The best and probably obvious reason for scarcity

[RoRoRo]

https://www.google.co.uk/amp/s/www.w...boom-a-bubble/

Apologies if already posted

Mods please delete if duplicate.

[stap]

Interesting article. Thank you for posting.


Sent from my iPhone using Tapatalk

[Jerrocop]

All i get is an image when I click on the link . . .

[LFFL]

Re-linked https://www.watchpro.com/corders-col...boom-a-bubble/

[the dark knight]

I agree with the premise of the article, that the scarcity is mostly caused by organic demand. Massive wealth creation ironically during COVID isn't helping things.

But I'm not sure about the conclusion.

Around 2015, you could find almost any sports Rolex in stores. An AD told me they had 4(!) Hulks and couldn't give them away. Around that time I walked into an AD I've never visited before and was offered a steel Daytona.

Mid 2010s, there were still new millionaires being minted at a steady clip, more than enough to absorb the annual 1M in production. And yet the most popular models now were sitting in displays back then. Scant 6 years ago.

If we were to experience a widespread economic slowdown that hits asset prices (stocks, real estate, etc), I don't see how that wouldn't negatively effect Rolex prices. The well-off that already have 4-5 may decide this is not the year to get more. Those looking for their first may think a recession is not the time to spend 10k on a watch.

[Francist]

If you compare rolex prices in the last 4-5 years against crypto / stocks / bonds, we're still way below.

[Speedbird-1]

If the Evergrande issue develops, there might be a tad more available.

[djtheot]

Very interesting. Enjoyed that take.


Sent from my iPad using Tapatalk

[Madman37]

In regards to prices how scarce these things actually is that Chrono24 average price tracker actually real. It can’t be it says a watch I am watching is £27k! But there are unsold examples for around £24.5k. Is it just a load of rubbish

I also wonder with the China situation now bubbling up how many Rolex watches Rolex will actually produce in order to keep their product scarce and valuable. They must be watching the situation with interest.

[RoRoRo]

My AD said they are holding certain models back for Xmas, and fulfilling their lists this way to ramp up spend at the end of the year.

Amazing that a business can control supply knowing that demand is still there at full spend and full profit.

Rolex must also do this in a similar fashion for different markets; Xmas, Eid, Chinese New Year (to name a few)

[BroncoOne]

Originally Posted by Madman37

In regards to prices how scarce these things actually is that Chrono24 average price tracker actually real. It can’t be it says a watch I am watching is £27k! But there are unsold examples for around £24.5k. Is it just a load of rubbish

I also wonder with the China situation now bubbling up how many Rolex watches Rolex will actually produce in order to keep their product scarce and valuable. They must be watching the situation with interest.

Wealthy Chinese, Russians and anyone else in a country run by a kleptocracy have been moving wealth out of those countries for years to get it beyond the reach of the rulers.

Look at properties in Europe and the US and some island nations and principalities. See what they have been buying.

Now that the money is liberated, they can spend it freely. I don’t expect Rolex demand to abate at all.

[Chester01]

Lol. Couldn’t have anything to do with the hundreds of gray dealers snapping my up watches. Is that “organic demand”? Are we really to believe that all that wealth was created in 3/4 years. 2016 my bro walked in got a BLNR I was offered and turned down a 116500. Please. To many people profit from the perceived belief of scarcity and demand, catnip to the wealthy who like to feel special and to blind to realize they are being duped. Rolex is not Picasso. Picasso =real scarcity Rolex =fake scarcity.

[beshannon]

Hard to obtain at the retail level does not equal scarce

[brandrea]

Originally Posted by Speedbird-1

If the Evergrande issue develops, there might be a tad more available.

Its having quite the impact on the markets.

[thenewrick]

One thing I’ve noticed that is interesting to me is that as prices have increase, supply as also increased but examples aren’t selling as quickly. There’s plenty of supply and models are “sitting on shelves” of used jewelry vendors. They don’t have to sell all of them just one here and there to the person who’s willing to pay the price to get it now.

