What if there were no grey market?

[MRBolton]

I heard an interesting theory in a Bark & Jack video recently regarding the supply of watches at ADs being MUCH improved if the grey market opportunists weren't in place. He searched for some 2020 Oyster Perpetual model on Chrono24 and showed where there were something like 1k+ listings for the specific variant. And these listing represent watches not in the "right" hands (those not looking to make a quick buck).

In a perfect world without the "greys" raking enthusiasts over the coals, is there likely enough supply to have a much more "normal" market?

There's no way to really get rid of the grey market dealers, but I'm curious how much of the current situation is attributable to them.

[enjoythemusic]

Or go deeper, why is there massive currency available to purchase luxury goods and services? Also, why buy items of intrinsic value versus wasting value on guaranteed losers like 2% bonds?

[VogelPhoenix]

Originally Posted by enjoythemusic

Or go deeper, why is there massive currency available to purchase luxury goods and services? Also, why buy items of intrinsic value versus wasting value on guaranteed losers like 2% bonds?

Yeah, what could be more certain winner than buying trinkets at 2x-3x the price other people pay?

[42itus]

I think the grey market fills a void and they facilitate sales but they are not the ones setting the price so to speak. They sell for what the market commands. It’s the hype and economic conditions that are driving the price in my opinion. You can buy an Hublot for much less than retail.
I’m all for the grey market as it gives collectors a relatively safe place to buy, sell, and trade.


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[MRBolton]

Originally Posted by 42itus

I think the grey market fills a void and they facilitate sales but they are not the ones setting the price so to speak. They sell for what the market commands. It’s the hype and economic conditions that are driving the price in my opinion. You can buy an Hublot for much less than retail.
I’m all for the grey market as it gives collectors a relatively safe place to buy, sell, and trade.


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I see both sides to it. But are they sucking up so many watches that the amount of people wanting hot watches are unable to purchase them due to the grey market greed? Could the void be nearly filled if these watches weren't sitting with them?

[42itus]

Originally Posted by MRBolton

I see both sides to it. But are they sucking up so many watches that the amount of people wanting hot watches are unable to purchase them due to the grey market greed? Could the void be nearly filled if these watches weren't sitting with them?

I get what you’re saying. But (and I have no insight to grey sellers) I don’t think they are hoarding inventory. I get the impression that they turn and burn and they make small margins with higher volume. I’m basing this off of previous transactions and observed what I sold it for vs what they asked for and how long the listing was active.

What baffles me is, how are there that many people willing to pay double or triple MSRP? It’s their money and I’m not judging but it blows my mind how many people are buying this.


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[vh2k]

Originally Posted by MRBolton

But are they sucking up so many watches that the amount of people wanting hot watches are unable to purchase them due to the grey market greed? Could the void be nearly filled if these watches weren't sitting with them?

Secondary resellers can only “suck up” what end user customers are willing to sell them. You can’t blame someone for buying and OP41 for $6,000 and flipping it to a secondary reseller for $10,000. But, how does that make the secondary reseller the party who is greedy???

[Pentameter]

It’s less about the Grey market and more about supply and demand. In a sense the Grey market can be viewed about the same as scalpers, meaning that they can sell watches for above MSRP where most authorized dealers can’t. They obviously aren’t derided the way that scalpers are because most people understand that they aren’t just getting “the good stuff” and then flipping it for profits, they also have to buy less desirable watches which makes it a more “fair” position, but my point is just that if the Grey market didn’t exist, more scalpers would fill that role. It’s a position born out of necessity, and the only real way to get rid of it is to change the rules that the AD’s have to play by.

[brandrea]

Originally Posted by Pentameter

... In a sense the Grey market can be viewed about the same as scalpers ...

Scalpers .... I’m not going to get into what I paid for U2 tickets the last time they were in Chicago

[Gab27]

IMO, the recent explosion is an outcome of:

• the supply-demand situation of new models, combined with
• the discretionary selling practices of ADs, combined with
• a moment in time when we are seeing a lot of new money and a lot of social media coverage, combined with
• secondary dealers often being extremely successful (and presumably aggressive) in acquiring new models from ADs in order to sell them on their own, combined with
• many individuals buying Rolexes with the intent to use them as an investment or to immediately sell them as a private seller (to a dealer or to another end buyer).

[Aquinas]

Originally Posted by Gab27

• a moment in time when we are seeing a lot of new money and a lot of social media coverage,

Plus insecurity both in the new money as well as in the middle class about their social status, caused by the current economic and social upheavals. Both try to assert themselves about their position in society with such status symbols that these groups are aware of. That explains the success of the watches with a strong brand even if they are horologically unspectacular (such as Rolex as a whole and the AP and PP models with their off-the-shelf JLC movement).

[teck21]

I think what OP is referring to are the dealers rather than the market. A resale market exists for every durable hood imaginable in the world.

The grey dealers are merely facilitators between buyers and sellers in this market.

It may not however not accurate to say they don’t contribute to the crazy prices going around now.

But that’s not because they are hoarding watches or some other such stupid theory. It’s much more prosaic and practical.

