The real genius of the Rolex CPO scheme

[Mick_Tock]

I've seen many comments about the Rolex CPO scheme, mostly from people complaining about the high prices, but some happy to pay the premium to be able to buy an approved watch without waiting, or having to play the AD games. For me, the real masterstroke of the CPO scheme is that Rolex DOES NOT ACTUALLY NEED TO SELL ANY OF THEM! The high prices on the website foster the illusion that buying a new watch at MRSP is a smart move. ("look what my Rolex will be worth in 3, 5, 10 year’s time"). This ensures that there will always be a high demand for new watches from AD's. Even grey dealers benefit: all they need to do is to pitch their prices below CPO to keep their customers happy.
This, to me, is the real genius of the Rolex CPO scheme. I would be interested to hear others’ thoughts on my theory.
Thanks for reading my first post - new to TRF but not to watches.

[BKScripto]

I hear your theory but to me it makes no business sense. And it would be a big EFF U to Rolex's ADs. Could it be a by-product of the CPO program? Sure, but I don't think that was the main goal.

[Bazil]

Not sure ‘don’t need to sell them’ philosophy, remember it’s ADs selling them, they for sure need to sell them to stay in business, some CPO watches are not too bad, I noticed a Pepsi from 2004 at a good price, all documents with it .. then I saw a Kermit at £20,000 and nearly dropped my pearls I was clutching …

[Mick_Tock]

Not all ADs are in the CPO scheme, but ALL ADs benefit from demand is stimulated.

[Tools]

No "scheme".

It's a typical overhaul program sponsored by the Manufacturer, just like many other products. Rolex is not buying or selling them, or setting the prices, that is up to the AD.
Buy one if you want, or not.

[Tim Plains]

The genius of it is having their ADs sell more watches without increasing new production and guaranteeing steady work at RSC.

[BraveBold]

Originally Posted by Mick_Tock

I've seen many comments about the Rolex CPO scheme, mostly from people complaining about the high prices, but some happy to pay the premium to be able to buy an approved watch without waiting, or having to play the AD games. For me, the real masterstroke of the CPO scheme is that Rolex DOES NOT ACTUALLY NEED TO SELL ANY OF THEM! The high prices on the website foster the illusion that buying a new watch at MRSP is a smart move. ("look what my Rolex will be worth in 3, 5, 10 year’s time"). This ensures that there will always be a high demand for new watches from AD's. Even grey dealers benefit: all they need to do is to pitch their prices below CPO to keep their customers happy.
This, to me, is the real genius of the Rolex CPO scheme. I would be interested to hear others’ thoughts on my theory.
Thanks for reading my first post - new to TRF but not to watches.

Not entirely. It actually makes visible the watches that stagnate (eg most women’s models). You get great value vs optimistic listing prices where you also cannot be confident of condition or authenticity.

The watches that DO trade above list - everyone knows those already. But CPO watches that sit in nice display cases, with all the overheard associated AND available for sale… well, there is a different cost to hold. Of course the cost to hold has gone up a lot generally over the last 12 months… across the board.

Finally, a CPO price has a warranty embedded and documentation. That means it should trade at a premium to transacted prices…

[chunk2020]

Was thinking this the other day when I walked into a large Goldmiths (large multi brand AD) in central London.

They’d cleared half the brands in the store. Left were tag, iwc and hublot in the back. Say 1/4 of the store space. 1/4 Cartier. 1/4 Rolex dedicated boutique …had 2 DD, a gold skydweller and the gold gmt jubilee, that’s it.

Gone were grand seiko, zenith and a handful of other brands for the other 1/4… replaced by large front and center CPO.

Mix of mainly sports models, discontinued stuff mainly, ranging from 116520, 14060, older DSSD, milgauss, exp polar etc. basically like going back 10-15 years.

From my estimation the prices set (in the UK anyway) seem to be cheapest comparable on c24 with b&p +60%

I asked the guy there that I’d spoken to a few times before are the prices prescribed. He said no we set them. (So there’s defo a prescribed methodology)

Asked could i sell you for example my starbucks for 12 when you have it listed for 17.5, or my 14060m for 7 when you have it listed for 12? (Jokingly). He said you apply online, we quote you and if you sell it to us, we get it inspected and serviced and it would end up here.

