In many ways, the free market and the convenience of online shopping are the enemy of luxury watch brands like Rolex. After all, anyone who knows anything about economics knows the principle of supply and demand, yet luxury watch manufacturers misjudge the demand (and, therefore, the price) of their models all the time. Moreover, they also occasionally make models intentionally scarce, artificially adding to their prestige.
Based purely on demand, for example, there should be more stainless steel Rolex Daytona models. Yet, the company keeps numbers limited to build a sense of exclusivity. If you attempt to buy one from an Authorized Dealer (AD) you will need to be extremely lucky, or you may need to buy it alongside other less desirable Rolex models.
Luxury Watch Brands Create the Grey Market
For Authorized Dealers, watch manufacturers misjudging supply and demand is a problem. Dealers have to pay before they even know which watches they will receive. This can lead to problems when trying to clear their inventory of unsold, unpopular or obsolete timepieces. For instance, a Datejust 36mm with a pink diamond dial could be hard to shift, as it is too big for most women’s tastes, but too feminine for most men.
The solution? In many cases, they try to sell these less desirable watches together with more desirable models to a grey market dealer, who buys in bulk. Of course, the Official Retailer is unlikely to make as much this way, but sometimes cash flow issues and reducing the inventory are more important considerations than trying to sell watches in strict accordance with Rolex’s demands, which can be completely unrealistic.
What is the Rolex Grey Market?
Many Authorized Dealers are unable to sell all of the watches brands sell them and, to contend with this, they will often sell part of their inventory to non-authorized dealers. On the other hand, whoever buys in bulk gets better conditions in any market, thus grey market dealers often get the best timepieces first. As non-authorized dealers are not bound by strict Rolex contracts, they are able to embrace free market principles, adjusting their prices based on supply and demand. They are also able to sell watches through online stores, which is forbidden for Authorized Dealers.
According to one article published by the Financial Times, the inefficiencies of the luxury watch market are so large that 20 percent of all luxury watch sales are currently happening in this ‘grey market’. Yet, this market is so disliked by some luxury watch companies that they would prefer to destroy their unsold watches than allow the free market to determine a fair price, and break their meticulously crafted pricing strategy.
Advantages of the Grey Luxury Watch Market
For customers, there are a number of potential advantages associated with buying a timepiece from the grey luxury watch market, rather than from an Authorized Dealer. Some of the most significant advantages are outlined below:
1) No Waiting Lists
Unlike with Authorized Dealers, grey market dealers operate according to free market principles, with no waiting lists. While this may mean you will need to pay more for the most in-demand luxury watches, you will be able to get the timepiece quickly. By contrast, you will rarely find a stainless steel Rolex Daytona, GMT II Batman, Submariner Hulk, James Cameron Deepsea or Sea-Dweller models from an Authorized Dealer, and even if you join a waiting list, there are no guarantees you will actually get the watch in the end. In the case of the steel Daytona the wait list is estimated 2-5 years. Some ADs even refuse to add new customers to the wait list.
2) Greater Choice
Another major advantage of grey market online shops is that they offer all models and varieties, whereas Authorized Dealers rarely have all variants of a specific model. For example, if you want a Datejust 41 with a black dial, Rolex offers different materials and bracelet options (see this article), but you will never find all of those with an AD. In addition grey market resellers also offer discontinued, pre-owned and Vintage Rolex Models which are not available at Official Retailers.
3) Significant Discounts
Generally, Authorized Dealers have to sell at prices dictated by manufacturers. If you are lucky, you may be able to lower the price a little at a Rolex Boutique, but most people do not enjoy this kind of haggling. ADs also typically have to cover costs associated with security and renting locations in the best shopping locations. On the other hand, a pure online store like Jaztime.com, operating on the grey market, has lower overhead costs and can survive on lower margins than ADs, resulting in lower prices, with discounts of as much as 40 percent.
4) Online Shopping
Rolex, and many other luxury watch companies, do not like online shopping and forbid Authorized Dealers from selling online. Yet, not every customer wants to visit multiple physical Rolex stores in an effort to find their desired watch. Therefore, one of the biggest plus points of the grey market is the convenience offered by online shopping. This reduces the hassle and allows customers to buy a watch, even if they do not have an AD nearby.
5) Easy Access to Price Info
Stores operating in the grey market will be upfront about the price of each watch. However, many luxury watch boutiques are not so clear and will withhold pricing information. As a customer, you can go online to check what these prices are, but by the time you have done that, you might as well just buy the watch online. Even if you do find pricing info from an AD, you may be surprised, because they are usually more expensive.
6) Selling and Trading
Not all watch owners want to wear the same watch for decades, but what can you do with a used watch? Authorized Dealers will not buy second-hand watches back, so you will need to go to the grey market. Here, you will often also find the option to trade your watch for a new one. This can only be done at grey market stores like Jaztime.com.
7) Discontinued, Pre-Owned & Vintage Timepieces
Often, grey market dealers will also sell used watches. In addition to these watches being more affordable, one of the biggest advantages here is the ability to buy older models, which are no longer in production. With luxury timepieces, the quality of design is usually so high that, after some professional polishing, you can hardly tell that a watch has been worn before, making the used timepiece market extremely viable.
8) Superior Service
From a customer service point of view, grey market stores will typically provide much more advice to customers and will also be more honest. With Jaztime.com, for instance, the website offers over 450 reviews, comparisons and ‘how to’ videos on YouTube, as well as a variety of buying guides, blog posts and other online articles.
9) Safety of Purchases: Brand Store vs Online Shop
In many counties, it is completely safe to walk into a store, buy a $10,000 luxury watch and walk out, yet in others this can be problematic. In particular, some areas have issues with criminals watching luxury stores and following customers after they leave, in order to rob them. Compare this with an online purchase – where a nondescript, fully insured package from UPS or FedEx will arrive discreetly – and there are clear safety advantages.
Disadvantages of the Grey Luxury Watch Market
While there are many benefits associated with buying a watch from the grey market, here at Jaztime.com we feel it is important to be completely honest and transparent about the negative aspects too. In particular, we feel there are two potential disadvantages that buyers should be aware of before committing to a purchase.
1) Brand Warranty
The first issue is the fact that some luxury watch brands claim they will not honor the brand warranty if the watch was sold on the grey market. With that being said, all authentic new watches sold on the grey market come with the real warranty card and papers, and an AD would have no real way of knowing where it was bought. Throughout our experiences, with many years of selling authentic Rolex watches, Jaztime.com has never yet had a case where customers have had problems claiming the warranty. Nevertheless, you should be aware of this possible issue.
2) Watch Authenticity
Secondly, it is an unfortunate reality that there are many replica luxury watches sold on the internet. If you buy from the grey market, there is the potential to encounter non authentic watches, especially if you are buying from sites like eBay or Craigslist. For this reason, we advise that you only purchase watches from trusted online stores like Jaztime.com. If you have concerns, check Yelp and Google for reviews of the store in question.