WatchPro SPECIAL REPORT - PRE-OWNED LUXURY WATCHES AND THE SECONDARY MARKET - Chronext
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WATCHPRO SPECIAL REPORT IN ASSOCIATION WITH CHRONEXT
& WatchPro
SPECIAL REPORT
PRE-OWNED LUXURY
WATCHES AND THE
SECONDARY MARKET
VOLUME 01
PRE-OWNED LUXURY WATCHES AND THE SECONDARY MARKET
Welcome to the first of a series of quarterly Special Reports about the pre-owned and secondary
market for luxury watches. I am delighted that CHRONEXT is the official partner for these reports
and I would like to express my gratitude to Rob Corder for allowing us to play a small part in
this important stepping stone for the Pre-Owned watch world. It is vital that the watch industry
and watch-loving consumers have clear and accurate information about how the secondary and
primary markets complement and support each other. Our industry is rapidly changing and it is
essential that we document and analyze that change through a central authority.
As CHRONEXT we are supporting these quarterly Special Reports, but it is important to note that
they are researched and written by WatchPro. We want to make sure that the overview of the
market is entirely independent. In a rapidly evolving secondary market, we need reliable and
trusted reporting so that people can make informed decisions and plan for the future.
As such in this first report, we hear from founders and CEOs of the major secondary market
players that are competing, with us also and, in many cases, cooperating to make the industry
as professional and trusted as it can be. We speak about the impact of the Coronavirus
pandemic on sales, the way supply and demand for watches has affected prices and speculate
on whether rising levels of ecommerce will transform both the primary and secondary markets.
The 3 key questions in everyone’s mind are of course: how will the retail landscape in the
watch industry change? Will there be changes in how we think about the supply chain? And
what can the digital world do to help the established players generate sales and importantly
preserve brand equity by controlling leakage into unwanted channels.
I hope you find the report informative and interesting. If it inspires you to start buying, selling
or collecting watches, then please come and visit us at CHRONEXT.CO.UK and we will gladly
help you enter one of the most beautiful hobbies known to mankind.
Sincerely yours and wishing you a great read,
Philipp Man, Co-Founder and CEO, CHRONEXT
2 WATCHPRO / JULY 2020 / watchpro.com
A CHRONEXT / WATCHPRO SPECIAL REPORT
HOW PRE-OWNED
AND THE SECONDARY
MARKET REBOUNDED
DURING THE PANDEMIC
NOBODY WILL EMERGE FROM THE GLOBAL COVID-19 PANDEMIC ENTIRELY UNSCATHED BY THE ECONOMIC AND SOCIAL IMPACT OF THE VIRUS,
BUT BUSINESSES THAT HAVE BEEN CONCEIVED PRIMARILY AS ONLINE ECOMMERCE OPERATIONS HAVE WEATHERED THE STORM BETTER THAN
THOSE RELYING ON BRICK AND MORTAR RETAIL, AND THE LEADING PRE-OWNED AND SECONDARY MARKET PLAYERS HAVE SUFFERED FAR LESS
THAN THOSE IN THE PRIMARY MARKET, AS ROB CORDER DISCOVERS IN THE FIRST OF OUR QUARTERLY SPECIAL REPORTS.
T
he global pandemic has do Audemars Piguet or Patek Philippe. state, wondering what to do,” recalls Paul
caused brick and mortar A much greater beneficiary of the Altieri, chief executive of Bob’s Watches,
stores to close for up to three shift to online during the pandemic is a specialist in pre-owned Rolex watches
months in key markets like the the secondary market where specialist based in Southern California.
United States and Britain, wiping out ecommerce players like CHRONEXT, CHRONEXT, based in Germany, saw a
any walk-up business. There has been Watchbox, Watchfinder, Bob’s Watches, similar dip at the start of the outbreak in
some compensation from sales over eBay and Chrono24 have seen their Europe, but has since returned to pre-crisis
messaging and phone calls with well- revenues barely dip during the crisis, and levels. “The first two weeks of March we felt
known customers, but the biggest customers looking for Rolexes are like kids it quite a bit and saw a 15% drop in traffic.