I asked is there anything in addition to me buying one from a grey and servicing it. He said 2year warranty…. Just like getting it serviced. But we have to make margin for the counter space. Fair enough, high rent etc.

I asked have you ever actually sold anything from this counter??!? He laughed and said yes, if somebody’s watch gets stolen, and have insurance like-for-like, then insurance companies don’t mind you coming in here and replacing it with these as they can’t make you go to a random grey dealer and vouch for the dealer. But a CPO counts as like for like. Basically the only times they have had sales was from that. Shows the state of London for watch thefts.

In laughed again and he said to be fair people only ever try on grand seiko or zenith or bell and ross that were here before.. nobody EVER buys them. Not here anyway. So makes no loss by getting rid of them.

He then said if you want to buy a Rolex your choices are one of those gold ones mentioned earlier or we can order you something gold in (assuming all in the back already or from another branch) … of one of these beauties.

They have also been told to justify the change to CPO that they have so much demand for discontinued pieces that they have done this due to high customer demand.

Actual lol. Nice guy though. Even he had a sense of humour about the whole situation.

Anyway, sorry long story but thought interesting chat re the insurance like-for-likes and the mock justification

Cheers


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[Serif]

It’s just about increasing the potential customer base and more market share - how many on this forum say they are wedded to 5 digits and modern Rolex’s are just too big for them to wear? The CPO programme will provide the opportunity to take the cash from these potential buyers by offering the classic models safely.

[brandrea]

Welcome to the forum

[ChronoZach]

Had I been Rolex, I would have destroyed the grey’s by offering a certified original product at a reasonable price point, there by controlling the new market that they already own and getting some of the secondary market.

I don’t know? If the CPO program is working for them? I see the same watches in the case every time I visit. Maybe one gone? and I get it they don’t need to sell anything. Rolex does not need the business.

Cheers,

[gccmd]

It appears to me that the CPO prices are higher than buying an "unworn" (i.e essentially brand new) watch from a reputable grey dealer.

[BraveBold]

Originally Posted by chunk2020

Was thinking this the other day when I walked into a large Goldmiths (large multi brand AD) in central London.

They’d cleared half the brands in the store. Left were tag, iwc and hublot in the back. Say 1/4 of the store space. 1/4 Cartier. 1/4 Rolex dedicated boutique …had 2 DD, a gold skydweller and the gold gmt jubilee, that’s it.

Gone were grand seiko, zenith and a handful of other brands for the other 1/4… replaced by large front and center CPO.

Mix of mainly sports models, discontinued stuff mainly, ranging from 116520, 14060, older DSSD, milgauss, exp polar etc. basically like going back 10-15 years.

From my estimation the prices set (in the UK anyway) seem to be cheapest comparable on c24 with b&p +60%

I asked the guy there that I’d spoken to a few times before are the prices prescribed. He said no we set them. (So there’s defo a prescribed methodology)

Asked could i sell you for example my starbucks for 12 when you have it listed for 17.5, or my 14060m for 7 when you have it listed for 12? (Jokingly). He said you apply online, we quote you and if you sell it to us, we get it inspected and serviced and it would end up here.

I asked is there anything in addition to me buying one from a grey and servicing it. He said 2year warranty…. Just like getting it serviced. But we have to make margin for the counter space. Fair enough, high rent etc.

I asked have you ever actually sold anything from this counter??!? He laughed and said yes, if somebody’s watch gets stolen, and have insurance like-for-like, then insurance companies don’t mind you coming in here and replacing it with these as they can’t make you go to a random grey dealer and vouch for the dealer. But a CPO counts as like for like. Basically the only times they have had sales was from that. Shows the state of London for watch thefts.

In laughed again and he said to be fair people only ever try on grand seiko or zenith or bell and ross that were here before.. nobody EVER buys them. Not here anyway. So makes no loss by getting rid of them.

He then said if you want to buy a Rolex your choices are one of those gold ones mentioned earlier or we can order you something gold in (assuming all in the back already or from another branch) … of one of these beauties.

They have also been told to justify the change to CPO that they have so much demand for discontinued pieces that they have done this due to high customer demand.

Actual lol. Nice guy though. Even he had a sense of humour about the whole situation.

