“Not a Supply Issue / There is NO Shortage” Says Govberg

[Chester01]

Originally Posted by Fleetlord

Absolutely. I can’t believe people still use C24 as a measurement of grey market inventory. Those ads are phony. The watches listed are not on hand.

There really only a few large grey dealers who have the strength...the absolute strength to inventory every single watch they list for sale. No fake ads. They have it and wouldn’t post it if they didn’t. It’s not only that the other guys don’t.....they literally CAN’T. The simply don’t have the money and cash flow.

All I can tell you is that when I sold a watch on c24 I had to jump through a bunch of hoops to post the watch for sale to prove I had that exact watch it in my possession. I had to post like 4 pictures within a few minutes setting the watch to random times....sooo it may actually be some what of a measure. Then of course one can just check the major players sites and they also have plenty. They seem to always beat me. Just when I am about to walk into the AD, they seem to be one step ahead. Must simply be bad luck because they beat me each and every day. I know they beat me because they are always in stock.


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[liu_watch]

It’s interesting that Omega and Cartier, the second and third largest watch manufacturers by sales, don’t suffer from the sudden surge in demand around 2017. Everyone in the world discovered Rolex in 2017. Or maybe all the resellers discovered Rolex...?

[vh2k]

Originally Posted by liu_watch

It’s interesting that Omega and Cartier, the second and third largest watch manufacturers by sales, don’t suffer from the sudden surge in demand around 2017. Everyone in the world discovered Rolex in 2017. Or maybe all the resellers discovered Rolex...?

Rolex is the gold standard. It's the undisputed market leader. One of the best brands in the world. People want Rolex!

And because Rolex holds its value (and some models arguably increase in value)... the demand for Rolex is increasing while 95% of the other Swiss brands are faltering.

[Krash]

Originally Posted by vh2k

Rolex is the gold standard. It's the undisputed market leader. One of the best brands in the world. People want Rolex!

And because Rolex holds its value (and some models arguably increase in value)... the demand for Rolex is increasing while 95% of the other Swiss brands are faltering.

Exactly


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[mips33]

Go check out the videos on youtube of the grey market dealers in Hong Kong. Multiples of every model ready to try and buy. There is no shortage of goods, there is a shortage at a specific price. It's all a shell game and everyone is in on it (Rolex, AD, Grey, etc)

[UK_]

Originally Posted by mips33

Go check out the videos on youtube of the grey market dealers in Hong Kong. Multiples of every model ready to try and buy. There is no shortage of goods, there is a shortage at a specific price. It's all a shell game and everyone is in on it (Rolex, AD, Grey, etc)

It’s not about a ‘shortage’, it’s about supply demand.

It’s really that simple.

Someone is buying those watches off those grey dealers, and the global market is supporting high prices.


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[TheVTCGuy]

I guess I mine as well tell all of you now.... sigh.... You see....



I HAVE ALL THE SS SPORT MODELS.


I have been hoarding them for years, about five to be exact. Ever see that show: “Hoarders?” That is what my house looks like, the only difference is all the boxes are filled with Rolex SS Sport models....

You know what, it bothers me to see all this arguing and discontent, .. I am going to start selling them... I’ll sell them all at MSRP.... Maybe even a discount.

[EEpro]

Originally Posted by TheVTCGuy

I guess I mine as well tell all of you now.... sigh.... You see....



I HAVE ALL THE SS SPORT MODELS.


I have been hoarding them for years, about five to be exact. Ever see that show: “Hoarders?” That is what my house looks like, the only difference is all the boxes are filled with Rolex SS Sport models....

You know what, it bothers me to see all this arguing and discontent, .. I am going to start selling them... I’ll sell them all at MSRP.... Maybe even a discount.

Is the sub supposed to come in a small or medium box? Does it have a strong odor?

[dkast85]

If rolex tripled their manufacturing numbers nobody would even notice. The market would stay the same. It never had anything to do with supply.

[Wrist King]

Hedge fund managers are buying those grey prices and gifting them to potential investors. Easy win and you look like you have special access skills.


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[vh2k]

Originally Posted by Wrist King

Hedge fund managers are buying those grey prices and gifting them to potential investors. Easy win and you look like you have special access skills.

Wait a minute... I've been sending all those calls from Renaissance, BlackRock, and Bridgewater to voice mail. Rats!