The nature of Rolex as a good means any single individual selling to another individual can be a time consuming and risky process.

Counterfeits, scamming, possibility of violence etc. Wary buyers and wary sellers make for difficult transactions.

In exchange for what is effectively a commission, these dealers take the risk and danger away from the transaction between individual buyers and sellers because they are ‘trusted sellers’. It should be ‘trusted buyer and seller’ really.

It is this ease of ‘disposing’ of a Rolex that attracts an entire army of scalpers worldwide to try their luck at every AD, every airport store they walk past.

The profit to be made is tiny in absolute terms, especially when almost nobody can reliably secure a regular stream of profitable Rolex watches to sell.

If these flippers had to go through the hassle of screening buyers, haggling, authenticating watches themselves just to sell one watch, most wouldn’t even bother.

That could take a lot of heat off the market, or at the very least ensure that more watches at ADs go to the end user rather than opportunistic flippers.


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[EEpro]

So where were you back when there was stock? I used to walk past Rolex at Mall at Millenia in Orlando when they were stocked full of subs and GMTs.

If there was no grey market there would be less demand and the AD would be full of watches "nobody wanted" instead.

Would these buyers be so desperate to buy a Pepsi at $10,000 if they couldn't even sell it for more than $6,000 in a pinch?

[fsprow]

Originally Posted by EEpro

So where were you back when there was stock? I used to walk past Rolex at Mall at Millenia in Orlando when they were stocked full of subs and GMTs.

If there was no grey market there would be less demand and the AD would be full of watches "nobody wanted" instead.

Would these buyers be so desperate to buy a Pepsi at $10,000 if they couldn't even sell it for more than $6,000 in a pinch?

How in heavens name do you think "if there was no grey market there would be less demand". Demand comes from customers, not sellers.

[EEpro]

Originally Posted by fsprow

How in heavens name do you think "if there was no grey market there would be less demand". Demand comes from customers, not sellers.

So if buy a widget for $10,000 knowing I can sell it to a reseller for $18,000 if I don't like it, you think that is customer demand?

I don't believe the demand is organic. I think it is propped up by resellers.

[fsprow]

Originally Posted by EEpro

So if buy a widget for $10,000 knowing I can sell it to a reseller for $18,000 if I don't like it, you think that is customer demand?

I don't believe the demand is organic. I think it is propped up by resellers.

The customer setting demand is the end customer. The one who believes the watch is worth $18,000 + to him/her in your example.

[vh2k]

Originally Posted by EEpro

So if buy a widget for $10,000 knowing I can sell it to a reseller for $18,000 if I don't like it, you think that is customer demand?

I don't believe the demand is organic. I think it is propped up by resellers.

Why would a reseller purchase a watch for $18K if there weren't end user customers willing to pay $20-21K for the same watch? Resellers are not collectors. They are in business to satisfy end user demand at a market price that provides for a reasonable margin to fund their operations.

[EEpro]

Originally Posted by vh2k

Why would a reseller purchase a watch for $18K if there weren't end user customers willing to pay $20-21K for the same watch? Resellers are not collectors. They are in business to satisfy end user demand at a reasonable markup from cost.

Originally Posted by fsprow

The customer setting demand is the end customer. The one who believes the watch is worth $18,000 + to him/her in your example.

I'm proposing the surge in demand we see today is because people believe in the momentum trade and see it as a no risk buy with upside potential.

I would separate end user consumer demand from the momentum trade demand we are seeing in Rolex today.

The grey dealers are performing the important role of the stock broker here ensuring efficient transactions at a 20% bid/ask spread. But the person who buys from the grey dealer is not the final word proving organic consumer demand.

Your story seems to conclude that once watch is purchased just twice that buyer #2 from the grey at $18,000 was a true organic demand. But what if he too was influenced by the momentum trade. He buys grey at what he sees is low risk and continues to move the watch on to buyer #3 as the market continues to climb. This type of demand is driven by the price increase momentum itself.

Without the efficient transactions provided by the greys I think a lot of this momentum trade demand would evaporate. That's all I'm saying.

[Just1More]

Originally Posted by EEpro

So where were you back when there was stock? I used to walk past Rolex at Mall at Millenia in Orlando when they were stocked full of subs and GMTs.

If there was no grey market there would be less demand and the AD would be full of watches "nobody wanted" instead.

Would these buyers be so desperate to buy a Pepsi at $10,000 if they couldn't even sell it for more than $6,000 in a pinch?

We used to this and used to that. We all used to do something. This is a discussion of what’s going on now and not what was in the past. Having said that I don’t have a solution

[Atone]

Originally Posted by EEpro

So where were you back when there was stock? I used to walk past Rolex at Mall at Millenia in Orlando when they were stocked full of subs and GMTs.

If there was no grey market there would be less demand and the AD would be full of watches "nobody wanted" instead.

Would these buyers be so desperate to buy a Pepsi at $10,000 if they couldn't even sell it for more than $6,000 in a pinch?

Exactly. When AD’s couldn’t give away hulks, no one wanted them at retail. Everyone looked for a discount with grey sellers.