Anyway, sorry long story but thought interesting chat re the insurance like-for-likes and the mock justification

Cheers


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Interesting. Sounds like you have an oddly expensive AD? Perhaps partly due to location (still odd).

I decided to check a couple pieces listed as CPO at my AD. Both are priced at the median of Chrono24 pricing… so your massive premium isn’t reflected in what I see here. Of course the Chrono24 asks are just asks… but my AD is also willing to cut deals. Of course the CPO pieces at my AD … well, they’re warrantied and I can buy them in person if that’s what I want. Chrono24 has big cuts to the platform, and many are sitting on inventory they overpaid for.

Maybe what we can learn here is that some dealers overcharge and will do so with or without a CPO program.

[L_S_SHOE]

Nah.

People already believe that their Rolex will appreciate, regardless of CPO pricing.

The CPO program is just another way to extract cash from ignorant consumers with money to burn.


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[ChronoZach]

I did not know you can negotiate? Price, Not at the AD I used go to. The prices were crazy but I never thought of comparing them to Chrono24? But very interesting? I saw a Sub for $27K in SS. Also a DD in platinum for $95K smooth bezel not diamonds.

[KatGirl]

Originally Posted by L_S_SHOE

Nah.

People already believe that their Rolex will appreciate, regardless of CPO pricing.

The CPO program is just another way to extract cash from ignorant consumers with money to burn.


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That’s a little harsh. There are some folks who really want a watch, can’t get one, and feel better that their watch has been freshly serviced, by Rolex, they know it’s genuine,and it has a 2 year warranty. That’s worth the extra price to some.

Kat


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[BraveBold]

Originally Posted by L_S_SHOE

Nah.

People already believe that their Rolex will appreciate, regardless of CPO pricing.

The CPO program is just another way to extract cash from ignorant consumers with money to burn.


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There is certainly some ignorance in the above statement(s).

[martyjanderson]

Originally Posted by KatGirl

That’s a little harsh. There are some folks who really want a watch, can’t get one, and feel better that their watch has been freshly serviced, by Rolex, they know it’s genuine,and it has a 2 year warranty. That’s worth the extra price to some.

Kat


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Simply the truth. Instead of worrying about a new service can get most from trusted seller that are one year old with papers etc in excellent shape, and still quite a bit cheaper than CPO programs. Seems like they were banking on more desperate buyers that didnt know much but looking at inventory at Govberg and Bucherer in Philly area doesnt seem like many are too interested. Same watches for long periods of time. Plenty of wealthy people imn Philly-Ardmore area. Just becuase someone is wealthy doesn't mean they want to feel ripped off either. The got SD 43 less than a year old with papers unpolished etc from trusted seller here and it was still 2k cheaper than CPO that was 7 or 8 years old. Thats just plain ridiculous. Buyers are much more knowledgebale than these CPO programs realize.

[Ursusarctos]

CPO is a lot like buying a certified pre-owned Audi or BMW from a dealer. The dealer has checked over one of their make of vehicles, made necessary repairs, sells it with a warranty, and charges a premium over a private sale. Nothing novel about the approach and it works with cars so why not Rolex. It also helps that the purchaser knows that their car (or watch) isn't stolen and if it is, there's recourse with the dealer.

[martyjanderson]

Originally Posted by gccmd

It appears to me that the CPO prices are higher than buying an "unworn" (i.e essentially brand new) watch from a reputable grey dealer.

Yes often thousands even for SD 43 sub etc and the CPO versions are often quite old despite being quite a bit more than "unworn" that are 1 year old or thereabouts.

[77T]

The logic behind Rolex CPO was proven by Bucherer beforehand.

Oftentimes, in business marketing work, the distributors figure out a novel solution to a topsy turvy market without help from the ivory tower.

Rolex normalized Bucherer's solution, rolled it out for all to enjoy (ADs & buyers), and now we have a revenue stream for ADs that also reduced the grey market channel's take $ for $, € for €, and £ for £.

Remember, it's a channel war strategy.


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[martyjanderson]

Originally Posted by Ursusarctos

CPO is a lot like buying a certified pre-owned Audi or BMW from a dealer. The dealer has checked over one of their make of vehicles, made necessary repairs, sells it with a warranty, and charges a premium over a private sale. Nothing novel about the approach and it works with cars so why not Rolex. It also helps that the purchaser knows that their car (or watch) isn't stolen and if it is, there's recourse with the dealer.

