The world just received some controversial news coming all the way from Geneva. Watch industry king Rolex has announced that it will be providing a certified pre-owned program to its authorized dealers.
According to reports, it will be providing a certificate of authenticity most likely to come in the form of a new warranty card. However, there is no indication of whether or not that will come in form of an actual service card. At first glance, it’s safe to say that is an important power move for the brand as it gives them further oversight of their product in the secondary market. It is also important to understand that once Rolex allocates their products to their points of sale and the warranty cards of the sold watch are swiped in the stores they can no longer have access to what happens to that watch from there on out.
Market Control
Now let me clarify. Rolex Geneva, based on their newly collected data of the pre-owned watches entering their program, can make supply and pricing adjustments in the future. There really is no better way for a brand to have oversight of the performance of their products than having access to information of their products a second time around. This is primarily why I believe that decision was made for data purposes. The more information the control business has the better it is for them in the long term.
Now for lucky authorized dealers participating in the program I believe this will drive their revenue figures up if they play their cards right significantly.
Authorized Dealers
One key thing to factor in here is that not all points of sale are the same, and not everything is equal for all retailers based on various driving factors such as region, competition, store size, and history of your Rolex point of sale. Allocation of product varies. Watches of Switzerland or Bucherer simply have different allocation numbers and access to special products via gem set pieces, or the Cosmograph Daytona in comparison to your local mom-and-pop authorized dealer. In fact, Swiss dealer Bucherer will be the first to begin selling pre-owned luxury watches that are certified as authentic by the company at stores across Europe.
For example, as an authorized dealer (AD) you’re at the bottom of the Rolex totem pole and your allocation is 500 watches a year. Now, this is a rough figure, I don’t exactly know what the numbers are, but I would assume to start its right around there. Product limit and/or scarcity inhibit control of your overall performance. Rolex pulls the strings and gives you what they give you. This program ultimately gives you access to unlimited merchandise moving forward if you know what you are doing and actually know the prices of the secondary market.
Gray Market Effect
Now finally, most importantly, how does this affect us on the gray market? We’ve established so far that putting the control of secondary product for Rolex can influence their supply and pricing decisions for new product entering the stores. But how does this new environment change secondary pricing?
I believe in the short term we will not see it take great effect, but in the long term, it remains to be seen. There are simply too many factors that we cannot account for. Factors such as how much will this certificate cost? How good are these authorized dealers at pricing out watches that come in?
As I had mentioned before there really isn’t a lot of experience from your local AD in terms of buying, selling, and trading. One thing I could say for sure is that it’s going to make a very, very interesting environment when a Rolex AD has a watch, let’s call it a Daytona, in their showcase. Well not that they have Rolex Daytona’s in their showcase to begin with, but for $13,000 whereas the pre-owned product is up there for $35,000, that’s going to make for a very, very interesting environment.
So to summarize, Rolex, I have big respect for this power play. This was a big, big statement to the watch community, and I definitely anticipate the rest of the watch market to basically follow suit and do the same. We’ve seen a few other brands do it before but I guarantee nobody will do it as well as Rolex. I’m excited about the future, I believe that there is nothing to worry about, and we will still be here for many years to come to buy, sell, and trade Rolex.
See more:
How Does The Rolex Waiting List Work? Can it Be Avoided?
Rolex Watch Prices: Historical and Current From Actual Sales Numbers