growth area has been ecommerce. The in a candy store thanks to the massive But we normalised after that. For April and
Watches of Switzerland Group, which selection of pre-owned and unworn models May we were very strong and back to
provides comprehensive financial for sale. pre-Corona levels. We are optimistic and
data as a publicly listed company, was WatchPro has spoken to all of the major expect that this will be our strongest year
robbed of sales to the tune of around players in Europe and the United States, by far in terms of profitability and marketing
£13 million ($16m) during the first six with the exception of Watchfinder, which efficiency – assuming there will not be a
weeks of lock down from mid-March appears to have taken a vow of silence second wave ,” says Philipp Man, co-founder
to the end of April. Over the same since being acquired by Richemont in and CEO of CHRONEXT.
period, ecommerce sales rose by 46%. 2018, and they tell a similar story of how In April, Tim Stracke, CEO of Chrono24,
This spike in ecommerce is from a lock down and the fear of Coronavirus that was the first of the major secondary market
relatively low base for WoSG, not least swept the globe affected sales. platforms to share data on its performance
because its biggest brand Rolex, which “It was tough the first couple of during lock down, and it was clear, even at
accounts for more than half of its annual weeks. Sales dropped 30 to 40% almost that early stage, that the model was proving
turnover, does not allow online sales. Nor immediately. People were just in a frozen more resilient than the wider retail market
watchpro.com / JULY 2020 / WATCHPRO 3
PRE-OWNED LUXURY WATCHES AND THE SECONDARY MARKET
for luxury goods. “When we look at market and the likes of Chrono24 steel Royal Oaks, Nautiluses and
transactions taking place, we are helped to clear them through by Daytonas have levelled off this year,
hearing from the luxury industry that connecting sellers with buyers all and maybe cooled by 10% in the
sales have dropped by 80-100% for over the world with bargain priced second quarter, but are still well
retailers, which is a catastrophic drop pieces. above recommended retail prices
in demand. That is quite different to This time is different. Although with authorised dealers. The only
what we are experiencing, which is demand has all-but evaporated for brand that appears to have taken a
more like a drop of 15-20%, shifting us three months, so too has supply. significant hit is Richard Mille. Asking
back to where we were in November Swatch Group brands are thought prices for an RM-011 on Chrono24
2019, and we are seeing quite a quick to have continued manufacturing at peaked at around £145,000
recovery in certain markets like Italy much-reduced capacity throughout, ($180,000) earlier this year but are
and Spain,” he told WatchPro at the but most factories closed for two or now on sale for under £120,000
time. three months and have only been ($150,000).
The secondary market is ramping up production volumes CHRONEXT is seeing similar
inseparable from the primary slowly. Even if Western Europe trends. “AP has been very stable.
market, and the shutdown of the avoids a second surge of the virus, Rolex has been mainly stable with
it seems certain that around 25% of a little depreciation. Patek has been
this year’s Swiss watch production mixed. We have seen softness for
will have been lost, and demand will certain models like the Nautilus,
therefore remain higher than supply which we started to see before
for the most popular watches this the pandemic. It is continuing to
year. Chrono24’s Mr Stracke said in move slowly in that direction. What
April he was even seeing the number we can see in the very high end
of listings on his platform decrease segment — €50,000 upwards — is
by about 5%, suggesting no upturn in some downwards movement but
activity on the grey market. the market is quite quiet,” Mr Man
Danny Govberg, co-founder of describes. “When you look at what
Watchbox, which is headquartered in you call unicorn watches, we are
Philadelphia and has trading offices seeing very little price movement
in Hong Kong, Dubai and Switzerland, with some fluctuation. In general
thinks the balance of supply and terms it is up. I would not have
demand will be broadly unchanged, predicted that at the start of the
despite the unprecedented times Corona crisis. We expected some
we are living through, because sort of correction, but at the macro
manufacturing has ground to a halt. level over time we are not really
“I’m not saying it’s good that they’re seeing any sort of correction,” he
shut, just like it’s not good that retail adds.
