how do grey watch dealers work?

[woody]

Hello ladies, and gents:

It's been a while since I posted, hope everyone is doing good. I've recently gotten my friend to bit the watch bug, and he has been collecting a few pieces here and there. We were talking just the other day, of which I thought was an interesting topic. I thought I'd post here and get some opinions and such. As we know there are quite a few grey watch dealers on the internet, such as Joma shop, prestige time, and authentic watches to name a few. 

 

We got to talking and we talked about how they are able to set up shop, and just what kind of capital it needs. For example, we always see these sites carry many different brands. Do you guys think that they would always have these watches in stock? Or do you think they will first get the web order in, then go to their AD supplier and buy it at a discount? Do you think just like AD, they have to buy certain amount of watches, equaling dollar amount, to maintain that relationship with the supplier AD? Or do you think they simply pick and choose pieces that have generous discounts, and work from there?

 

And what do you guys how much they need in order to start a company like these? I'm always curious about some of these things myself, but never got to ask them until I had this conversation with my friend. All input/insight/comment welcomed! 

[Nightwatch]

Lots of ground to cover there. They are not AD´s and cannot offer the AD warranty (and that´s a biggy), they offer their own. You get unstamped original warranty cards.

The watches that are sold are original, but where originally not meant for that market (USA items get sold in the EU and vice-versa etc.).

AD´s have to fullfil a quota to comply with their brand, but often don´t manage to sell the watches to individual clients or it´s models that are not selling well. These also go to the grey market at a discount. Sometimes serial nrs. are erased, so the brand new watch cannot be traced back to the AD it originally came from (unsure if this is only a past praxis or still ongoing).

[panerai153]

Lots of ground to cover there. They are not AD´s and cannot offer the AD warranty (and that´s a biggy), they offer their own. You get unstamped original warranty cards.

The watches that are sold are original, but where originally not meant for that market (USA items get sold in the EU and vice-versa etc.).

AD´s have to fullfil a quota to comply with their brand, but often don´t manage to sell the watches to individual clients or it´s models that are not selling well. These also go to the grey market at a discount. Sometimes serial nrs. are erased, so the brand new watch cannot be traced back to the AD it originally came from (unsure if this is only a past praxis or still ongoing).

Removing serial numbers is still being done. For me, the grey market dealer would have to offer a really significant discount for me to even entertain buying from them. Not only do you not get the warranty from the manufacturer, you aren't even sure it's really a brand new watch. Example, you go to an AD, buy a new Omega for instance. You wear it a day, and decide that you really don't like it. You take it back, and trade it for something else. The AD cannot sell this as a new watch, but they can darn sure sell it to a grey market seller who in turn resells it to you as a new watch. Same thing with watches that develop a problem right after purchase. Replaced and resold. I would expect that these occupancies are a tiny part of the total grey market. The vast majority are coming from AD's who sell to grey market dealers that are not in competition with the AD, geographically. AD's use this method to unload unpopular models and slow sellers, but they also use this to increase the volume of watches and possibly qualify for a bigger discount. I don't know that all manufacturers have sliding scale discounts, but lots do. The more the dealer buys, the less the price per unit.

Watch manufacturers really don't like grey market dealers, as they establish the price of a particular watch at a price point well below the manufacturers suggested retail price. Also it creates a PR problem when someone tries to get their watch repaired under warranty and the manufacturer refuses because it is a grey market watch. One year out, the watch owner doesn't remember the fine print that specified the watch was not covered under the manufacturers warranty! The owner is now mad at the company because they won't is his watch

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[woody]

Thanks all for the feedback so far!

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