[aparker973]

Not long ago gray dealers could get you watches at discounts you couldn't ordinarily get yourselves. They served a good purpose for the watch community and for ADs.

What happened was the risk/reward for flipping Rolex became very asymmetrical. I do not believe it is strictly a supply/demand story -- supply/demand emerged when there became a floor for every piece.

What if I told you every stock in a particular index could only go down 10% maximum in the coming year, but could go up anywhere from 0% to 300% if you chose wisely? Everyone would be running to gobble them up. Who would gobble them up first and drive up the price? Retail investors, or "professionals"? Retail would have to catch up. Then what would happen if the drawdown could be 75% from original listing instead of 10%? The calculus changes...

Let's be very clear -- it is a heavily manipulated market.

[Hollie_Rollie]

The explosion of grey dealers directly correlates with the supply issue. Greys are vultures. Period. They buy out the back door from ADs, the buy at inflated prices from flippers, they buy at inflated prices from each other. They manipulate market prices (ie green Daytona and white explorer 2). They are leeches that suck the money out of the hobby. Oh welll, they got mouths to feed, insta models to impress, and Ferrari payments don’t make themselves


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[vh2k]

Originally Posted by Hollie_Rollie

The explosion of grey dealers directly correlates with the supply issue. Greys are vultures. Period. They buy out the back door from ADs, the buy at inflated prices from flippers, they buy at inflated prices from each other. They manipulate market prices (ie green Daytona and white explorer 2). They are leeches that suck the money out of the hobby. Oh welll, they got mouths to feed, insta models to impress, and Ferrari payments don’t make themselves

They buy out the back door from ADs

Overwhelming majority of secondary reseller supply comes from customers who sell their watches. If an AD accidentally sells a piece to a grey, why is the secondary reseller the bad guy?

They buy at inflated prices from flippers

Yes, they have to pay high prices to flippers to obtain watches to sell to end user customers. They are risking their own capital. They have to pay $10K for that turquoise OP41 to try to sell for $13K. They have to pay $18K to get that brand new Pepsi to sell at $21K. How does that make the secondary reseller the greedy party?

They buy at inflated prices from each other.

And they are bearing 100% of the risk. If the market value goes down, they have to liquidate at a loss.

They manipulate market prices (ie green Daytona and white explorer 2

Their merchandising and pricing strategies are very clever... but, again, they are buying watches at high prices and assuming all the risk. If watches don’t sell at the “market price,” prices have to come down OR they have to hold (and tie up that working capital) until it does sell at that price.

[Marcjvr]

It’s funny because almost all the trusted sellers on here have been around selling Rolexes at market prices long before the “shortage” kicked in. They were selling at big discounts in the past and no one was complaining then.

If the market crashes and market prices fall below MSRP they will still be around selling at those market prices

I, for one, would like to thank all the trusted sellers we have for the service they provide. If you ever wanted to buy a discontinued model and avoid being scammed, or sell a watch and avoid being scammed they are the answer

THANK. YOU. TRUSTED SELLERS!!!

[aparker973]

Originally Posted by Marcjvr

It’s funny because almost all the trusted sellers on here have been around selling Rolexes at market prices long before the “shortage” kicked in. They were selling at big discounts in the past and no one was complaining then.

If the market crashes and market prices fall below MSRP they will still be around selling at those market prices

I, for one, would like to thank all the trusted sellers we have for the service they provide. If you ever wanted to buy a discontinued model and avoid being scammed, or sell a watch and avoid being scammed they are the answer

THANK. YOU. TRUSTED SELLERS!!!

Totally. I bought like new GMT and Subs for... low 6s or less? Big name here got me 20% off on a PM Rolex, empty card. Big discounts on other brands.

Even in this craze their margins are not huge-- just the volume.

[uhren917]

What if there were no moon? Right up there with what if I had a jabillion dollars.

A topic of pure fantasy.

Didn't even bother reading any of the replies.

[SubMillennial]

if ADs would just properly vet their customers, we would never see BNIB models on the market. Several years old models? Fine, but BNIB is at best a failure on ADs to properly vet -- even that means not selling every SS piece to a VIP, god forbid -- or at worst backdoor dealing.

[M.a.x.]

What would happen if all ADs were allowed to sell above or below MSRP, any price they wanted and were allowed to resale used/vintage watches.

Would that kill the gray market?

[Lemieux66]

Originally Posted by M.a.x.

What would happen if all ADs were allowed to sell above or below MSRP, any price they wanted and were allowed to resale used/vintage watches.

Would that kill the gray market?

Not entirely but they’d perhaps have to undercut the ADs to have a business.

[bp1000]

The market is a mess.

The majority of watches listed on Chrono24 with stock pictures are resellers that don’t have the watch. They use their business history and reviews to attract customers at a higher price. They then source the watch from existing customers or consignments, some even contact other private sellers on c24 and just act as the fixers.

It’s a crazy market.

What I would like to see is the cleaned up version. Where you can only list the watch with custom photography, so you only list watches you have to sell.