Fun with maths - grey market and waiting lists

[EverCloserUnion]

Hello all,

I’ve been thinking about the relationship between Rolex waiting lists and the spread between MSRP and grey market prices.
Could we develop a model to ‘predict’ the waiting list length from the MSRP / grey difference?

I’ve had a bash at it. My assumptions / and approach:

Data sample: I focused on the OP 41 (available in the UK – 2024 watches) with currently available dial colours as the differentiator. I mined the data from Chrono24 and took an average (mean) for each dial colour and calculated the ‘spread’ between MSRP and the average grey market price.

‘Known’ waiting times: I put myself on the waiting list for an OP41 some months ago (prior to buying my DJ41), so I’ve used the waiting times as relayed to me by the SA (circa 2 years for silver, up to three years for green, and around 7 years for the celebration).
As far as the model goes, I’ve assumped the position of a potential buyer with ‘minimum standing’ with the AD (positioned to be seriously placed on the waiting list but not of sufficient standing to queue jump).

Methodology:


Polynomial interpolation: Used to populate the unknown data points outside the ‘known’ years.
Value at zero years: A purely theoretical Rolex which is available on demand at just about any AD is assumed to have a MSRP / grey spread of -33% (the average day one loss applicable to competitor watches from Omega, Breitling, etc that are available from dealers with zero wait).
Terminal value: Taken to be 100% spread at 10 years (to avoid bumping up against price elasticity of demand issues).

Testing beyond OP41:

I used the 2024 SS Daytona as an example (again, 2024 watches available in the UK). The MSRP / grey spread is 63% (percentage difference).
According to Luxury Bazaar (based on scraping of Reddit Rolex waiting time spreads), the waiting time for a Daytona is one to five years (so assume five years for a customer with minimum standing with an AD).
You’ll see from the chart / table that the model (based on the price spread) does indeed point to a waiting time of circa five years.

Formula / polynomial chart:





Output table:

[PenDelicate]

Excellent!

Even more excellent if you could update the model with data points of buyers from ADs.

I bought a two-tone Daytona in 2023 when the grey market had it for sale at 20% over MSRP. I waited one year.

[dmash]

lol 1-5 year for a SS Daytona is not accurate at all.

LEGIT customers with huge spend can’t even get one after 5 years at some ADs. I can speak firsthand from that.

1-5 years with zero purchase history would be less than a 1% chance, at almost every dealer, worldwide.

[EverCloserUnion]

Originally Posted by dmash

lol 1-5 year for a SS Daytona is not accurate at all.

LEGIT customers with huge spend can’t even get one after 5 years at some ADs. I can speak firsthand from that.

1-5 years with zero purchase history would be less than a 1% chance, at almost every dealer, worldwide.

As stated, the model is based on 'minimum standing' at an AD: the standard to get a serious place on the list but not to get what ever you want in a matter of days.
So no... no assumption of a zero spend walk-in getting a Daytona.

[EverCloserUnion]

Originally Posted by PenDelicate

Excellent!

Even more excellent if you could update the model with data points of buyers from ADs.

I bought a two-tone Daytona in 2023 when the grey market had it for sale at 20% over MSRP. I waited one year.

Many thanks - do you mind if I ask about your status when you approached the AD? Decent spend history?

[PenDelicate]

Originally Posted by EverCloserUnion

Many thanks - do you mind if I ask about your status when you approached the AD? Decent spend history?

0 spend-history.

Two-tone Daytonas have always been the easiest to get, so a one-year wait list is even a little long, even given the height the market had climbed to.

[dmash]

Originally Posted by EverCloserUnion

As stated, the model is based on 'minimum standing' at an AD: the standard to get a serious place on the list but not to get what ever you want in a matter of days.
So no... no assumption of a zero spend walk-in getting a Daytona.

Ahh. I complete missed that sentence. Should be ashamed as I deal with biostats/medical literature constantly

Ok that’s reasonable, good data here

[fly4food84]

I like it, except we need to sadly make it more complicated by using some coefficients or something.

Example: customer spend brackets.

The more I think about it the more I think the spend starts after you generate “interest/register” in a watch. All the money you spent prior to that is weighed less.

I texted my SA last week and he said he’d add me to their register then came back and offered me a blue dial OP (completely random). Almost as if… buy this and maybe I’ll really keep you in mind - which is likely true.


