An unintended consequence of the demand and supply situation?

[tng11]

A couple of recent threads have gotten me thinking about this.

In principle I have no issue with there being a grey market - it's a free market, and no one complained years ago when people were getting huge discounts on grey vs. buying from an AD. In the past, at least there was the argument that going the AD route ensured authenticity, and now some of these people are being rewarded for having paid extra to establish that relationship.

However, I can't help but wonder that in pushing people to have to go to grey dealers and the secondary market to buy certain desired pieces when many pieces are not available at ADs without a long wait (or even at all, if you don't spend big), that it creates a danger, especially for newbies to be scammed and or fooled with a superfake, which have been getting better and better, and might even fool a dealer at first glance even with the back popped off. And then there's the issue of stolen pieces as thefts have appeared to increase around the world. That has to be at least partially damaging to Rolex's image when practically speaking, one has to deal with a non-authorized party to obtain certain pieces, whereas many other luxury manufacturers would tell you the only way to be certain is to deal with a authorized boutique/retailer.

Yes, I know a key mantra is "buy the seller" when dealing with the grey market. And there are many trusted sellers. And maybe at the end of the day, this isn't too different from your everyday scam, where a very small number of transactions go bad. But with the stakes getting higher and higher with counterfeit full sets, more brazen thefts and higher dollar amounts, is there a point at which these scams become so widespread that they end up hurting the brand more than the additional cachet that is provided by the rarity factor?

Just expressing a few thoughts I had on this Monday afternoon.

[zjd168]

demanding full set from reputable sources can minimize the risk of buying stolen/robbery/fake pieces

[Robf52]

Good discussion. I think it's a given that Rolex's strategic goals are to always protect and enhance the "brand".

Presently, despite your valid points, the GM with Rolex's willing cooperation and participation thru their AD's, is doing exactly that. Demand remains high, secondary market prices remain high, the air of exclusivity remains high. All going in Rolex's favor.

Can the situation change? Obviously yes, but I think it will take a major event like a recession or bear market to upset the balance.

As in anything, in the GM it's buyer beware. You're right about the quality of fakes getting amazing; I think it would take the world being flooded with fakes to get on Rolex's radar enough for them to respond, and, hopefully, they are already active behind the scenes shutting down the factories making the junk.

[DavidRT]

Where there's money to be made there's always some exchanging under the table.. I chose to buy from TRF and lucked out with a great seller for my 214270 that I've been wanting since the beginning of the year and kicked myself not buying one for $5,500 in March 2020 when I had the chance... but gladly paid the premium for one that came with newer card and great history and a cool seller.

[LoveTheCrown]

One more issue with buying from a Grey: I once purchased a Daytona (116520); the last version without the ceramic bezel. There were no papers with it and I was too naive back then to understand the importance of this. Anyway, the crystal did not have the engraved crown at the 6 which bothered me so I went to my AD and asked if they could send it into Rolex and replace it with an engraved crystal. Well, that’s when the ‘fun’ started. I received a lawyers letter a few weeks later telling me it was a stolen watch. After about a month of going back and forth escalating with various threats, I received my cash back. But it taught me a valuable lesson. Buying from a grey not only costs more, but has some very real risks


Sent from my iPhone using Tapatalk

[Fleetlord]

Sure....it's happened already.

There was a youtuber / gentleman dealer who allegedly passed off some phony Daytonas to unsuspecting peeps. He used his channel to gain confidence and take advantage.

The best course of action is to steer clear of the gentleman dealer type. They are usually younger dudes who flash luxury goods for sale solely on Instagram or other social media platforms, while promoting a super on trend luxury lifestyle filled with unobtainable items and spontaneous get away trips to whereever / whenever. Sure, most of these guys are fine, but also most of the scams, issues, fakes, frauds tend to come from that channel.

They don't have a B&M or even a basic website, so nothing to "ground" them.

To me, that means that their "business" isn't worth anything and they could risk reputation by doing dumb and scammy stuff, especially if they get over their heads.

