PP disputes is definitely not the way to go.
On the other hand if watch was DOA, the usual thing is to send the watch back and get a refund.
Solutions like "send it to a watchsmith to get it fixed" it basically means passing the problem to the other person and usually don't work.
When that happened to me (as a seller), I got the watch back and I have issued a full refund. Period.
Always , I repeat always, the seller assumes more risks than the buyer.
Statements like, theft, loss, damage, customs etc.. are at buyers risk , are really useless (....I personally, when I am buying, I only accept the customs risk, nothing else).
If the buyer fills PP claim there is nothing you can do about it.
A seller should also choose carefully the buyer.
....btw , watches some times just break without any particular reason. That's even more frequent with reps.
IMO (even though not my business) , I think that the right thing is that the buyer withdraws the PP claim , he sends the watch back and he gets a full refund.
Hope you guys you can settle this out.