Creating the grey market.

[Robert Bruce]

It occurs to me that unscrupulous ADs are artificially creating the shortage of 'desirable' Rolexes by selling them over MSRP to grey marketers. That both creates the shortage for bona fide customers and inflates resale prices.

[jackminny15]

This just occurred to you?

[Marcjvr]

That may be so...but the reality is no one the world over will be shedding tears for people who can’t get a Rolex at MSRP

[Pw92676]

You summed up 2 years worth of TRF babbling quite nice and succinct.

[Token74]

Originally Posted by Marcjvr

That may be so...but the reality is no one the world over will be shedding tears for people who can’t get a Rolex at MSRP

Spot on!! Something many members here forget!


Sent from my iPhone using Tapatalk

[2nastie]

Not sure if you also realized that the public/"end-user" is also selling to others or greys above MSRP...

These blanket statements that imply all ADs sell above MSRP to grey dealers and that's the main source of the secondary... is pretty hilarious. Sure there are definitely some that do so, but there are equally those who purchase a watch MSRP and flip it as soon as they get it without remorse.

There are more people buying a Rolex for the sake of it being a Rolex then us so called collectors and grey market dealers.

[Goin2drt]

Who has the Captain Obvious meme handy.

[Littletommy]

Originally Posted by robert bruce

it occurs to me that unscrupulous ads are artificially creating the shortage of 'desirable' rolexes by selling them over msrp to grey marketers. That both creates the shortage for bona fide customers and inflates resale prices.

ok.

[Benzsiam]

Actually ADs do the same thing to both regular customers and Grey dealers.

When you want SS sport models, ADs preferred you to bundle with PM or DateJust.

Grey dealers bundle SS sport models with a lot of DateJusts from ADs.

[ciceroyeah]

Originally Posted by Robert Bruce

It occurs to me that unscrupulous ADs are artificially creating the shortage of 'desirable' Rolexes by selling them over MSRP to grey marketers. That both creates the shortage for bona fide customers and inflates resale prices.

The ADs are not creating the demand and neither is the grey market.

The answer is one word: China.

The Chinese middle class and millionaire class surpassed the size of the US middle class/millionaire class in 2019, and Rolex is the best-known luxury watch brand in the world. Over 100 million Chinese people now have a net worth over $100,000 USD, and Rolex's entire production is less than a million watches annually. Only a fraction of Rolex's production are SS men's sports models, so that's less than 1 watch per 100 Chinese nouveau riche per year. When supply fails to meet demand this much, prices will inevitably continue to rise.

Every newly minted Chinese middle class/millionaire wants a BRAND NEW stainless steel Rolex or Patek or AP. Rolexes are portable, durable, and easily transported, and are very liquid. They are therefore very useful for legal use as personal status symbols, investments, and stores of value, and are very convenient for illegal use such as bribes, tax evasion, and money laundering.

Demand will continue to grow as the Chinese middle and upper class grows, and Rolex will never increase production to meet this demand because rising prices benefit Rolex's brand, and benefit existing owners while making the brand more desireable. ADs are simply acting rationally by selling the hot models out the back door for cash kickbacks or else tied with high-margin purchases.

Edit: source: https://www.theguardian.com/business...richest-people

"The bank’s annual wealth survey found there were 100 million Chinese people among the world’s top 10% of richest people, compared with 99 million in the US.
... Personal savings of $109,430 (£83,630) are required to be part of the top 10% of the world’s richest people. While China has overtaken America at this level, the US is still ahead when it comes to the super-rich, accounting for 40% of the world’s millionaires."

[Robert Bruce]

Originally Posted by 2nastie

Not sure if you also realized that the public/"end-user" is also selling to others or greys above MSRP...

These blanket statements that imply all ADs sell above MSRP to grey dealers and that's the main source of the secondary... is pretty hilarious. Sure there are definitely some that do so, but there are equally those who purchase a watch MSRP and flip it as soon as they get it without remorse.

There are more people buying a Rolex for the sake of it being a Rolex then us so called collectors and grey market dealers.