The big greys this is total non issue as they do so much business, there is absolutely no reason to pull any pranks. It would cost them SOOOO much more in lost business than any scam could pull off, so it simply isn't worth it.

It might be possible that one of these greys might take a bad watch in on trade and not catch it, but that is rare and most would rectify the situation instantly as...again their business is worth way more than any single phony deal...

[Calatrava r]

You really cannot fully prevent problems with prodigy unless you buy from an AD. The fakes are so good even trained professionals cannot spot them. Watches can trade hands several times and finally end up in the hands of a respected honest seller but still remain stolen property from the past. Buying the seller who makes good on these problems with no questions asked or hassles is the best thing to do.

[superpop]

Rolex could fix this today by allowing AD's to charge above MSRP. I would be fine paying above MSRP if it was from an AD. I think this would also fix the supply issues as you would have end user customers buying what they really want vs a bunch of flippers that just want to sell for a profit. I think we would see some equilibrium. Maybe Rolex does not want that?

[RyanJ]

Originally Posted by superpop

Rolex could fix this today by allowing AD's to charge above MSRP. I would be fine paying above MSRP if it was from an AD. I think this would also fix the supply issues as you would have end user customers buying what they really want vs a bunch of flippers that just want to sell for a profit. I think we would see some equilibrium. Maybe Rolex does not want that?

The thing some are missing... There is no problem. There are simply impatient people who want what they want now. Pay to play or go away.

Rolex should not and, most likely, will not change anything.

[Podmornica]

The most honest in the current climate would be that the AD organize the online/ in store auction for each professional model they get .. That way there would be no hard feelings ..

[ricardo-sf]

...

[tng11]

Originally Posted by superpop

Rolex could fix this today by allowing AD's to charge above MSRP. I would be fine paying above MSRP if it was from an AD. I think this would also fix the supply issues as you would have end user customers buying what they really want vs a bunch of flippers that just want to sell for a profit. I think we would see some equilibrium. Maybe Rolex does not want that?

I actually agree with this - a dynamic pricing model. It probably ends up working out just as well for the AD and the end user. In some countries that how the AD operates.

[brandrea]

You ask a question that goes through the back of everyone’s mind at one time or another I’m sure ...

I’ve only gone gray once, when the reference I wanted was no longer available at boutiques (non Rolex).

I guess in my case I trusted the dealer after speaking to him several times and knowing he had a stellar reputation here and elsewhere. He also has a bricks and mortar store larger than most ADs. For whatever reason, that gave me comfort as well.

I guess in the end, I knew he’d take care of me if something went terribly wrong, but then I again I expected him to be a selling an authentic watch so I really didn’t sweat anything.

I feel badly for those who are newer to the game and cringe when I see questions here about eBay listings etc. It can be a mine field out there for sure, but I think you’re right the supply demand situation makes those “newer buyers” vulnerable to scams.

[superpop]

Originally Posted by RyanJ

The thing some are missing... There is no problem. There are simply impatient people who want what they want now. Pay to play or go away.

Rolex should not and, most likely, will not change anything.

There is a problem when third party people and companies stick their nose into the normal buying process and circumvent it to the detriment of the real buyers. I am fine to pay and play but I am not going to line the pockets of some back alley flipper and risk my money on authenticity on such an expensive purchase. Rolex could and should fix this.

[Burlington]

Originally Posted by superpop

Rolex could fix this today by allowing AD's to charge above MSRP. I would be fine paying above MSRP if it was from an AD. I think this would also fix the supply issues as you would have end user customers buying what they really want vs a bunch of flippers that just want to sell for a profit. I think we would see some equilibrium. Maybe Rolex does not want that?

In a round about way you can - by bundling PM/ less desirable pieces the AD is essentially charging over MSRP.

[RyanJ]

Originally Posted by superpop

There is a problem when third party people and companies stick their nose into the normal buying process and circumvent it to the detriment of the real buyers. I am fine to pay and play but I am not going to line the pockets of some back alley flipper and risk my money on authenticity on such an expensive purchase. Rolex could and should fix this.

This is the free market at work. Good luck getting Rolex to "fix" the "problem" that their watches are selling out as fast as ADs can get them.