Because they aren’t scarce or rare and because there are a large supply of watches and prices are being artificially inflated by a select few of people willing to pay extra because of FOMO I see prices going down soon. Especially on models that have lost their social media appeal; Pepsi, Daytona, Hulk.

The game now is to see how long used jewelry vendors are willing to sit on inventory that isn’t moving without reducing prices.

I’m just using Chrono24 and recommended vendors as data points.

When vendors start seeing prices drop they will all begin undercutting each other because nobody wants to be caught holding the bag. The buyers paying 2x 3x retail don’t really care because they’re generally very wealthy to begin with. People paying that much above market value are not concerned with prices outside of a little bragging rights.

If you want a good price on a Rolex just be willing to wait until those holding supply can’t tolerate holding supply anymore. The past few years have been huge profits for used jewelry salesmen so there’s no reason for them to stop the profit party now. So if you’re a savvy buyer just wait.

As an aside when I was young I wondered what would happen if I put a pebble up for sale on EBay for $1 mil. I figured I didn’t have much to lose and you never know. Someone rich might buy it for a laugh or yolo. That’s essentially what’s happening now with certain luxury goods. People are just asking silly prices to see if anyone is willing to pay it. There’s been enough wealthy people willing to buy them here and there to sustain this phenomenon for the past few years but all trends end. These Beanie Babies will lose their Instagram appeal and the extra cash will go towards the new new.

So in short, I disagree with the author. Rolex aren’t scarce. Demand is artificial because models are increasing in supply at used jewelry vendors. Author needed to do more research over time to see the trends. Asking price isn’t actual sales and isn’t sales volume. Pebbles aren’t worth $1mil even if someone buys one for $1mil. Saying something is worth whatever someone pays for it isn’t a truism it’s sort of simpleton economics. A banana taped to a wall sold for $120,000 at Art Basel in Miami recently. This does not mean a banana taped to a wall is worth $120,000. It does not mean if you tape a banana to a wall you will be able to sell it for $120,000. It does not mean in the long run if there are several competing vendors all selling bananas taped to walls they will sell for $120,000.

Hope you enjoyed this mornings Rolex economy lesson. :)

[Watcheroo]

Originally Posted by beshannon

Hard to obtain at the retail level does not equal scarce

Scarcity is relative. As is commonly believed, Rolex makes roughly 1 million watches per year. There are approximately 56 million millionaires globally. This number is increasing and is expected to hit 84 million millionaires by 2025. A lot of these people will want Rolexes. So, limited production capacity plus growing demand base, and presto, you have scarcity.

I don’t see the current situation with Rolex changing for quite some time.


Sent from my iPhone using Tapatalk

[beshannon]

Originally Posted by Watcheroo

A lot of these people will want Rolexes. So, limited production capacity plus growing demand base, and presto, you have scarcity.

Sure are a lot of watches for sale on this forum. There is no shortage, there is no scarcity. There is only whining about prices.

[pepe01]

Everytime when expert said about investments (Stock, Oil, Gold, Bitcoin, and ROLEX) that the boom is forever. It is the time to end the cycle.

"I can calculate the motions of the heavenly bodies, but not the madness of the people." - Isaac Newton

[DonRickles]

The scarcity of Rolex is strategic.

"Rolex seems to have structured their business in such a way that they're controlling distribution and who gets what, at a retail level,"

Watches are still flowing to the brand's preferred ADs, and that the backlog is more illusion than reality.

Rolex would like to perpetuate the image that there's a shortage and that there's such high demand that they can't produce enough to satisfy the demand, but I think in reality it's just very controlled release in order to keep that demand super high,"

Just to quote quickly…..

[Watcheroo]

Originally Posted by beshannon

Sure are a lot of watches for sale on this forum. There is no shortage, there is no scarcity. There is only whining about prices.

