As waitlists for popular models grow ever longer, the gray market goes mainstream to meet rising demand.
What is the gray market?
To start, let’s discuss what constitutes the gray market for watches. The gray market, simply put, includes any new or unworn watch purchased from a seller who is not an authorized dealer for a particular brand. To illustrate, a timepiece purchased from the Rolex boutique on Fifth Avenue in New York City would be a primary market purchase. In contrast, the same watch purchased in the Diamond District a few blocks away would be a gray market purchase.
This market arose from the imbalance between growing demand and largely stagnant supply. Gray market dealers who are unaffiliated with the brand purchase popular watches and resell them in their stores or online at a higher price. You’ll hear the term “above retail” used to describe these price discrepancies.
The gray market for watches is similar to the gray market for items like cars or sneakers. I even purchased my go-to pair of Persol sunglasses from a gray market dealer almost a decade ago.
The Gray Market Does Have Deals
Most people associate the gray market with exorbitant prices well above retail, and for many coveted models, this is true. However, one benefit of the gray market is that several watches from desirable brands actually trade below retail.
Omega, for example, is cheaper on the gray market than in boutiques. This includes Seamaster models, dress watches, and even the mighty Speedmaster. You’re also better off purchasing the Bvlgari Octo Finissimo, a future classic, on the gray market. If you like Cartier, Breitling, or IWC, the gray market is your best bet.
In fact, I purchased a military re-issue on the gray market last week and saved over 30%. So, yes, popular watches from Rolex, Patek Philippe, and Audemars Piguet command a premium on the secondary market, and investors only amplify this. Still, deals are out there, and they’re quite easy to find.
Is it safe to buy watches on the gray market?
Once the gray market was established, larger companies began moving in and providing marketplaces with a greater sense of quality, accountability, and consistency. Some of these companies sell a little bit of everything, and others (including Chrono24) specialize in watches.
The reality of these large companies competing for (gray) market share provides the proof of concept that quality products can indeed be purchased safely on the gray market, even when dealing with large volumes of high-value items across international borders.
Survival of the Strictest
An important point to keep in mind is that the success of online marketplaces is directly determined by the level of service and security they can provide their customers. If gray market dealers are free to scam buyers with impunity, the buyers will disappear, and the platform will crumble. Competitor companies in this space constantly try to out-police each other, adding more and more protections and eliminating surprises. Chrono24 alone has dozens of employees dedicated to monitoring dealers and assisting buyers.
Let’s look at some of the specific tools Chrono24 uses to ensure a smooth purchase experience. The first is our dealer registration department. This team investigates each potential dealer looking to join the platform to confirm whether they consistently deliver quality products and have an excellent track record with customers. After the dealers pass certain tests and join the platform, they are under their constant supervision.
What if you’d like to buy a watch but want to talk to an actual human about it? Chrono24’s customer support team speaks over 20 different languages to assist buyers before, during, and after their purchase. If you’re looking for a high-value watch over $10,000, our new Private Client Advisor service offers informed guidance for the purchase of exclusive timepieces.
Finally, the Buyer Protection program ensures that you receive exactly what you ordered or your money back. With the free Escrow Service and the 14-day return policy, dealers don’t get paid until we know that you have received your watch and want to keep it.
The gray market will always be there in some form, but at the risk of sounding cliché, it also exists in varying shades of gray – and they are getting lighter all the time. In fact, the more sales a platform like Chrono24 can safely complete, the more it can re-invest in further developing its safety net.
While the gray market isn’t a perfect system, it does work. By “work,” I mean you could have a new Rolex on your wrist by the weekend!
Let’s wrap this up by clearing the air a bit: A lot of this article portrays gray market dealers almost like programmed automatons. The reality is, however, that these dealers are individuals with families and employees to look after. All of that is put at risk with the sale of a single inauthentic watch. A business that has been built over decades could be gone if even one buyer gets spooked.
If you look beyond the security measures, the dealer vetting process, the monitoring tools, the customer support network, the escrow account, and the return policy, this is an industry of people serving people. Buyers today are more informed and better equipped at detecting fraudulent merchandise than ever before. The train is speeding toward legitimacy, and there’s no money in being left behind.