Have you ever wondered why online watch shops can sell watches for over 40% off in brand new condition?
Have you ever noticed that such companies never offer a warranty from the manufacturer, but always from themselves?
Has it ever puzzled you that they happen to have all watches you ever thought of always in stock?
Here are three realities about the world on online watch buying you probably didn’t know.
The new watch market online isn’t black and white, its what we call the GREY market.
Each year, manufacturers create as many watches as distributors are willing to order and in many cases, limit such units based on past sales or monetary commitments.
In order to survive and make more money, manufacturers also make additional units that are what we call “Ghost Units”.
These extra units are identical and are essentially the same watches, but are often made of leftover parts, may have very slight differences in the movements and are often not warranteed because they’re not supposed to exist.
They are 100% real and authentic, but cannot be held the same level of quality or standard as a brand new watch sent to a boutique.
As a result of this, online retailers and resellers are not authorized to typically carry the brand as a dealer end up bidding on palettes of these watches by the numbers and often buy up to 100 units for their inventory at fractional costs.
To give you an idea, Hublot will sell to their authorized dealers watches at 40 – 50% off, but will sell to retailers who are not authorized at 60 – 70% off.
While one can argue that its a bigger discount to someone who shouldn’t even be selling the watch, the idea is that Hublot will not stand behind the products given with such discounts meaning that the reseller is the one to accept any any liability.
In most cases, watches do not break in their first 2 – 3 years giving a very small percentage of repairs which is easily offset by the much larger discount on the watches as well as the ability to advertise the watches much cheaper than authorized retailer.
These watches carry are often called and referred to by dealers as GREY Market watches.
2. Many are actually never in stock.
While most third party resellers like Jomashop will have thousands of pictures of your favorite watches and show that all are in stock, the majority do not have the watch itself.
They will mask this by saying that watches have a 2 to 5 day processing time, giving them the chance to have their internal buyers source them from other resellers.
You order a watch, they end up calling another reseller who does have one, offer them a bit more knowing what you agreed to pay and send you the watch from there.
They do so to create a global profit sharing model for inventory that allows them to optimize and keep their clients rather than share them.
So remember most of the watches you see online that show a 2 to 5 day processing time are actually not in stock at all.
3. There are plenty of new watches hidden as used.
One of the strategies that watch resellers use when selling authorized pieces at discount is that they cannot advertise them as new.
Unless you are an authorized dealer, you cannot carry brand new inventory with a warranty, but as times have changed, backend deals are being made even on that front giving the resellers brand new watches under warranty by the manufacturer.
They simply cannot be sold as new in the public’s eyes as it would damage the reputation of authorized dealers selling same watches for two to three times more.
In order to disguise them, they list such watches as used rather than new even though they have never been worn or used previously.
The one difference, however, is that while your warranty in this case still remains with the manufacturer like an authorized dealer would sell you, the card itself will show stamped and say the reseller accepted the watch rather than the day you bought it so you may run into a few months less of warranty, but for 70% less, who cares.
The world of watches is complicated, and the idea that so many watches are trading hands online makes it hard to really understand how this giant mess started to begin with.
It was either the manufacturer’s needs to sell more units, the jeweler’s greed to make more, or the consumer’s constant push for lower prices based on the fact that shopping online is now favored 3 to 1 to buying in-person.
It is important to say that not all manufacturers play dirty or in the so called ‘grey area’, as many still hold strong to their boutique style distribution and rely heavily on real authorized retailers to get them clients and uphold their watchmaking name.
You can tell how these are as they’re often never found on any third party reseller websites or publicly sold as new other than in boutiques.
If you want to make sure you’re not the next victim of the “Grey Market” sign up here for our next free training.