Zoom out. This forum is a grouping of enthusiasts and industry folk. The vast majority of Rolex buyers are not on TRF


Sent from my iPhone using Tapatalk

[RoRoRo]

Originally Posted by Watcheroo

Scarcity is relative. As is commonly believed, Rolex makes roughly 1 million watches per year. There are approximately 56 million millionaires globally. This number is increasing and is expected to hit 84 million millionaires by 2025. A lot of these people will want Rolexes. So, limited production capacity plus growing demand base, and presto, you have scarcity.

I don’t see the current situation with Rolex changing for quite some time.


Sent from my iPhone using Tapatalk

agree

[Geckobros]

Originally Posted by thenewrick

One thing I’ve noticed that is interesting to me is that as prices have increase, supply as also increased but examples aren’t selling as quickly. There’s plenty of supply and models are “sitting on shelves” of used jewelry vendors. They don’t have to sell all of them just one here and there to the person who’s willing to pay the price to get it now.

Because they aren’t scarce or rare and because there are a large supply of watches and prices are being artificially inflated by a select few of people willing to pay extra because of FOMO I see prices going down soon. Especially on models that have lost their social media appeal; Pepsi, Daytona, Hulk.

The game now is to see how long used jewelry vendors are willing to sit on inventory that isn’t moving without reducing prices.

I’m just using Chrono24 and recommended vendors as data points.

When vendors start seeing prices drop they will all begin undercutting each other because nobody wants to be caught holding the bag. The buyers paying 2x 3x retail don’t really care because they’re generally very wealthy to begin with. People paying that much above market value are not concerned with prices outside of a little bragging rights.

If you want a good price on a Rolex just be willing to wait until those holding supply can’t tolerate holding supply anymore. The past few years have been huge profits for used jewelry salesmen so there’s no reason for them to stop the profit party now. So if you’re a savvy buyer just wait.

As an aside when I was young I wondered what would happen if I put a pebble up for sale on EBay for $1 mil. I figured I didn’t have much to lose and you never know. Someone rich might buy it for a laugh or yolo. That’s essentially what’s happening now with certain luxury goods. People are just asking silly prices to see if anyone is willing to pay it. There’s been enough wealthy people willing to buy them here and there to sustain this phenomenon for the past few years but all trends end. These Beanie Babies will lose their Instagram appeal and the extra cash will go towards the new new.

So in short, I disagree with the author. Rolex aren’t scarce. Demand is artificial because models are increasing in supply at used jewelry vendors. Author needed to do more research over time to see the trends. Asking price isn’t actual sales and isn’t sales volume. Pebbles aren’t worth $1mil even if someone buys one for $1mil. Saying something is worth whatever someone pays for it isn’t a truism it’s sort of simpleton economics. A banana taped to a wall sold for $120,000 at Art Basel in Miami recently. This does not mean a banana taped to a wall is worth $120,000. It does not mean if you tape a banana to a wall you will be able to sell it for $120,000. It does not mean in the long run if there are several competing vendors all selling bananas taped to walls they will sell for $120,000.

Hope you enjoyed this mornings Rolex economy lesson. :)

Interesting take. The premise that there is a Rolex shortage has never sat well with me. You can have the Rolex of your dreams tomorrow if you are willing to pay the price. No matter how hard we try to convince ourselves that we have something "special" it simply isn't true. The investors have snatched up models to sell at inflated prices and here we are today. Go grey and get the Rolex of your dreams tomorrow.

[Watcheroo]

Originally Posted by Geckobros

Interesting take. The premise that there is a Rolex shortage has never sat well with me. They are readily available albeit at inflated prices and of course not at AD's.

Not an exact comparison by any means, but diamonds and gold are also readily available to purchase for anyone who wants diamonds and gold. Both commodities are known for being “scarce”.

There may be confusion happening here between the concepts of rarity and scarcity.