Sent from my iPhone using Tapatalk

[EverCloserUnion]

Originally Posted by fly4food84

I like it, except we need to sadly make it more complicated by using some coefficients or something.

Example: customer spend brackets.

The more I think about it the more I think the spend starts after you generate “interest/register” in a watch. All the money you spent prior to that is weighed less.

I texted my SA last week and he said he’d add me to their register then came back and offered me a blue dial OP (completely random). Almost as if… buy this and maybe I’ll really keep you in mind - which is likely true.


Sent from my iPhone using Tapatalk

Those are great points. And you're right... it needs more complexity to bring nuance. Perhaps a bit too ceteris paribus right now.

[ArtNouveau]

Just my anecdotal evidence from dealing with the same AD since 2017.
They are a high volume Rolex only store, they know what to expect in a calendar year, and their policy is not to make “lists” for any model they can’t realistically expect to deliver within two years.
We do hear of occasional outliers where someone suddenly gets a call on something they’ve almost forgotten about but in general I believe if an AD says five years to get something they are blowing you off. The real answer is you’re not getting one.

[rolexpatek363]

The watch market is collapsing. At least for Rolex.

[EverCloserUnion]

Originally Posted by ArtNouveau

Just my anecdotal evidence from dealing with the same AD since 2017.
They are a high volume Rolex only store, they know what to expect in a calendar year, and their policy is not to make “lists” for any model they can’t realistically expect to deliver within two years.
We do hear of occasional outliers where someone suddenly gets a call on something they’ve almost forgotten about but in general I believe if an AD says five years to get something they are blowing you off. The real answer is you’re not getting one.

That's really interesting to me. Thinking about it, I'm not sure I've met anyone who's waited more than two years. I was quoted 24 months when I first enquired about an OP. One colleague of mine waited two years (and then received) a two-tone DJ, while a second got a DD after 18 months.

[EverCloserUnion]

Originally Posted by rolexpatek363

The watch market is collapsing. At least for Rolex.

I wonder if the sheer amount of pent up demand will soften the landing, or potentially cause a small bounce.

[rolexpatek363]

I think the problem (if it is a problem) is that demand has evaporated. No-one's interested. Same for sports cars.

[4reRlxGuy]

Originally Posted by rolexpatek363

I think the problem (if it is a problem) is that demand has evaporated. No-one's interested. Same for sports cars.

This

Have never seen "new" Ferraris available at msrp (296) or cpo below msrp (SF90) in 25 years of collecting exotics.

[EverCloserUnion]

Originally Posted by 4reRlxGuy

This

Have never seen "new" Ferraris available at msrp (296) or cpo below msrp (SF90) in 25 years of collecting exotics.

Do you have thoughts on why that might be?
Economic challenges or changing tastes, perhaps?

[watchwatcher]

Not my idea of fun, buy hey, to each is own.

[brandrea]

Originally Posted by watchwatcher

Not my idea of fun, buy hey, to each is own.

Have to agree

[Skee-Bum]

Originally Posted by rolexpatek363

The watch market is collapsing. At least for Rolex.

Tell the AD’s that. I have been treated better buying very expensive cars, then wanting to buy a watch for myself. Such is life, it will work out.

[rolexpatek363]

Buy Cartier!

https://watchcharts.uk/watches/indexes

[Sublovin]

Originally Posted by rolexpatek363

The watch market is collapsing. At least for Rolex.

I said many times on here a few years ago that we were in a bubble and was criticized for it. There is a softening of the secondary market, but I don’t consider that the “watch market” is collapsing, as I feel that watches will continue to fly out of AD’s at full retail price. The effect will be on the secondary market only. Let’s not forget that several years ago Subs sat in cases and you could easily get 15% discount on nearly everything but Daytona’s. Even then, the market was strong and new AD’s were opening. There remains a strong interest in watches from Gen Z, and the number of people waiting to buy at MSRP from an AD will keep the cases empty in perpetuity.
There’s a big difference between the over inflated grey market and the watch market as a whole.

[SLWoodster]

I agree with you. Still a huge gap of retail demand between gray market and retail market.

The collectors from the last 5 years and even many older collectors are prisoners of the moment. Most don't even shop gray but use it to try to predict availability at the AD.

In 2019, prior to coronvavirus, there were available watches at every single AD, just not the ones the stainless GMTs, stainless subs, daytonas most online forum goers are looking for. Some of the cases were nearly full.

