Analysis of the online pre-owned luxury watch market and different online platforms

According to Bain & Company, the secondhand market for luxury goods rose to €26 billion in 2019. Of which approximately 78% -or roughly €20.3 billion- relates to the sale or jewelry and pre-owned luxury watches. In their report, Bain & Company do not make the specific split between watches and jewelry. However, in their January 2020 report KD Market Insights estimated the pre-owned luxury watch market at approximately €16.9 billion.

Globally, 30% of these purchases were digitally enabled – which would be approximately €6.1 billion for the sale or jewelry and pre-owned luxury watches (and approximately €4.5-€5 billion for pre-owned luxury watches alone). Of which the majority is sold in Europe (55%) and the US(27%), and 18% through the rest of the world (for example Asia).

The COVID-19 pandemic will undoubtedly have an impact on off- and online sale of luxury products, and as such also on the sale of luxury pre-owned watches. Bain & Company states in their 2020 press release regarding the sale of luxury pre-owned watches online during the COVID-19 pandemic: “All categories have seen declines, with accessories showing the most resilience and watches declining the most due to a lack of online sales platforms to offset the shutdown of physical channels”

We believe that innovative players in the online segment that sell luxury pre-owned watches specifically will be one of the key drivers in recovering this market, and will take over part of the former role of physical channels. This belief is supported by a report of McKinsey & Co called “The age of digital Darwinism” where McKinsey & Co project that sales of personal luxury goods online, including pre-owned luxury watches, will more than triple (>300% growth) from 2015 to 2025.

We can conclude that the online market for luxury products such as pre-owned luxury watches is growing at an incredible pace. And online platform for pre-owned luxury watches is taking over a part of the current market of brick and mortar stores (i.e.: physical stores and shops). We have also seen the introduction of Certified Pre-Owned and becoming more popular online and offline. We believe online platforms should continue to innovate to keep up with this trend, and to ensure that customers can safely purchase that amazing authentic pre-owned luxury watch online. By improving the full customer experience route from the moment you purchase a watch until you receive it, and in excellent after-care. 

Looking at the current online market for luxury pre-owned watches, we can distinguish between a variety of different types of platforms. Each with their own advantages and disadvantages. We have listed the three most common types of online platforms below.

Online marketplaces, such as Chrono24, CataWiki and eBay

The online platforms selling the most number of pre-owned luxury watches by far are platforms such as eBay and Chrono24, being marketplace platforms.

Marketplace platforms such as eBay and Chrono24 do not acquire their own stock, but merely connect buyers and sellers, whereby the respective platform earns a commision for each sale made through their platform. Depending on the platform and several other factors such as transaction fee for the payment method chose the commissions range between (normally 3%-15%) and are determined by the platform. Although the most common commission percentages paid by sellers online via these platforms is north of 5%.

The buyer has a strong responsibility to ‘vet’ the seller of a watch. If you have a Chamber of Commerce number, sign the trusted sellers guidelines, and send a copy of your ID – any seller can obtain that authorized seller stamp at Chrono24 for example. This is something that buyers should be aware of, as such a stamp says nothing about the quality and authenticity of an individual watch.

To help you understand how these platforms work we have listed the most important advantages and disadvantages for marketplace platforms to buy a pre-owned luxury watch here below:

Advantages

-     Highly diverse offer of watches. Platforms such as eBay and Chrono24, especially combined, have a very large offer of different brands and models. Depending on the rarity of the watch, your chances of finding the specific piece you are looking for are actually quite solid.

-     Comparability of watches and prices. Given the diverse offer of watches, you can relatively easy compare the different models, prices  and characteristics. This will help you in finding that perfect watch that matches your personal taste and preferences.

-     Worldwide access for sellers and buyers. These marketplaces provide worldwide connections between sellers and buyers. This means sellers can sell their watch to anyone and anywhere. Which is also applicable to buyers, who can buy their watch from every continent at any time as these marketplaces are open 24/7 and have apps that support access to the watch market even when you are travelling or waiting somewhere.

