The grey market refers to the trading of original, authentic luxury watches outside of the official watch brand’s distribution channels. Although this concept may sound dubious, it’s not. It’s completely legal and shouldn’t be confused with the black market, which is the selling of fake or stollen watches. Even though buying watches from the grey market is totally legit, there are things you need to be aware of before you go jumping in.
Understanding the Term “Grey Market”
Everyone knows that the secondary market is one effective way to cut out a considerable waiting list for a desirable model. Sometimes, buying on this platform will save you money because the secondary market is often cheaper than buying from new. But watch manufacturers want to exert as much influence as possible over their distribution, and sometimes watches on the pre-owned market aren’t worn; they’re brand new and sold for no other purpose than to make a hefty profit. To acquire more control over their watches' distribution, manufacturers dictate their quantities to their authorised dealers. These dealers and jewellery stores often have to buy larger quantities than they can realistically sell. They’re also obliged to take on less popular models, which makes selling them particularly challenging, especially when they aren’t allowed to discount the stock themselves. With lots of stock sitting in the back of an authorised dealer’s store room, the only way to shift it is to sell it to other dealers who are not officially authorised as exclusive brand stockists. This is what we term the grey market. These third-party buyers sell these new watches at a significantly reduced price through their own channels. This sounds great for the consumer, right? But is it?
More often than not, grey market dealers will source these watches from abroad, which makes sense when you think about it. Particular models are not as popular in certain countries, plus some countries have lower VAT. It’s, therefore, profitable for a grey market dealer to do business this way. The same thing can happen with pre-owned watches, which causes a problem since there is very little regulation, and many watches can have missing parts, paperwork or boxes. Brands like Audemars Piguet and Rolex have been effectively repurchasing and servicing their watches so that they can be sold as certified pre-owned watches with an official warranty supplied upon purchase.
The Grey Market Today
The price of a grey market watch can be significantly lower or more expensive than the official list prices. It all depends on the model and how desirable it is. For example, a TAG Heuer Autavia watch, although popular, can be purchased for at least £1000 less than a brand-new one. However, a highly desirable Rolex Daytona or GMT-Master II will demand a higher price than the RRP price, where the consumer would have to go on a waiting list directly with an official stockist.
Many manufacturers disapprove of the grey market since they want to control their pricing. Platforms such as the secondary and grey markets are often a thorn in their side. Still, you could argue that the trading of watches this way is self-inflicted since the key element that drives prices up so high on the grey market is the limited availability (manufacturing quantities) of popular models. Some brands, like Audemars Piguet, have broken away from traditional distribution channels and opened their own boutiques. Rolex also purchased its own retailer, Bucherer. As such, fewer unworn watches end up on the grey market. Other companies blacklist anyone they catch buying a watch and immediately selling it to make a profit.
The problem with the grey market from a collector’s point of view is that as soon as you take a brand new watch out of its official distribution channel, it loses value in a way because its warranty is null and void. This can make the aftersales care particularly hard to obtain, as well as any repair work or servicing that needs to go directly through the official brand. Simply speaking, buying from a reputable pre-owned retailer is a safe and effective way to ensure you’re getting what you see advertised. Here at Charles Martin, we thoroughly service and test all our watches before they go on sale in our online pre-owned store. We’re also a certified repairer of several prestigious watch manufacturers like Omega and Rolex, and we offer our own warranty on all our genuine timepieces.
Want more information on a watch you’ve seen here at Charles Martin or want to organise a visit? Drop us an email on sales@charlesmartinwatchcompany.com or call us on 01889 560 002.