[Crazy Lugs]

Originally Posted by Wrist King

Hedge fund managers are buying those grey prices and gifting them to potential investors. Easy win and you look like you have special access skills.


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Not with some random person's name on the warranty card...

[Wrist King]

Originally Posted by Crazy Lugs

Not with some random person's name on the warranty card...

They don’t hand over the warranty card buddy. They’re not for resale, and most normal people (I.e not us!) don’t care about boxes or warranty cards etc. Rolly will still service without them


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[Crazy Lugs]

Originally Posted by Wrist King

They don’t hand over the warranty card buddy. They’re not for resale, and most normal people (I.e not us!) don’t care about boxes or warranty cards etc. Rolly will still service without them


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These titans of business we’re supposed to be impressed with present the “rolly” as a gift in a paper bag with a ribbon on it?

[UK_]

Originally Posted by Crazy Lugs

These titans of business we’re supposed to be impressed with present the “rolly” as a gift in a paper bag with a ribbon on it?

Trust me - lots and lots and lots of Rolex are gifted. Bought form a grey dealer unworn.

Giver looks like he has connections with his sub or GMT. £15k is nothing in the grand scheme of things.

Recipient does not care in the slightest about a green card missing from the box.


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[HiBoost]

This topic gets discussed in several threads every week and there are always a ton of people saying something along the lines of "there is no shortage, grays have plenty of stock". Maybe somebody can help me, because I just do not understand this thought process at all. When a new Playstation comes out there will always be 50 of them on ebay at multiples of retail. But the stores are empty. Shortage does not mean "none were produced" it means less were made than there are interested buyers. And grays - for products in all categories - will run the price up just high enough that they can actually sell the very limited quantity that they have. And obviously doing this will turn away many/most of the buyers so they will maintain some level of stock at all times. But even if pricing were not a factor (let's say grays sold at MSRP as well) there is no argument to be made that there is actually a new steel Submariner out there, somewhere, for every buyer on this planet who wants one. No production estimates have ever been put forward which would support this claim. So how is it that we can't agree that there is, in fact, a shortage?

[Krash]

Originally Posted by HiBoost

This topic gets discussed in several threads every week and there are always a ton of people saying something along the lines of "there is no shortage, grays have plenty of stock". Maybe somebody can help me, because I just do not understand this thought process at all. When a new Playstation comes out there will always be 50 of them on ebay at multiples of retail. But the stores are empty. Shortage does not mean "none were produced" it means less were made than there are interested buyers. And grays - for products in all categories - will run the price up just high enough that they can actually sell the very limited quantity that they have. And obviously doing this will turn away many/most of the buyers so they will maintain some level of stock at all times. But even if pricing were not a factor (let's say grays sold at MSRP as well) there is no argument to be made that there is actually a new steel Submariner out there, somewhere, for every buyer on this planet who wants one. No production estimates have ever been put forward which would support this claim. So how is it that we can't agree that there is, in fact, a shortage?

Because people lack an understanding of basic, fundamental economic principles like supply & demand. They invent alternative theories based on what they see. For example, centuries ago, people would blame comets and meteors for famine and drought. That's what they saw at the time, so the comets and meteors must be at fault.

On TRF, people see gray dealers selling a Rolex at above MSRP and automatically assume that's what the cause is. They lack an understanding of the underlying science and market forces, so they don't know any better.

[RyanJ]

What people mean by shortage is the perceived shortage of not being able to buy them at MSRP from an AD.

We all know there are plenty of watches available through the secondary market.

We will see this with new models when they are released. They will quickly start popping up on the secondary markets at a premium the moment stock is actually released.

This is just how it is now...

[BroncoOne]

One point being argued is that less people wear watches so there should not be more demand. This ignores that for every person that owns one Rolex there are 12 that own 10 of them.

If you like watches, you tend to collect more than one.

[jssans]

I would imagine there is not a supply issue when you’re both an AD & grey. If that’s the future of all dealers then things are about to get ridiculous.

[Crazy Lugs]

Originally Posted by jssans

I would imagine there is not a supply issue when you’re both an AD & grey. If that’s the future of all dealers then things are about to get ridiculous.

It does make you wonder why it’s permitted by Rolex. About a year ago I stopped by Govberg (previous Rolex purchase) and inquired about a white dial OP39. I was told they were all “spoken for” but was offered a pre-owned model from the back that was about $1,000 over retail. I probably would have taken it had the clasp not been chewed up.

