In my last article I shared the process I used to make over $10k in profits in my first 90 days of watch trading… but I omitted one key element – How I was able to bring in over $40k of inventory, at zero percent interest, and without an investor. Now don’t get me wrong, Cal and Honza have covered this topic on multiple occasions but I wanted to add some additional tactics to WTA community so that we call all broaden our knowledge about the different ways to fund our watch trading journey.
So let’s dive in.
As many of you know, a large “retail” platform for selling watches is eBay and the main way to build your reputation on the platform is to have a positive rating. Personally, I’ve had my eBay account since 2015, but I only had transactions as a buyer.
So I went around my house and found “luxury goods” that I did not use anymore and listed them on eBay. This is a proverbial “killing two birds with one stone” approach – I was able to increase my seller reputation on eBay AND made enough money from selling things I no longer used to buy a Rolex Explorer II.
P.S. – The same strategy can be used on other selling platforms like Facebook Marketplace, OfferUp, and any other platform that has a seller rating.
Get “Memoed” Inventory
Once you start building your reputation as a watch trader (both as a buyer and seller of luxury watches) you fill find yourself in situations where your clients will want to “see” certain pieces before making a decision. This happened to me with a Panerai Pam 335.
A retail buyer that I had already sold multiple pieces to wanted to compare a Ulysse Nardin Diver Black Sea, that I already had in stock, to a Pam 335. Although the watches were pretty similar, and my client THOUGHT he wanted the Panerai – even though I warned him that the Luminor case MIGHT be a little big on his wrist.
So I went on the hunt to find a Pam 335, thinking that I would have to purchase and stock the watch so that I could let my customer try it on, causing me to spend $8,500+.
However, when I went on my search, I ran into another WTA member who had the exact watch that my customer was looking for.
Since he was a fellow watch trader and knew that I had a good reputation, he “memoed” the watch to me, meaning, he agreed to send me the watch without requiring me to pay him until I got a decision from my client.
Ultimately, my client went with the UN Diver and the memo terms cost me about $250 (for the memo terms, I agreed to a $100 restocking fee and to pay shipping both ways if my client didn’t purchase the watch) but I was able to show my client THE EXACT watch he was looking for and still make a healthy margin on the sale. Note – For accounting purposes, I included the additional expenses from the Pam 335 into the cost of the UN… and I still made an 8 percent margin on the sale.
Authorized Dealer Financing
Saving the best for last, this is BY FAR my favorite (and most creative) way to create cash for watch trading.
One day, very early on in my watch trading career, I walked into my local AD and happened to find a model that traded “over list” in their showcase. I knew that I NEEDED to buy that watch but because I was still so new, I didn’t totally understand all the logistics.
Seeing that I was interested and was trying to process the transaction in my head, the salesperson then said something to the effect – “Did you want to put this on your credit card or apply for financing. We have a promotion going on right now for 12 months, no-interest, but if you take it right now, I can ask my manager to extend that to 18 months for you.”
And the lightbulb went off in my head – I could buy the watch on credit, sell it, then use the funds to reinvest in other inventory, all while making payments to pay the watch off in 18 months!
So obviously, I took the AD up on the offer and was approved to put the full balance of the watch on their financing.
Granted, I have “good credit” but I generally find that in-store type financing in more lenient than other bank-backed financing like loans or credit cards.
All-in-all, I was able to get about $25,000 worth of inventory from the AD which I “broke-even” on (I sold one watch for a profit and another one from a loss, just so that I could maximize the credit I had with the AD) and this has been my primary source of funding for watch trading.
P.S. – The same strategy can be used when making a purchase through an online retailer/jewelry store or eBay and by using PayPal Credit, Affirm Payments, or other types of “in-store” financing.
In summary, there is no shortage of ways to be able to get inventory for your watch trading business. Whether you use any of the methods covered by Cal and Honza such as Brokering, PayPal Credit, Bank Checks, Credit Cards, or Investor Money, or any of the tactics that I described above, there is ABSOLUTELY no reason why lacking funds should prevent you from turning watch trading into an extremely lucrative endeavor.
Best wishes to you on your watch trading journey,