The Sleeping Giant Is Wide Awake: The Booming Pre-Owned Luxury Watch Market
Once relegated to down market pawnshops or ultra-exclusive auction houses, the pre-owned luxury watch market has drastically transformed over recent years to become a booming industry. Thanks to the rise of e-commerce, new consumption habits, growing watch enthusiast communities, and an upsurge in watch-focused media, savvy entrepreneurs were quick to establish platforms dedicated to the sale of secondhand fine watches. And the bet has paid off.
Opting for used watches is no longer tainted with shame but instead, buyers are happily flaunting the fact that they either saved a ton of money buying pre-owned or were able to source hard-to-find discontinued models. The exponential growth of the pre-owned luxury watch market has subsequently attracted the attention of some of the biggest watch manufactures in the game, who are devising their own strategies to grab a piece of the pre-owned pie.
The Size and Growth Rate of the Pre-Owned Luxury Watch Market
While there are no precise numbers out there just yet, the estimates of the size and growth of the pre-owned luxury watch market are impressive. For instance, in the Trends Report 2018 published by the Fondation de la Haute Horlogerie (FIHH), financial consultancy Kepler Cheuvreux estimates the global market for second-hand watches (including auction house sales) to be worth $5 billion. Kepler Cheuvreux also maintains that the pre-owned market has outperformed the market for new watches since 2013 and continues to grow by about 5% a year. The same report projects that the sales of used watches will either equal or surpass the sales of new watches within five years.
Reginald Brack, executive director and industry analyst for watches and luxury at NPD Group, has an even more optimistic view of the pre-owned high-end timepiece market. He was quoted in an Associated Press article saying, “It’s bigger than people think.” And when asked about estimates that put the pre-owned market three at times the new luxury watch market (which is valued at about $10 billion in the U.S.), he said, “I wouldn’t disagree with that statement. And it’s only getting bigger.”
How Watch Brands Are Reacting to the Pre-Owned Market
With size assessments and growth projections like these, it comes as no surprise that a slew of big watch brands are shifting their focus from only selling new watches to include the possibility of secondhand watch sales too. But it is not just for monetary reasons that the brands want in. To safeguard their pristine reputations, luxury watch brands want to exert control over the authenticity and quality of the used watches being bought and sold that bear their names.
When asked about his estimates, Audemars Piguet CEO, François Henry Bennahmias, said in an interview with Reuters in 2018 that the pre-owned watch market could end up being worth 10 to 20 times the new watch market. As such, Audemars Piguet announced last year that they will introduce a subsidiary business dedicated to selling and buying secondhand AP watches.
Likewise, other brands such as Breitling, H. Moser & Cie, F.P. Journe, and more also declared an interest in expanding into the secondhand watch market. MB&F took the plunge last summer by launching a website to sell certified pre-owned MB&F watches. On the other hand, rather than doing it themselves, Zenith watches teamed up with TrueFacet — an online marketplace for secondhand watches and jewelry — a few months ago to sell certified pre-owned Zenith watches.
The biggest move to date however, comes from Richemont Group (parent company of premium watch brands like Cartier, Panerai, A. Lange & Söhne, Jaeger-LeCoultre, IWC, Piaget, and others) when they purchased Watchfinder.co.uk, a U.K.-based online platform dedicated to buying and selling used watches. While the sum was undisclosed, there are unofficial reports that the sale was valued at around $115 million.
The Big Players in the Pre-Owned Watch Market
The newfound attention from watch manufactures is in part a result of the big bottom lines of some of the secondary market’s largest players. Along with some luxury consignment specialists like the TheRealReal and Vestiaire Collective that carry a collection of pre-loved watches, there is, of course, the juggernaut of online auctions, eBay.
As a matter of fact, Paul Altieri, CEO and Founder of Bob’s Watches, the leading online retailer of pre-owned Rolex watches, told WatchPro in an interview that he estimates that eBay alone does almost $1 billion a year in just secondhand Rolex watches. In that same interview, Altieri stated that his company — with an almost exclusive focus on used Rolexes — was on track to do $42 to $45 million in sales for 2018.
Hamilton Powell of Crown & Caliber, an online retailer of pre-owned luxury watches, revealed similar figures to Entrepreneur. The CEO confirmed his company’s 15,000th transaction in early 2018 after six years in business and projected that his team would achieve $45 million in sales by year’s end.
