17/08/2020
Grey Market Watches | What Are They & Should I Buy One?
Everyone has heard of a black market or even The Black Market. In movies and TV shows.
The Black Market is often portrayed as a network of shady figures moving guns, drugs, and other illegal items across borders and into the hands of bad guys. In reality, the black market is mostly stolen goods and knock-off products being sold as the real thing.
Let us talk about but equally important to the luxury watch buyer is the grey market. The grey market is made up of the legal but sometimes ethically dubious watch dealers who sell high-end timepieces at massive discounts. Even the wealthiest shopper is going to appreciate finding a Rolex watch for 40% off the list price.
This is an example of what you might find on a grey market website. Before making that purchase, though, it’s important to understand exactly what the grey market works and how it affects the luxury watch industry.
The grey market is not a place or thing. It’s the term given to retailers (usually online) who purchase the unsold product and resell them at a huge discounted price. Usually, these retailers buy their product in bulk from authorized watch dealers who have been unable to move their inventory and are trying to recoup losses.
Grey market retailers are not doing anything illegal. Thus, which is why they not only don’t fight hard against the perception of being resellers, they openly discuss their business practices. For some people – both consumers and watch dealers – the grey market provides a necessary, even welcome service. To luxury brands, who would prefer to work exclusively with authorized dealers, the grey market represents a complex quandary.
For luxury watch brands (think Rolex and Tag Heuer, among many others), authenticity is their greatest asset. There is no end to the number of counterfeiters in the world making cheap yet surprisingly accurate fakes and knock-offs. To ensure the value and uniqueness of their creations, watchmakers need to minimize where authentic watches can be attained.
This is where authorized dealers come in. Watchmakers make exclusive arrangements with certain dealers to sell their timepieces. For the watchmakers, this arrangement makes it easier to undermine counterfeiters. For the dealers, they get to claim a certain level of exclusivity in the products they sell. And for the buyers, they can feel 100% secure that they’re getting the real deal.
Where do grey market watches come from?
As mentioned earlier in this article, most grey market watch retailers get their products from authorized dealers. There are two reasons behind this. The first part is when authorized dealers make their arrangements. They are often required to buy the products in bulk and are not permitted to sell the unsold product back to the watchmaker. If a large amount of inventory doesn’t sell, the dealers have to find something to do with it.
The second part is the recent downturn in the luxury watch market. Though wristwatches have remained surprisingly popular in the age of mobile phones, luxury watch brands are hurting. The reasons for that downturn are multifaceted. However, the bottom line is that many authorized dealers are stuck with an expensive product. The grey market offers a plan solution.
Should I buy from a grey market?
Watchmakers would, for the most part, prefer you didn’t buy from the grey market. Similarly, authorized dealers would rather sell their product to the consumer at full price than unload their inventory for a massively reduced fee. Yet, the watches being sold on the grey market are real, not counterfeits, so why wouldn’t the average buyer shop there?
However, watch sold by an unauthorized dealer will have its warranty voided. The luxury brands all offer warranties on their products. Does that really matter?
In 99.9% of cases, No, it does not.
Firstly the warranty only covers manufacturing defects...nothing else.
Secondly, Most Swiss brand watches have a reputation for reliability which is second to none.
It is highly unlikely that you will have need of any warranty support in the first 2 years, or the first 10 years for that matter.
What are the grey market websites?
There are numerous grey market websites that operate exclusively in luxury watches. The US-based Authenticwatches.com and IconicWatches.co.uk, based in northern England, are two of the biggest names. They both offer guarantees about the authenticity and quality of their products. Jomashop.com, in New York City, has been selling luxury watches, as well as jewelry and bags, for over three decades.
Perhaps the biggest grey market reseller is Chrono24, a global market that is so large, luxury brands have started to accept them as an inevitability. One luxury brand, Frederique Constant, has even gone so far as to work directly with the website, selling their own product at the original, full list price. That’s a stark sign that luxury watchmakers have seen the writing on the wall.
If you are interested in reading more about the unauthorised luxury watches market read these unbiased articles from Reuters and the Financial Times
https://www.reuters.com/article/us-swiss-watches-grey-market/gray-market-has-become-a-necessary-evil-for-luxury-watchmakers-idUSKBN17E2E8
https://www.ft.com/content/4a4fc942-582d-11e7-80b6-9bfa4c1f83d2
https://www.heuritech.com/blog/articles/luxury/regain-control-gray-market/
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