If you look carefully at my post, you will see that I neither stated nor implied that 'all ADs sell above MSRP to grey dealers'. In fact I specifically said unscrupulous ADs do that, and we have the evidence for that on here regularly.
My point is that the supposed shortages of SS and other desirable pieces would not exist without that. It also creates the conditions for flippers to profit from.

[rolexperfect]

Originally Posted by ciceroyeah

The ADs are not creating the demand and neither is the grey market.

The answer is one word: China.

The Chinese middle class and millionaire class surpassed the size of the US middle class/millionaire class in 2019, and Rolex is the best-known luxury watch brand in the world. Over 100 million Chinese people now have a net worth over $100,000 USD, and Rolex's entire production is less than a million watches annually. Only a fraction of Rolex's production are SS men's sports models, so that's less than 1 watch per 100 Chinese nouveau riche per year. When supply fails to meet demand this much, prices will inevitably continue to rise.

Every newly minted Chinese middle class/millionaire wants a BRAND NEW stainless steel Rolex or Patek or AP. Rolexes are portable, durable, and easily transported, and are very liquid. They are therefore very useful for legal use as personal status symbols, investments, and stores of value, and are very convenient for illegal use such as bribes, tax evasion, and money laundering.

Demand will continue to grow as the Chinese middle and upper class grows, and Rolex will never increase production to meet this demand because rising prices benefit Rolex's brand, and benefit existing owners while making the brand more desireable. ADs are simply acting rationally by selling the hot models out the back door for cash kickbacks or else tied with high-margin purchases.

Edit: source: https://www.theguardian.com/business...richest-people

"The bank’s annual wealth survey found there were 100 million Chinese people among the world’s top 10% of richest people, compared with 99 million in the US.
... Personal savings of $109,430 (£83,630) are required to be part of the top 10% of the world’s richest people. While China has overtaken America at this level, the US is still ahead when it comes to the super-rich, accounting for 40% of the world’s millionaires."

Best explanation I've seen so far of the current Rolex market bubble (if we can actually really call it a bubble... bubbles pop, not sure if this is going to ever pop).

[ciceroyeah]

Originally Posted by rolexperfect

Best explanation I've seen so far of the current Rolex market bubble (if we can actually really call it a bubble... bubbles pop, not sure if this is going to ever pop).

I see a few possibilities for the price “bubble” to “pop”:
1) China’s economy implodes and pushes tens of millions of people into poverty.
2) Rolex as a brand loses prestige or perceived status/value.
3) A government (whether CCP or western nations) enforces genuine trade restrictions that prevent importing Rolexes into China or moving money out of China.
4) Rolex increases production by several million units annually.

All of these are extremely unlikely to the point of being absurd, so the “bubble” is probably here to stay for the next few years, and dealers will keep doing business accordingly.

[2nastie]

Originally Posted by Robert Bruce

If you look carefully at my post, you will see that I neither stated nor implied that 'all ADs sell above MSRP to grey dealers'. In fact I specifically said unscrupulous ADs do that, and we have the evidence for that on here regularly.
My point is that the supposed shortages of SS and other desirable pieces would not exist without that. It also creates the conditions for flippers to profit from.

For any event like that to happen that would imply that the majority of the ADs are unscrupulous as you need a mass to swing the overall demand. Rolex isn't exactly boutique... more like a well oiled machine that pumps out luxury watches on mass... you'll need a fair number of ADs and greys together working to create a shortage which is what you are implying: Bad ADs + Grey = Shortage.

This grey market and AD relationship won't exist if there wasn't some level of demand from the end consumer to begin with.

Bad ADs + Grey certainly adds to the shortage but I would say they contribute more to the higher prices vs. lack of inventory.

You should also consider those who want the most popular thing (hype) and overall increase of wealth or spending in the luxury market then you'll end up creating what we are experiencing now.

It's combination of everything. But mainly started from the individuals who wanted a nice watch and his friends also wanting a nice watch and the domino effect that happens.

[BillA]

Originally Posted by ciceroyeah

The ADs are not creating the demand and neither is the grey market.

The answer is one word: China.