Danny Govberg, whose family has been in the (new) watch and jewelry business in Pennsylvania since the early 20th century, set his eyes on the exploding pre-owned watch market by establishing WatchBox online. Forbes reports that after Watchbox achieved $200 million in sales, the company raised $100 million from outside investors in 2017 in preparations for global expansion, complete with physical locations in Asia and Europe.
According to Mark Miles, a founding team member of premier luxury watch buying service WatchPayer, the demand for pre-owned luxury watches has skyrocketed over the decade and will outgrow the new luxury watch market within the next five years. “We’ve had such a dramatic increase in demand for used luxury watches from our network of private buyers and collectors that we decided to launch WatchPayer to help us meet that demand”. Although specific numbers were not available, according to Mark the increase in pre-owned luxury watches being sold on WatchPayer has a lot to do with a big transfer of property from baby boomers to younger generations. “As baby boomers pass their luxury watches on to their kids and grandkids these pieces are entering the pre-owned market at a growing rate. This trend will likely continue for years to come.”
Most, if not, all watch enthusiasts have visited Chrono24 at least once when hunting down a particular pre-owned watch. The German company is the leading global online marketplace for buyers and sellers of vintage and pre-owned watches and facilitates transactions across 90 countries. Unlike Bob’s Watches or WatchBox, Chrono24 does not carry an inventory of watches. Chrono24 CEO, Tim Stracke, told WatchPro last year that his company was projecting around €1.2 billion (approximately $1.3 billion) worth of transactions for 2018, which is 20% more than the year before.
Hot on the heels of Chrono24 is marketplace Chronext, which according to TechCrunch, recorded $60 million worth of transactions in 2017 and was set to see $130 million in 2018. To fund their rapid expansion plans, Chronext raised $34 million in their second round following a previous round of $16 million.
Even watch-focused media outlets, such as Hodinkee and Revolution, have their own pre-owned watch sales channels, leveraging their captive audience of readers. Yet, for now they are more focused on selling vintage timepieces, similar to websites like Analog/Shift, 10PastTen, and HQ Milton.
I Want to Buy a Pre-Owned Luxury Watch, Now What?
For first time buyers, jumping right into the secondary watch market can be intimidating. There is always the chance of being cheated with a counterfeit watch or receiving a watch that is in subpar condition. This is where the advice “buy the seller” comes into play. Buying from a trusted and popular source may come at a slight premium, however, since companies dedicated to the sales of pre-owned watches stake their reputation on the quality and authenticity of their products, it is worth spending the extra coin. The same rationale goes for selling a watch in the pre-owned market — it is typically less of a headache to go with one of the bigger players with plenty of experience.
With vast amounts of information online dedicated to watches and watch collecting, it is a relatively simple process to see the current market price and/or demand of a particular timepiece. Cross-referencing prices listed on marketplaces, retailers, and auction sites is a good place to start. To dig deeper into the history of watches, there are plenty of reference websites, watch forums, and media outlets dedicated to the pursuit of horology.
Contrary to popular belief, the majority of luxury watches do not appreciate over time. A very small percentage of watches actually increase in value, and if they do, it can take decades to see to a respectable return. As a matter of fact, buying pre-owned is the way to offset the initial depreciation that occurs when a new watch leaves a boutique. It is much easier to recoup the value of a secondary watch compared to a brand new watch.
It goes without saying that there are of course exceptions. Take for instance a handful of recently released Rolex steel sports watches that are currently selling more than double their retail value because global demand far outpaces supply at authorized dealers. It is worth mentioning that some watch brands — most notably Rolex and Patek Philippe — hold their value better in the secondary market than others. The demand for secondhand and vintage Rolex and Patek Philippe watches are further fueled by high-profile auction results such as the $17.8 million sale of Paul Newman’s Rolex Daytona and the $11.1 million sale of a steel Patek Philippe perpetual calendar.
Select Omega Speedmaster, Audemars Piguet Royal Oak, Breitling Navitimer, and Vacheron Constantin models are popular in the vintage watch market too. It is interesting to note that men’s watches currently outperform ladies’ watches in the secondary market, by far. Because of the lower demand, the difference in price between new ladies’ luxury watches and used ladies’ luxury watches is considerable.
But at the end of the day, the best pre-owned luxury watch to buy is one that will be worn and enjoyed regularly — regardless of popularity or future price potential.