I just made $1,240 on a $10,000 Rolex GMT Master II! It was a 12% ROI in less than 6 hours! I was ecstatic, literally fist-pumping the air after that sale went through. That was until I found out the guy after me made $7,000 on that same Rolex!
It was then and there I realized I was done wholesaling watches.
Now hear me out…
It’s not all sunshine and rainbows, getting stainless steel sport model Rolexes just above MSRP, and making quick money all day long. The wholesale strategy is polluted with landmines that can have you upside down financially, especially if you haven’t been doing it for decades.
I started noticing many people falling victim to the negative sides of wholesaling. They were making mistakes that led them to quit when they were right at the turning point of making more money than even their six-figure jobs. So I had to share the secrets that got me over the wholesaling hump that turned me into the profitable watch trader I am today. Wholesaling is not a bad thing when deployed with the proper intent. However, it can decimate you if certain mistakes are made. There’s a step-by-step way to easily avoid these issues covered in the Watch Trading Academy Insider Facebook community , which is a huge help beyond just my tips here!
If you don’t know the difference between a wholesaler and a trader, here’s the scoop. A wholesaler is a dealer or independent person who moves timepieces monthly at a thin margin. So for example, a wholesaler may trade 10-5,000 watches a month at net profit margins ranging from 5-9% on average. A watch trader on the other hand, is typically someone who trades specific brands with the intent of getting the returns they want by focusing on a portfolio of timepieces that target a higher % profit so they can choose to let go of the watch whenever they want. So a watch trader tends to move less volume over a period of time with a greater return averaging approx ~ 15-33% on average. This business model is flexible and caters to many independent enthusiasts and those who want to scale to a full-blown business. Every 100K Club member who has broken six figures in profits a year made this same shift from wholesaler to trader too.
In essence, wholesaling is a strategy that can be used among other approaches like brokering, scarcity plays, quick flips, and memoing (all of which are taught in Watch Trading Academy ).
Typically when a watch trader starts on their journey, they do more wholesale-type deals. I went through this phase when I started too. But as I learned more about getting consistent returns, I realized wholesaling is not an approach I wanted to get stuck in. The reason I was wholesaling when I started was because I didn’t fully grasp the concept of investing or wealth transfer . I was putting capital risk at stake to generate returns that were not worth the opportunity cost. So I was chasing small profits, locking up a lot of money in the process.
It was after doing enough crap deals, that I realized I had to grow through this phase. I wanted to get to the point where my returns were making me enough money to justify the capital I was parking into the timepieces. It was time for a shift from buying mostly Rolexes to make $250 per sale to be able to break five figures monthly even on as little as 5 watches traded. Here’s the secret strategies that got me there:
Focusing on Retail Clients – This was a game-changer. When I was starting out, I would get excited by a quick sale or get uncomfortable holding a watch too long so I would sell it to another trader/dealer. This got me paid faster, but I sacrificed my time and money on a great buy price and wasn’t gaining new premium paying clients in the process. By sourcing watches I thought a retail buyer would want and taking excellent photos, I was able to attract those types of high-paying customers who didn’t beat me up on price like other wholesalers and watch traders do.
Inventorying Target Profit Makers ONLY – When I made the shift from buying anything and everything that looked like a deal to stocking only pieces that had my target profit margins, it made a world of difference. This means I only stocked watches with 20% margins in them (when that was my plan), and brokered the ones that still were opportunities but weren’t worth holding. By being able to leverage brokering as a strategy, I was still able to make money on deals that were going to make me 5%+ without risking any of my own cash. So I wasn’t letting go of a money making opportunity, and at the same time, I wasn’t making a poor investment decision. The difference between trading and investing clarifies what I mean further.
Buying Right – Money is made on the BUY!!! If you’re already a member of Watch Trading Academy you know bottom cash value numbers on any timepiece and understand how your target price should relate to this bottom cash value number. This ensures a smart return on your investment. If you don’t know the bottom cash value numbers when purchasing luxury timepieces, you’re hoping that the market appreciates on the watch or you get lucky. Trust me when I say hoping for luck isn’t a dependable strategy. When I buy a piece really well, it allows me the option to either wait for a retail customer who will pay my 15-25% profit, or if I want to liquidate the watch, I can take less for the quick sale. But when I wasn’t buying the watch right, I was forcing myself to take what I could get which was usually a wholesale margin of 6% or breaking even. I had to in turn rely on my salesmanship instead of an easy passive 20% profit every 1-2 months.
Positioning and Differentiation – this was critical to breaking the 5 figure net profit monthly mark. It’s what helped me take home more than most wholesalers make monthly and move way less pieces. Even selling 10-15 timepieces a month was enough to make six figures a year by myself as a trader. The way I think through why I purchase a timepiece is different than it was when I first started out. When I was wholesaling, I would pretty much buy any deal that looked like I could make some money on with no real thought behind it. Hence my approach was chaotic, and so were my results. When I forced myself to think through how I was going to market to a retail buyer before I even bought the deal, I was able to clearly define why this piece made sense to inventory. So I’ll give you an example. Let’s say I wanted to buy a Panerai Luminor PAM 526 Regatta Flyback. If I saw one for sale previously, I might have bought it for $11,000 in the secondary market, and tried to sell it for $12,500. I would usually take home $11,500 though. This was me strictly looking at the market comps and thinking that since most were listed at $14,000+ at the time, $11,000 was a good deal. Come to realize I wasn’t getting much traction from potential buyers, so I would wholesale it out and be happy with $500.
I was also mistakenly using listed prices thinking that’s what the pieces moved for when it’s not always true. The way I look at this now, is I will wait until I get the RIGHT price to inventory it at. So I won’t pay more than $9,500 on one that’s a complete set. This gives me a much more secure and beneficial risk/reward ratio when parking my money in the asset. Also, I’ll think about how I position the watch in the open market and how it will attract retail customers through differentiation. So, for example, I see that the watch comes with a black sport rubber strap, and another boring OEM strap. If I can get a miami blue and orange rubber strap for cheap, and add them to the package because those colors match the subtle accents of the watch design, then I have a way of attracting more attention to the sale due to my positioning and differentiation. So if you take the extra minute to think through how you will do this on the watches you trade, you’ll be amazed at how much quicker you sell pieces, and how to attract the right types of people you want to sell to. This also helps deter scammers and low-ballers from blowing up your listings.
So there you have it! My 4 secrets that changed my life and got me to the next level. I hope you found it helpful and you don’t end up in the wholesale wasteland because trust me, it’s not fun!
My goal is to help many more timepiece enthusiasts move through the wholesaling phase quicker than I ever did before. I want you all to enjoy badass watches, and make strong returns instead of getting stuck in the “grind” like many do for years. If you’re interested in taking the fast track, you can always join us in the Watch Trading Academy community to learn this process ASAP even with no prior experience with timepieces. Let me know what you think in the comments below, and I hope we’ll be connecting in the community soon. I want to see you in the 100K Club next!