Sent from my iPhone using Tapatalk

[thenewrick]

I think it all boils down to supply. Because supply is increasing and availability is increasing there isn’t a good argument for asking price values. It’s sort of the definition of a fix. I think there were about 120 Pepsi for sale on Chrono24 a couple of years ago and prices were around $15k. Now there’s 160 Pepsi for sale and asking price is $22k. That just means there’s a very small number of yolo wealthy paying asking prices without thinking and fewer price conscious buyers actually buying. Vendors are continuing to hoard and hold on their prices while fewer and fewer are actually sold. Eventually the low volume numbers will become a burden due to opportunity cost and you’ll see prices fall.

From time to time you do see someone advertise for much less than typical asking prices and they sell quickly. That’s the actual value of the watch. Also consider advertising fees and cuts, margins for profits, shipping and insurance and other overhead.

A Pepsi is probably worth about $12k, a little higher than retail because it is an in demand model and somewhat “scarce”. All these $22k+ advertisements are profiteers paying fees and overhead.

Nobody on this forum with a Pepsi is wearing a $22k watch even if they paid $22k for it and even if there’s asking prices of $22k.

Get a quote from a vendor for your watch, subtract the taxes you paid on it, subtract any shipping or other fees, subtract insurance. That’s the value of the watch. Nobody likes to admit they paid $20k for a Pepsi and sold it for $16k to get another model though so you won’t hear those reality stories.

[IamJacky]

I agree with this article for the most part. I've always thought Rolex never intended to hold back production to create a shortage/scarcity, it's all made up in the minds of those who feel frustrated about not being able to get the watches they want.

IMO the reality is really simple, the demand for Rolex had grown exponentially in the past few years, the growth in demand is so disproportionate to Rolex's annual output that it just seemed like there's a shortage.

But as many of us have already pointed out, there is no shortage at all, you can get almost any Rolex you want instantly at the secondary market, you just have to pay the market price for them.

As for why the demand for Rolex has grown so outrageously in the past few years, that's another topic of discussion. Personally I believe social media /information sharing had a huge part in it. The internet and social media had grown tremendously and information sharing had become more easily accessible than ever, particularly within the past decade. Then the rise of China with its hundreds of thousands of new riches and insatiable thirst for luxury goods. There're many other factors for sure, but IMO it all boils down to the advancement in information-sharing technology, new money, and the fact that Rolex truly makes long lasting, quality iconic products that many deem not only just a luxury watches but assets as well.

[Geckobros]

Originally Posted by Watcheroo

Not an exact comparison by any means, but diamonds and gold are also readily available to purchase for anyone who wants diamonds and gold. Both commodities are known for being “scarce”.

There may be confusion happening here between the concepts of rarity and scarcity.


Sent from my iPhone using Tapatalk

I understand the difference. And I believe you are saying Rolex watches are scarce (not enough for demand). Where we disagree is that I see Rolex watches readily available. When I start seeing "Call for availability" or no stock in the used market, then we can agree that Rolex watches are truly scarce.

Gold is rare. Diamonds are controlled making them seem rare when in fact they are quite common when compared to other precious gemstones.

[Mendota]

Originally Posted by thenewrick

One thing I’ve noticed that is interesting to me is that as prices have increase, supply as also increased but examples aren’t selling as quickly. There’s plenty of supply and models are “sitting on shelves” of used jewelry vendors. They don’t have to sell all of them just one here and there to the person who’s willing to pay the price to get it now.

Because they aren’t scarce or rare and because there are a large supply of watches and prices are being artificially inflated by a select few of people willing to pay extra because of FOMO I see prices going down soon. Especially on models that have lost their social media appeal; Pepsi, Daytona, Hulk.

The game now is to see how long used jewelry vendors are willing to sit on inventory that isn’t moving without reducing prices.

I’m just using Chrono24 and recommended vendors as data points.

When vendors start seeing prices drop they will all begin undercutting each other because nobody wants to be caught holding the bag. The buyers paying 2x 3x retail don’t really care because they’re generally very wealthy to begin with. People paying that much above market value are not concerned with prices outside of a little bragging rights.

If you want a good price on a Rolex just be willing to wait until those holding supply can’t tolerate holding supply anymore. The past few years have been huge profits for used jewelry salesmen so there’s no reason for them to stop the profit party now. So if you’re a savvy buyer just wait.