Nah not so much. Most of the CPO watches are quite old even if serviced.

It would be like buying a 8 year old Audi that has 50k and well maintained vs buying one that is nearly new and less than a year old with 500 miles and paying 10k more for the 8 year old.

I get the idea but its to fool people that dont know better but it seems people arent really falling for it. Im only basing on two CPO programs however, perhaps some arent as outlandish.

[csaltphoto]

Originally Posted by Ursusarctos

CPO is a lot like buying a certified pre-owned Audi or BMW from a dealer. The dealer has checked over one of their make of vehicles, made necessary repairs, sells it with a warranty, and charges a premium over a private sale. Nothing novel about the approach and it works with cars so why not Rolex. It also helps that the purchaser knows that their car (or watch) isn't stolen and if it is, there's recourse with the dealer.

Yep. And BMW CPO charges a hefty premium. At least 30% and closer to 40% over used car dealers/private sellers when I bought my last car which just wasn't worth it.

[richardlo]

Rolex isnt looking at things from the buyer level. They are looking at things from the top level. All they are concerned about is their brand and if they will sell their upcoming inventory or not. All the other stuff that happens that collectors see is just a side effect.
No different than a company, the workers, middle managers complain but the executives are completely unaware of these complaints yet the people complaining think the top is aware and making decisions for or against their gripes.

[Mick_Tock]

I don't know or care whether the CPO prices are set by Rolex or the AD. My point is that the higher the asking price for CPO, the more that will stimulate demand for new pieces at retail, thus benefiting both Rolex and ADs (but not necessarily the average watch-buying consumer). Oh, and thanks for the welcome, Kat.

[dandy]

I have two scenarios in my mind:
1. Rolex would reduce their production and might even increase the prices, push people to buy Tudor as an alternative otherwise go for their CPO: Rolex will be making money from the CPO by checking these watches that gets sent to them from the ADs and verifying them for a cost which the AD will add it on top of his profit and resell the watch to the public so both AD & Rolex would be making easy money instead of grey dealers.
2. on the other hand Rolex is building a massive factory so what would they do about this factory if they decide to go with scenario 1? does Rolex realy want to reduce the production and rely on higher margins rather than lower margin and more sales?

[BraveBold]

Originally Posted by Mick_Tock

I don't know or care whether the CPO prices are set by Rolex or the AD. My point is that the higher the asking price for CPO, the more that will stimulate demand for new pieces at retail, thus benefiting both Rolex and ADs (but not necessarily the average watch-buying consumer). Oh, and thanks for the welcome, Kat.

Yeah, because they need to stimulate MORE demand at retail…LOL.

[BraveBold]

Originally Posted by martyjanderson

Nah not so much. Most of the CPO watches are quite old even if serviced.

It would be like buying a 8 year old Audi that has 50k and well maintained vs buying one that is nearly new and less than a year old with 500 miles and paying 10k more for the 8 year old.

I get the idea but its to fool people that dont know better but it seems people arent really falling for it. Im only basing on two CPO programs however, perhaps some arent as outlandish.

You seem an expert on pricing… for two ADs.

[Roddypeepa]

Originally Posted by Ursusarctos

CPO is a lot like buying a certified pre-owned Audi or BMW from a dealer. The dealer has checked over one of their make of vehicles, made necessary repairs, sells it with a warranty, and charges a premium over a private sale. Nothing novel about the approach and it works with cars so why not Rolex. It also helps that the purchaser knows that their car (or watch) isn't stolen and if it is, there's recourse with the dealer.

I fear that the car dealers do very little inspection, if any of fairly new ish used cars. I once had an e92 m3 from a main dealer. About 3 years old. New brakes had been fitted.

When it went back to another dealer for routine service a couple of years later they told me the brakes discs were in back to front. That’s right. Some spanner monkey had put the ventilated brake discs on back to front. And did they stand by that? No of course they didn’t.

Here in the uk we call them stealers not dealers and I fear the CPO is going the same way.


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[Robf52]

Originally Posted by L_S_SHOE

Nah.

People already believe that their Rolex will appreciate, regardless of CPO pricing.

The CPO program is just another way to extract cash from ignorant consumers with money to burn.

Agree; and AD's are onboard as CPO represents another profit center for them.