The quality of that experience seems odd to me, but the watch and jewelry retail world ain’t exactly sane.

[Etschell]

Originally Posted by vh2k

Govberg/Watchbox says Rolex has increased shipments to ADs — even of sports models. Rolex isn’t holding back anything. No artificial shortage. Strength in the secondary market creates more demand through authorized dealers... and the cycle perpetuates itself.

There is an insatiable global desire and demand for Rolex.

Go to 1:50



https://youtu.be/4MaVV664Ot4?t=110s

A shortage doesn't have to do with supply only. It's basic economics 101 and something that you would think a large organization could understand.

The very thought that rolex was holding back anything shows just how inept the average collector is.

[drfrankenstein]

^

A Rolex SA, who used to work in one of the NYC locations, said the exact opposite. Supply was restricted at the store level - that is to say if you asked for a Pepsi they told you they didn't have any, but the safe was stocked with hot models. I have no reason to doubt what he was saying because it wasn't painting ADs or Rolex in a good light given the current climate. Do with that information what you wish.

[IamJacky]

Originally Posted by drfrankenstein

^

A Rolex SA, who used to work in one of the NYC locations, said the exact opposite. Supply was restricted at the store level - that is to say if you asked for a Pepsi they told you they didn't have any, but the safe was stocked with hot models. I have no reason to doubt what he was saying because it wasn't painting ADs or Rolex in a good light given the current climate. Do with that information what you wish.

A Rolex AD stocking hot models in the safe is not equivalent to Rolex itself restricting its supply.

That AD clearly understood the market value of those hot models and it only made sense for the AD to stock the hot pieces in the safe awaiting for some kind of bundle deal or reserving for the VVIPs.

I run a factory and have a certain production capacity. I sell bulk to my clients who are distributors of these goods. My company is of course no Rolex, but we have faced times when suddenly demands for certain products surged and we simply couldn't meet the deadline.

So it's easy for me to understand that the phenomenon we're seeing now with Rolex, that the demand has grown exponentially over the last few years that it overwhelmingly outpaced what Rolex is able to put out.

Just because my distributor is holding back my products does not mean I am intentionally withholding my production.

The real question is what OP pointed out, what positive effect will Rolex have if they increased their production to meet this crazy demand? Many have already pointed out, there's absolutely no benefit for Rolex to do so.

They're selling almost everything they have like hot cakes and have solidified their brand power/prestige. They will only cheapen their brand equity by dramatically increasing their production. What is there to gain for Rolex to make more watches? more money? They don't need that. What they want is to establish their brand status as something people desire and chase after, which they've done so fantastically.

[Fleetlord]

Originally Posted by IamJacky

A Rolex AD stocking hot models in the safe is not equivalent to Rolex itself restricting its supply.

That AD clearly understood the market value of those hot models and it only made sense for the AD to stock the hot pieces in the safe awaiting for some kind of bundle deal or reserving for the VVIPs.

I run a factory and have a certain production capacity. I sell bulk to my clients who are distributors of these goods. My company is of course no Rolex, but we have faced times when suddenly demands for certain products surged and we simply couldn't meet the deadline.

So it's easy for me to understand that the phenomenon we're seeing now with Rolex, that the demand has grown exponentially over the last few years that it overwhelmingly outpaced what Rolex is able to put out.

Just because my distributor is holding back my products does not mean I am intentionally withholding my production.

The real question is what OP pointed out, what positive effect will Rolex have if they increased their production to meet this crazy demand? Many have already pointed out, there's absolutely no benefit for Rolex to do so.

They're selling almost everything they have like hot cakes and have solidified their brand power/prestige. They will only cheapen their brand equity by dramatically increasing their production. What is there to gain for Rolex to make more watches? more money? They don't need that. What they want is to establish their brand status as something people desire and chase after, which they've done so fantastically.

I think there is a limitation in distribution as you described, but I think there is limitation in production as well...for specific references.

Does anyone think that Rolex produces the same number of Blue dial SS Skydwellers that they make of the other dial color SS Skydwellers? or for even blue dial yachtmasters or blue dial datejusts?

Does Rolex make the same number of YG Green Dial Daytonas as YG Black Dial Daytonas?