Once the dust settles, the retail price will still be higher than 2019, we will have more Rolex customers than 2019.

Originally Posted by Sublovin

I said many times on here a few years ago that we were in a bubble and was criticized for it. There is a softening of the secondary market, but I don’t consider that the “watch market” is collapsing, as I feel that watches will continue to fly out of AD’s at full retail price. The effect will be on the secondary market only. Let’s not forget that several years ago Subs sat in cases and you could easily get 25% discount on nearly everything but Daytona’s. Even then, the market was strong and new AD’s were opening.
There’s a big difference between the over inflated grey market and the watch market as a whole.

[1William]

Interesting.

[Littlelad2]

Originally Posted by ArtNouveau

Just my anecdotal evidence from dealing with the same AD since 2017.
They are a high volume Rolex only store, they know what to expect in a calendar year, and their policy is not to make “lists” for any model they can’t realistically expect to deliver within two years.
We do hear of occasional outliers where someone suddenly gets a call on something they’ve almost forgotten about but in general I believe if an AD says five years to get something they are blowing you off. The real answer is you’re not getting one.

I agree about those wait times—sometimes they tell you more than you want to know.

I looked around Goldsmiths this weekend while out shopping with the family when someone from the store asked if they could help me with anything. Jokingly, I pointed to a watch (126610LV) and said, "Sure, if you're willing to sell me that." I got the standard reply and quoted something like a 3 to 5-year wait, which was higher than expected. So, I asked what the timings were on GMTs and then a Daytona. I swear she said something like 25 years and then 50 years for a Daytona.

If that’s not a polite way of saying "not for you," I don’t know what is.

Thankfully, I’ve switched to another AD where the expectations are clearer based on my history with them.

[codecow]

I know at my AD my wait time for a SS Daytona several years ago was zero. They had some number available for VIP clients in a safe, even older models. May or may not be the case now, but I think it would be a very quick wait for me.

[Calatrava r]

This data to me is of no help in my view. The buying process is so AD dependent, has a large personal interaction dynamic and good timing aspect which cannot be simplified to basic math equations. Be nice and nice things happen.

[Sublovin]

Originally Posted by SLWoodster

I agree with you. Still a huge gap of retail demand between gray market and retail market.

The collectors from the last 5 years and even many older collectors are prisoners of the moment. Most don't even shop gray but use it to try to predict availability at the AD.

In 2019, prior to coronvavirus, there were available watches at every single AD, just not the ones the stainless GMTs, stainless subs, daytonas most online forum goers are looking for. Some of the cases were nearly full.

Once the dust settles, the retail price will still be higher than 2019, we will have more Rolex customers than 2019.

I remember in 2009, one of local AD’s still had a NOS aluminum bezel Sub sitting in the case. He offered it to me for 15% off of the 2007 retail price! I bring this story up quite frequently with watch people, because at that time the watch market, and specifically the Rolex market, was considered very strong!
What we have seen the past handful of years IMO was highly unusual. I don’t think that a return to what I am describing would be a sign of struggle for the market, but rather a return to normalcy.
Rolex has been a strong brand for decades. Owning a Rolex (when compared to MSRP) has proven to be a safe place to keep money over time.
The crazy flips and prices are a recent thing. As for aftermarket resellers, they will simply adjust to the market. Used car dealers remain an important part of the industry regardless of pricing. The only thing that may go away will be the ridiculous prices for new “great market” watches, which I think is great!
Let Rolex AD’s sell the new stuff, and the aftermarket resellers can sell the used and collectible stuff.

[EverCloserUnion]

Originally Posted by SLWoodster

Most don't even shop gray but use it to try to predict availability at the AD.

Thank you... this was very much the point of the model. While the MSRP / grey spread is a strong indicator of availability (with quoted waiting times a useful proxy for the achievability of a purchase), conversely AD availability should be inversely proportional to the scale of the MSRP / grey spread (greater ease / lower spread).

[GrailTime]

I'm no expert on statistical modeling, but i'm not really sure how the "waitlist" can be predicted in anyway.

Way too many variables, especially when what an AD receives is sporadic and who they call is based upon spend history, relationship, potential future spend history, your job, the net worth that the sales assistant guesses you have and generally if your face fits.

[GrailTime]

Originally Posted by rolexpatek363

The watch market is collapsing. At least for Rolex.

It is getting back to "normal" after an unprecedented spike in demand during COVID.