and consistent demand that individuals cannot match.

Of course this is a corrupt practice from for the AD, however how else can anyone explain how many new watches are available at grey dealers? Based on the ADs I have visited, their ability to spot individual flippers cannot be that bad.

With this additional understanding, I have attained peace with dealing with the grey market. It is the ADs who bundle who are the real bad actors.

[Marcjvr]

All is fair in love, war and luxury watch allocations

[CarlOver]

No all AD work as outline by OP. Plenty of folks get the watches they want. Obviously, not all.

[ArtNouveau]

Not all ADs are the same and each individual’s experience might vary as well. I bought my first Rolex watch 40 years ago and have dealt with only four ADs since for my 14 past and present Rolex. Have only bought once from the secondary market back in ‘08 for a DSSD when it was cheaper and quicker to.
Not once did I want a particular watch so much I would pay over MSRP for it. I love watches but ultimately they’re just trinkets that I want, not need. One thing worth noting is I have a SA at my current AD I have known since ‘97. At my current dealer he has delivered five desirable SS models since 2017 and only once did he have to tell me what I wanted was not likely. I shrugged and moved on. I wish the Rolex market wasn’t like it is today but content with my “AD relationship” and enjoying the watches I do own.

[Easy E]

Originally Posted by njlam

Nice summary by the OP. however I think he left out one aspect of the AD's business: Bundling to grey market dealers.

While it is true that an AD hopes to sell unpopular models to retail clients before they offer them the popular models, this takes time and it is expensive (especially when interest rates are high) to hold inventory.

Why not bundle the popular and unpopular models and sell them to a grey and forgo the waiting/expense? This method allows the AD to move serious volume (Hello Rolex, we are out of our allocation, pls send us more), and not have to worry that PM or diamond models are slow movers). The bundling concept also explains how grey dealers can sell new (recent warranty card) PM models below MSRP and stay in business (their losses are offset by the Daytona's they are selling at 2x).

Grey market dealers provide a regular and consistent demand that individuals cannot match.

Of course this is a corrupt practice from for the AD, however how else can anyone explain how many new watches are available at grey dealers? Based on the ADs I have visited, their ability to spot individual flippers cannot be that bad.

With this additional understanding, I have attained peace with dealing with the grey market. It is the ADs who bundle who are the real bad actors.

Greys don’t sell at a loss. They buy the unpopular pieces for a few % over cost, nowhere close to MSRP. That helps the AD, the Grey, and even those that are looking for the less popular pieces. They (greys) are also likely paying over MSRP for the hot items.

[kopi-c]

Originally Posted by njlam

Nice summary by the OP. however I think he left out one aspect of the AD's business: Bundling to grey market dealers.

While it is true that an AD hopes to sell unpopular models to retail clients before they offer them the popular models, this takes time and it is expensive (especially when interest rates are high) to hold inventory.

Why not bundle the popular and unpopular models and sell them to a grey and forgo the waiting/expense? This method allows the AD to move serious volume (Hello Rolex, we are out of our allocation, pls send us more), and not have to worry that PM or diamond models are slow movers). The bundling concept also explains how grey dealers can sell new (recent warranty card) PM models below MSRP and stay in business (their losses are offset by the Daytona's they are selling at 2x).

Grey market dealers provide a regular and consistent demand that individuals cannot match.

Of course this is a corrupt practice from for the AD, however how else can anyone explain how many new watches are available at grey dealers? Based on the ADs I have visited, their ability to spot individual flippers cannot be that bad.

With this additional understanding, I have attained peace with dealing with the grey market. It is the ADs who bundle who are the real bad actors.

This.

If the forum sellers here are not bundling their purchases from Rolex AD, how else could they have gotten their recent dated watches for sale. Especially, the Daytona's and GMT's..

I am only getting offered random TT DJ, or PM Sub, YM and PM GMT.

[Zach69SS]

Op, I believe you made some good points here, however there many ADs where none of that applies, there are members of the TRF that don’t go through the AD dance when they want to buy something, they ask and get it? Some don’t have a large spend history or even a long relationship with the AD and some do.

Your market will dictate, what you can get and the AD in question.

So I guess it’s which AD you visit at least in my experience, I’ve been a Rolex owner for a long time and it is always changing. I remember when you went to AD and could buy almost anything, They were all in the case even a SS Daytona was not hard , some wait but not crazy. A few months or weeks later you would have one.

Great explanation though, and yes this is the way things are now, sometimes?

[brandrea]

Not all AD’s are created equal.

[1William]

Interesting observations and many are right on.

[Sublovin]

A lot of thought put into this…
I don’t think much about AD strategies. Mine is simple. I only buy at MSRP, so I will wait for something I want. I also enjoy the hunt of buying preowned pieces, so I enjoy trying to find and negotiate the best deal. Again, only buy below MSRP.
I’m not the guy who is going to spend 150% on a steel Daytona or Pepsi.

[njlam]

Originally Posted by Easy E

Greys don’t sell at a loss. They buy the unpopular pieces for a few % over cost, nowhere close to MSRP. That helps the AD, the Grey, and even those that are looking for the less popular pieces. They (greys) are also likely paying over MSRP for the hot items.

I agree, and that means some ADs are complicit (selling some models below MSRP and some above).

This does however help the AD and Rolex as they do not have to appear they are selling up popular models at a discount (they let the grey do it) and yet, they still make a little money.

[Cigars&Watches]

Ads are in business to make money and will leverage what they can. The best customers get the best pieces most of the time. Would you not do the same? Having said that there is a level of non-financial consideration that takes place with some ADs. I say this because I've benefited from it.

[inadeje]

Originally Posted by njlam

Nice summary by the OP. however I think he left out one aspect of the AD's business: Bundling to grey market dealers.

While it is true that an AD hopes to sell unpopular models to retail clients before they offer them the popular models, this takes time and it is expensive (especially when interest rates are high) to hold inventory.

Why not bundle the popular and unpopular models and sell them to a grey and forgo the waiting/expense? This method allows the AD to move serious volume (Hello Rolex, we are out of our allocation, pls send us more), and not have to worry that PM or diamond models are slow movers). The bundling concept also explains how grey dealers can sell new (recent warranty card) PM models below MSRP and stay in business (their losses are offset by the Daytona's they are selling at 2x).

Grey market dealers provide a regular and consistent demand that individuals cannot match.

Of course this is a corrupt practice from for the AD, however how else can anyone explain how many new watches are available at grey dealers? Based on the ADs I have visited, their ability to spot individual flippers cannot be that bad.

With this additional understanding, I have attained peace with dealing with the grey market. It is the ADs who bundle who are the real bad actors.

If this synopsis is true then the alleged grey dealer is assuming the risk. Not only a financial one but a inventory one. In this case the scenario is wholly correct in a market economy and the grey dealer is merely permitting the rotation of the cogs of capitalism so rightly deserves the suggested 2x Daytona upside to mitigate both said risk and financial outlay.

[CH69]

In some cases and models, some ADs where I am don’t even call it a waitlist. It is called an expression of interest. They specifically clarify that when put ur name down for a Rolex that u want.