As an aside when I was young I wondered what would happen if I put a pebble up for sale on EBay for $1 mil. I figured I didn’t have much to lose and you never know. Someone rich might buy it for a laugh or yolo. That’s essentially what’s happening now with certain luxury goods. People are just asking silly prices to see if anyone is willing to pay it. There’s been enough wealthy people willing to buy them here and there to sustain this phenomenon for the past few years but all trends end. These Beanie Babies will lose their Instagram appeal and the extra cash will go towards the new new.

So in short, I disagree with the author. Rolex aren’t scarce. Demand is artificial because models are increasing in supply at used jewelry vendors. Author needed to do more research over time to see the trends. Asking price isn’t actual sales and isn’t sales volume. Pebbles aren’t worth $1mil even if someone buys one for $1mil. Saying something is worth whatever someone pays for it isn’t a truism it’s sort of simpleton economics. A banana taped to a wall sold for $120,000 at Art Basel in Miami recently. This does not mean a banana taped to a wall is worth $120,000. It does not mean if you tape a banana to a wall you will be able to sell it for $120,000. It does not mean in the long run if there are several competing vendors all selling bananas taped to walls they will sell for $120,000.

Hope you enjoyed this mornings Rolex economy lesson. :)

Thank you. It's interesting how many would-be economics experts we have here who will probably join in soon and fight you tooth and nail over this, likely because they themselves have overpaid for these shiny widgets [because they were impulsive and couldn't wait], therefore they have skin in this game and want to see secondary prices remain lofty. Trying to convince us otherwise, however, does them no good because we aren't the ones participating in this market anomaly right now. We are just watching it play out and have no dogs in this fight. They need to try to convince others, equally as impulsive as they are, that the time to buy is right now. Only through FOMO and impulsivity can they continue to push this rock up a hill. At some point that rock will pick up enough dirt and debris along the way up that the weight of it will start rolling back down. Maybe not quickly, but there will reach a point where fewer people are willing to pay lofty prices and decide to just wait it out. These proverbial "millionaires" that the impulsive crowd like to use as evidence of why secondary prices will just keep going up didn't actually get there by overspending on shiny widgets and trinkets.

[thenewrick]

Thanks for the feedback.

It seems like a lot of people are ignoring the fact that supply has increased and availability increased over the past year. This shows that there is reducing scarcity and that it’s just price fixing. We’re seeing this in many industries these days. They will increase prices just because they want to and say it’s because of supply side issues. Oil/gas is notorious for this.

If we saw supply and availability go down and prices increasing, then I would buy the increased demand argument. But what we’re seeing now is just savvy profiteers fleecing the wealthy. And I have zero problem with that. I have no problem waiting and shopping around and doing other things. Zero fomo here.

[SubMillennial]

Originally Posted by Watcheroo

Scarcity is relative. As is commonly believed, Rolex makes roughly 1 million watches per year. There are approximately 56 million millionaires globally. This number is increasing and is expected to hit 84 million millionaires by 2025. A lot of these people will want Rolexes. So, limited production capacity plus growing demand base, and presto, you have scarcity.

I don’t see the current situation with Rolex changing for quite some time.


Sent from my iPhone using Tapatalk

most of those newly minted millionaires of the variety whose house they've lived in for 25 years is now worth 500K, with most of the rest coming from their retirement accounts they draw a small portion from each month. And of course good 'ol inflation. That doesn't mean they are suddenly going to be buying five figure price tag watches. Lots of 60+ year old paper millionaries still on a fixed income.

[Calatrava r]

What explains the total dearth of TT models in DJ in the small sizes. I think the whole plan is controlled supply which greatly increases demand and the higher prices on the used market incentivizing buyers of new watches from ADs to sell their watches to on-line watch dealers. ADs continue to be shut resulting in fewer doors all over the world, yet no product anywhere. Now, a buyer cannot even special order a Datejust. It is quite crazy at the moment and most people think this is the new normal going forward.