Does Rolex make the same number of SS Daytonas as they make Subs?

Of course they don't. There are some References they make less off. They even say so on their website.

"All Rolex watches are assembled by hand with the utmost care to ensure exceptional quality. Such high standards naturally restrict our production capacity and, at times, the demand for our watches outpaces this capacity. Therefore, the availability of certain models may be limited".

I agree with what your saying about not increasing overall production, but Rolex certainly has limits on production of specific references

[drfrankenstein]

Originally Posted by IamJacky

A Rolex AD stocking hot models in the safe is not equivalent to Rolex itself restricting its supply.

That AD clearly understood the market value of those hot models and it only made sense for the AD to stock the hot pieces in the safe awaiting for some kind of bundle deal or reserving for the VVIPs.

I run a factory and have a certain production capacity. I sell bulk to my clients who are distributors of these goods. My company is of course no Rolex, but we have faced times when suddenly demands for certain products surged and we simply couldn't meet the deadline.

So it's easy for me to understand that the phenomenon we're seeing now with Rolex, that the demand has grown exponentially over the last few years that it overwhelmingly outpaced what Rolex is able to put out.

Just because my distributor is holding back my products does not mean I am intentionally withholding my production.

The real question is what OP pointed out, what positive effect will Rolex have if they increased their production to meet this crazy demand? Many have already pointed out, there's absolutely no benefit for Rolex to do so.

They're selling almost everything they have like hot cakes and have solidified their brand power/prestige. They will only cheapen their brand equity by dramatically increasing their production. What is there to gain for Rolex to make more watches? more money? They don't need that. What they want is to establish their brand status as something people desire and chase after, which they've done so fantastically.

A couple of things here...

Everything you said makes sense but a distributor restricting supply is still restricting it. Hence, why I said at store level.

I also think given the current climate the AD model as it currently exists is still not working exactly as intended. Watch 30 mins of Timepiece Gentleman and you see they are getting calls all day from people saying that they were offered such and such watch from their AD and are asking what they can get for it by immediately selling it to them. And Anthony will occasionally mention it’s worth taking a $1-2k loss on a piece of it means upping their spend history. This is a long winded way of saying their seems to be a significant proportion of AD clients who are flipping watches. Of course ADs don’t have control over this but there might be a way to get more end users SS models at retail and not in the resale pool if they sold to new customers. They don’t have to do this, but the point is, selling to known customers has not cut down on the resale of these pieces to the secondary market from where I sit.

As far whether Rolex cares about money or not, it’s an argument you can’t make both ways. Rolex is making way more watches than Patek, if they wanted to go they route they certainly could but they aren’t. They could also raise prices significantly but most of the raises are small increments. As none of these things are happening, they are probably trying to split the difference.

[francoamerican]

Since most models aren’t rare in any meaningful way then we can expect supply will catch up with demand, since more watches are being made than newly minted middle class people who can afford them? Or are middle classes growing faster than matched being manufactured?

[vh2k]

Originally Posted by francoamerican

Since most models aren’t rare in any meaningful way then we can expect supply will catch up with demand, since more watches are being made than newly minted middle class people who can afford them? Or are middle classes growing faster than matched being manufactured?

It’s highly unlikely Rolex will invest tens of billions at enormous risk to produce dramatically more (50-100% more) than they do today.

There are simply more people (especially in China) who want the crown jewel of luxury watch brands and they want to own more Rolex pieces in their collection than ever before.

[Mystro]

The average yearly income in China is 72,956 Yuan ($11,108.00 USD.) In contrast, the US average income is $60,545 USD.

According to China Daily, "good" salaries in the non-private sector averaged at RMB 145,766 (USD 20,823), while salaries in the private sector averaged at RMB 76,908 (USD 10,896) yearly.

[francoamerican]

Originally Posted by Mystro

The average yearly income in China is 72,956 Yuan ($11,108.00 USD.) In contrast, the US average income is $60,545 USD.

Average can be misleading but that’s my thinking too - look if the amount of people who can buy Rolex grows as fast as they can make them it will likely be a good thing for the world. But I would expect western asset price appreciation for pretty much everything is driving things substantially - but that it will level off and it will happen fast and then you’ll be able to get anything you want but a Daytona.

Also I think Rolex know this which is why they still make watches that don’t sell when they could *easily* shift that production to watches that do sell - so they gild the lily.