The Chinese middle class and millionaire class surpassed the size of the US middle class/millionaire class in 2019, and Rolex is the best-known luxury watch brand in the world. Over 100 million Chinese people now have a net worth over $100,000 USD, and Rolex's entire production is less than a million watches annually. Only a fraction of Rolex's production are SS men's sports models, so that's less than 1 watch per 100 Chinese nouveau riche per year. When supply fails to meet demand this much, prices will inevitably continue to rise.

Every newly minted Chinese middle class/millionaire wants a BRAND NEW stainless steel Rolex or Patek or AP. Rolexes are portable, durable, and easily transported, and are very liquid. They are therefore very useful for legal use as personal status symbols, investments, and stores of value, and are very convenient for illegal use such as bribes, tax evasion, and money laundering.

Demand will continue to grow as the Chinese middle and upper class grows, and Rolex will never increase production to meet this demand because rising prices benefit Rolex's brand, and benefit existing owners while making the brand more desireable. ADs are simply acting rationally by selling the hot models out the back door for cash kickbacks or else tied with high-margin purchases.

Edit: source: https://www.theguardian.com/business...richest-people

"The bank’s annual wealth survey found there were 100 million Chinese people among the world’s top 10% of richest people, compared with 99 million in the US.
... Personal savings of $109,430 (£83,630) are required to be part of the top 10% of the world’s richest people. While China has overtaken America at this level, the US is still ahead when it comes to the super-rich, accounting for 40% of the world’s millionaires."

Good article

[Binky1]

Originally Posted by Robert Bruce

It occurs to me that unscrupulous ADs are artificially creating the shortage of 'desirable' Rolexes by selling them over MSRP to grey marketers. That both creates the shortage for bona fide customers and inflates resale prices.

There’s so much great information, photography and opinion on this forum....and then there’s this.

[Nairn1980]

Originally Posted by Robert Bruce

It occurs to me that unscrupulous ADs are artificially creating the shortage of 'desirable' Rolexes by selling them over MSRP to grey marketers. That both creates the shortage for bona fide customers and inflates resale prices.

Welcome, and thanks for telling us

[HiBoost]

Originally Posted by Robert Bruce

My point is that the supposed shortages of SS and other desirable pieces would not exist without that. It also creates the conditions for flippers to profit from.

I'm not following the logic. Currently all SS models are being sold - some portion at retail from an AD direct to a customer, and some other portion above retail by a gray dealer (how the gray got this piece and what he paid doesn't really matter). We don't know the percentages of either portion and opinions vary wildly. But if the gray portion is > 0% then the average price paid by all purchasers is > MSRP.

If instead all sales were happening at the AD at retail pricing, then the average price of each model would actually drop and therefore they'd sell even faster. Not all of us are willing to pay the inflated prices. Some can justify it, some cannot. But there are literally zero people who would refuse to buy at MSRP and will only buy if they can pay more through a gray ;)

So unless you believe that the only reason people want these watches is because of the inflated price (there could be some small contingent that is motivated by the impression this conveys, but it can't be the main driver) then I'm not sure how you can assert there would be "no shortages" if the grays were out of the equation. The only way there could truly be "no shortages" is if Rolex ramped up production significantly.

The fact that grays have watches in stock regularly doesn't mean there is more supply than demand. Rather, it means that some small part of the overall supply is being sold at a price so high that it mitigates demand on that portion, but certainly doesn't imply everybody on earth who wants a watch has one.

[ce027772]

Originally Posted by ciceroyeah

The ADs are not creating the demand and neither is the grey market.

The answer is one word: China.

Oh, I see. So, U.S. government printing trillions of dollars has nothing to do with it. Thanks for clarifying.

[ciceroyeah]

Originally Posted by ce027772

Oh, I see. So, U.S. government printing trillions of dollars has nothing to do with it. Thanks for clarifying.

Wow this response is almost as derpy as op

[subtona]

This thread needs a sarcasm button.

[ciceroyeah]

Originally Posted by subtona

This thread needs a sarcasm button.

This thread is a sarcasm button