stores are shut, but from a market There is additional evidence in
standpoint I believe that there are the auction market that prices are
going to be shortages. To some holding up, or even rising through
extent there should be shortages. I the pandemic period, with record
don’t believe there’s going to be as prices being paid all over the
many people wanting to buy a luxury world for watches from across the
timepiece coming out of this as there spectrum. Reporting ever week on
were before the pandemic because these auctions, as WatchPro does,
Above entire supply chain from component there’s unemployment, business isn’t it is obvious that auctioneers are
CHRONEXT saw and finished watch manufacturing as good, people are scared, so with surprised and delighted by the
the number of through to wholesalers and retailers less product being produced it’ll just robust demand.
visitor sessions has an impact on the volume and keep the market tight,” he suggests. A theory doing the rounds in the
to its website price of watches being offered for Consumers who have been early weeks of the pandemic was
decline during the sale on the major platforms. During waiting to see whether the pandemic that trade prices were softening
pandemic, but the previous downturns, such as the will cause the bubble to burst as professional dealers rushed to
volume of sales global financial crisis of 2008/9, on prices for the most popular sell and a buyers’ market briefly
rose because of a watchmaking groups continued to references from Rolex, Patek emerged. “That was the case for the
dramatic rise in push product on their authorised Philippe and Audemars Piguet are first two weeks of March,” agrees Mr
the conversion rate dealers who had no customers for going to be disappointed, at least Man, “But it has normalised again
from browsing to the watches. This lead to a huge for now. Analysis of watches listed because demand has normalised.
closing deals. wave of watches hitting the grey on Chrono24 shows that prices for Buying is competitive and customers
4 WATCHPRO / JULY 2020 / watchpro.com
A CHRONEXT / WATCHPRO SPECIAL REPORT
original dealer. If watches changed Left
hands at that level, there would be no CHRONEXT’s
need for new watches for decades. state of the art
“Every new watch that gets watchmaking
launched this year will be pre-owned workshop brings
next year. Nobody throws away a pre-owned watches
watch. Watches are like Krugerrands back to mint
in a way; nobody ever takes a gold condition.
Krugerrand and throws it away.
So the constant manufacturing of Below
watches is like making more gold for Hot Rolex models
the pre-owned market,” Mr Govberg saw an initial dip
suggests. in prices during
Philipp Man adds: “We are the pandemic,
definitely seeing a very strong but production
growth within the pre-owned market. shut downs have
Our internal customer surveys show squeezed supply
have choices for where they sell their eBay, third party sellers on Amazon, that 76% of our customers would and caused values
watches. We want CHRONEXT be trade-in watches being bought and be willing to buy pre-owned. This to rise again on
their first choice, so we have to be sold through brick and mortar retail, was not the case a few years ago. CHRONEXT.COM.
fair with our pricing. At the moment, auctioneers, pawn shops and two Because of the sustainable aspect
you will probably get the same guys trading watches over a couple of the product and the pricing,
price, potentially even higher than of beers or WhatsApp. we expect the same shift we had
pre-Corona, for many of the unicorn $15 billion sounds more plausible in the last decade to happen at a
watches. For example, if you look at when you consider the volume much faster pace within the next 24
the white panda dial Daytona, there and value of watches that are months.”
has been no change to the rising manufactured and sold every year. Choice and availability are key
price trend. It is going up and up,” he The Swiss, alone, export watches drivers for the secondary market.
adds. with a wholesale value of around $20 Customers walking into a Rolex
Before Covid-19 hit, the secondary billion per year. That generates closer dealer as a first time customer have
market was going gangbusters and to $50 billion per year at retail prices. zero chance of walking out with
looks certain to return to the same Every year, that is another $50 billion- a Batman or Hulk, but they can
growth trajectory. Various studies worth of watches being bought by browse online find hundreds on
have looked at the overall size of consumers. According to Chrono24, offer. If the customer wants another
the market and, while there is no if each of those watches were sold brand, they will find far more choice
consensus answer, a figure of $15 on average every 25 years, it would on the secondary market than
billion per year is widely quoted and lead to the $15 billion annual figure through authorised dealers or even
is thought to be growing at 10% per for the secondary market. monobrand boutiques. “If you want
year. The watch industry often to buy an IWC you can go to their
The number sounds extraordinary, compares the market for pre-owned boutique or you can go online and
but it includes everything from new, watches with second hand cars. Most pick between a few hundred new
pre-owned and vintage watches sold cars are sold new then sold again at ones, but you can buy a pre-owned
through major specialist platforms, least once — even it if is back to the one and pick out from a thousand
watchpro.com / JULY 2020 / WATCHPRO 5
PRE-OWNED LUXURY WATCHES AND THE SECONDARY MARKET
Left to right: pre-owned models at half the price and pre-owned is a big, big part of it. the largest inventories of pre-owned
Tim Stracke, CEO of of a brand new one. So I think Pre-owned and online. They’ve got to watches in the world. CHRONEXT
Chrono24, Danny people are learning more, they’re find a way to participate in it, all the closed a funding round last year,
Govberg, chairman getting educated, much more about big brands, because it’s happening as did CHRONEXT, with €65 million
of Watchbox and timepieces than they ever have. So and there’s no turning back, Bob’s injected at the end of 2019.