 

Disadvantages

-     Absence of certainty over authenticity. Fake watches, including “Frankenstein watches” have been sold, and are offered today, through eBay andOther platforms. There are some online platforms that promote their vetting of watches, for example CataWiki, but these are infamous for selling fake watches as well. Amsterdam Vintage Watches, a well known quality seller of vintage watches, has issued a video on YouTube where they expose CataWiki on selling fake watches on their platform. In this video they also expose the vetting procedures executed by CataWiki, which merely comprises questions about the watch that are answered by the seller and never verified. For example they ask when the last revision was, if the watch is waterproof and if the timekeeping is still accurate. And again, nothing is verified. They even say their buyers should ask good friends and relatives who know a lot about watches to help them check the watch before buying. But why do they then have experts who vet the watch and seller before they are put up for action online? Nevertheless CataWiki takes a significant commission of 15%! (watch the video (only in Dutch) here: https://www.youtube.com/watch?v=ImPhQBScsM4)

-     Limited to low certainty over quality. The parties offering watches on platforms such as eBay and Chrono24 can range from renowned pre-owned luxury watch dealers to people who have inherited a watch and are looking to sell it. Consequently, the quality of the watches offered on these platforms can range from excellent to very poor (for example watches with water damage). But as a buyer you can never make a accurate estimate of the quality based on asking questions and looking at photo’s. If you know a watch maker, ask him or her if he can decide what the quality (and even authenticity) is of a watch based on a photo. The watchmaker will tell you he can only tell you if a watch is in bad shape when it shows case or lugs damages, but the inside remains a question and so does timekeeping accuracy and waterproofness.

‍

Online platforms that have their own stock of watches

 

A second type of online players that could be distinguished, are players that acquire their own stock of pre-owned luxury watches through various routes, and sell these themselves. Examples of such platforms are Watchfinder, Watchbox, Bob’s Watches and CHRONEXT. These parties normally have the in-house knowledge or expertise to authenticate a watch, or have the network to have it authenticated for them. Watches are sometimes serviced if needed.

These types of platforms have to pre-finance all the watches they have on stock, and as such are more limited in terms of offering compared to the market place platforms. Depending on the working capital capacities of respective platform.

The most important advantages and disadvantages for online platforms who have their own stock are listed here below:

 

Advantages

-     Authenticity. These platforms normally have the in-house knowledge to properly verify if a watch is authentic, and also whether a watch is not a Frankenstein watch. Watches are most often serviced if needed, which potentially could also improve the overall condition and quality of the watch.

-     Warranties. Some of these platforms, such as CHRONEXT, give warranties over all the watches they sell for a certain period.

 

Disadvantages

-     Higher prices and very high premiums. We experienced that the price of pre-owned luxury watches over these types of platforms can vary widely, and on average are on the higher end of the bandwidth. This is primarily driven by the authentication process, servicing, and pre-financing of these watches by the company – for which these platforms will sell watches against a higher mark-up.

-     Limited supply. Supply on these platforms is more limited compared to marketplace platforms, but generally wider compared to physical stores and shops that also sell online. If you are looking to buy a very specific watch (for example a vintage Rolex Daytona or even a Datejust with a specific dial and bracelet combination) you might have to wait quite a bit before you can find one on these platforms.

 

Brick and mortar boutiques also selling online

The last type of online retailer are the brick and mortar stores that, as an extension of their offline business, also sell luxury pre-owned watches online. A good example of such a store here in Amsterdam is for example Amsterdam Vintage Watches.

The most important advantages and disadvantages for brick and mortar boutiques that also sell online are listed here below:

 

 

Advantages

-     Authenticity and Quality. Even though we still highly recommend you to properly research a seller, also in case of physical stores selling their watches online, on average it should be noted that in most cases the authenticity and quality of these watches is good. Make sure to do some online research on the seller, there should be plenty of reviews out there.

-     Option to try on. With platforms that also have physical stores, it is easier to go to the respective store to try the watch on your wrist.

 

Disadvantages

-     Higher prices and very high sales commissions. Buying your pre-owned luxury watches from platforms that also have brick and mortar stores is the most expensive option compared to the other options, as they have to make sufficient margin to cover these housing expenses. There might be a bit more room to negotiate, too.

-     Limited supply. Similar to the online platforms that have their own stock, supply is therefore more limited compared to marketplace platforms. In terms of supply you are dependent what they have on store, or make sure to get on a waiting list at these companies whereby they can contact you when they have that specific watch on store that you are looking for.

We realize that there are platforms that are slightly different than the three types of online platforms discussed in this article and that there are more nuances, but we note that these have a relative small portion of the total market share of the online market for pre-owned luxury watches.

The advantages and disadvantages mentioned in this article might also vary over different platforms, but should give you a general understanding of what you can expect and what to look (out) for.

If you have spotted a watch on a marketplace platform, or any other platform for that matter, and you want to be 100% sure that you buy an authentic watch. Then feel to reach out to us at Relleb.com and be sure you buy an authentic watch!