Paul Altieri, CEO of I think you’ll see pre-owned become Watches’ Paul Altieri predicts. In the case of CHRONEXT, the
Bob’s Watches. even more and more and more That may explain why the world’s money will help the business
prevalent as time goes on,” predicts leading watch businesses, which grow faster while improving the
Mr Govberg. historically viewed the secondary experience for customers. Access
Another huge driver for the market as a cesspit of crooks and to serious cash also means the
secondary market is the fact that chancers, are not engaging with business can compete for the best
brands including Rolex, Patek the biggest players and looking to watches coming onto the market.
Philippe, Audemars Piguet and learn from their ecommerce and “We are investing even more into
Richard Mille do not sell directly Big Data expertise. “A big change building our pre-owned business.
online to consumers, and do not we have seen is that brands who We are spending on upgrading and
permit their authorised dealers to would have previously never spoken expanding our watch workshop; we
do so either. Customers who are to us are now very actively working are investing a great among into
increasingly comfortable spending with us and are respectful of what pre-owned stock because we feel it
five-figure prices for goods online we do. The Swiss watch industry is really valuable for us to own the
find it strange that they cannot has warmed up to the idea of pre- watches.
“add to basket” when they see the owned. What is more we are now There has never in our lifetimes
watch of their dreams with an official speaking to many of the major chief been a more terrifying crisis —
retailer. But, since the major online executives and are working together from both a health and economic
secondary market platforms have on managing the inventory flows. perspective — than the current
emerged over the past decade, I feel the watch industry has learnt Coronavirus pandemic. But not
these customers have been a click since the last crisis 2008 – it is not everybody will be affected equally,
or two away from finding the watch about moving watches but about and it is undeniable that ecommerce
they were denied on an authorised moving them into the right place.” businesses like the secondary watch
dealer’s site at a WatchBox, reveals Mr Man. “Together with many market have weathered the storm
CHRONEXT or Watchfinder. major brands CHRONEXT is looking far better than the primary players.
The lock down has turbo-charged at inventory flows with all channels They emerge with balance
this trend. “The pandemic has in the mix, including secondary sheets broadly similar to those
really served to accelerate it. More and inventory market and stopping with which they entered the crisis,
and more consumers are feeling product leakage that undermines the which makes them more powerful
comfortable buying online, and I brand equity.” relative to the primary market than
don’t I don’t see that shift going That sort of respectability has at any time in their history. The
back. The watch industry, the watch unlocked finance for the biggest major watchmaking groups are
manufacturers, everybody, they players. Watchbox was established responding, but it looks likely they
all need to find a way to embrace with a capital injection of $200 will have to join with the secondary
technology, embrace this change million, which has been invested in market players in some way, rather
that’s taking place in front of them, technology, infrastructure and one of than beating them.
6 WATCHPRO / JULY 2020 / watchpro.com
Your expert for certified luxury watches
+7.000 watches available Boutiques & Pick-up Locations worldwide
In-house certified watchmaking atelier Over 50.000 happy customers
Visit us at .CO.UK
London | Hong Kong | Paris | Berlin | Hamburg | Munich | Cologne | Frankfurt | Zug
Your expert for certified luxury watches
+7.000 watches available Boutiques & Pick-up Locations worldwide
In-house certified watchmaking atelier Over 50.000 happy customers
Visit us at .CO.UK
London | Hong Kong | Paris | Berlin | Hamburg | Munich | Cologne | Frankfurt | Zug
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