I hope positive changes can occur as it would be nice for people who legitimately want watches to be able to get them.

[superpop]

Originally Posted by RyanJ

This is the free market at work. Good luck getting Rolex to "fix" the "problem" that their watches are selling out as fast as ADs can get them.

I hope positive changes can occur as it would be nice for people who legitimately want watches to be able to get them.

No, a free market would mean that the AD could charge the street value for a product. Rolex is causing this problem because they are restricting the ability of the AD to charge what the product is worth. That is causing all of these issues around the ability to safely and comfortably purchase the product the end user wants. It is very simple.

[teck21]

Originally Posted by superpop

No, a free market would mean that the AD could charge the street value for a product. Rolex is causing this problem because they are restricting the ability of the AD to charge what the product is worth. That is causing all of these issues around the ability to safely and comfortably purchase the product the end user wants. It is very simple.

What would happen to the prices of the tt dj’s and the day dates if ADs were to be allowed price models according to demand.

Do you see that happening?

Even now, nothing is stopping people from safely and comfortably buying the products from an AD.

Pay for the bundle or spend money to build the relationship. It’s that simple.


Sent from my iPhone using Tapatalk

[superpop]

Originally Posted by teck21

What would happen to the prices of the tt dj’s and the day dates if ADs were to be allowed price models according to demand.

Do you see that happening?

Even now, nothing is stopping people from safely and comfortably buying the products from an AD.

Pay for the bundle or spend money to build the relationship. It’s that simple.


Sent from my iPhone using Tapatalk

Price of less desirable models would probably drop to a negotiated discount. But they would make more on the marked up hot products. This would be more transparent though than an assumed bundle or vague promise of a hot model after spending enough. My point is, flippers are driving the price of hot models and grabbing up a big part of the limited supply and causing false scarceness and inflated pricing. Without the flippers, pricing would probably stabilize on all models with a small premium for hot models and a small discount for less desirable models but this would all be controlled by the AD channel, not a bunch of leaches that are offering no added value and a higher price with the risk of being scammed or ripped off. AD's could still reward high spenders with better pricing, that is a free market.

[Jpccarguy]

Originally Posted by superpop

Price of less desirable models would probably drop to a negotiated discount. But they would make more on the marked up hot products. This would be more transparent though than an assumed bundle or vague promise of a hot model after spending enough. My point is, flippers are driving the price of hot models and grabbing up a big part of the limited supply and causing false scarceness and inflated pricing. Without the flippers, pricing would probably stabilize on all models with a small premium for hot models and a small discount for less desirable models but this would all be controlled by the AD channel, not a bunch of leaches that are offering no added value and a higher price with the risk of being scammed or ripped off. AD's could still reward high spenders with better pricing, that is a free market.

+1

[Singslinger]

Originally Posted by RyanJ

The thing some are missing... There is no problem. There are simply impatient people who want what they want now. Pay to play or go away.

Rolex should not and, most likely, will not change anything.

Agree with this.

[L_S_SHOE]

I agree with the OP.

The Grey and secondary markets are inherently less secure, yet they now represent a large percentage of Rolex sales. I worry that scammers will be more successful in the future, not less.

[drfrankenstein]

Originally Posted by superpop

Price of less desirable models would probably drop to a negotiated discount. But they would make more on the marked up hot products. This would be more transparent though than an assumed bundle or vague promise of a hot model after spending enough. My point is, flippers are driving the price of hot models and grabbing up a big part of the limited supply and causing false scarceness and inflated pricing. Without the flippers, pricing would probably stabilize on all models with a small premium for hot models and a small discount for less desirable models but this would all be controlled by the AD channel, not a bunch of leaches that are offering no added value and a higher price with the risk of being scammed or ripped off. AD's could still reward high spenders with better pricing, that is a free market.

+1

Perfect reply to all those who cry “free market/capitalism.” It is a rigged system.

[macrowatch]

Originally Posted by tng11

I actually agree with this - a dynamic pricing model. It probably ends up working out just as well for the AD and the end user. In some countries that how the AD operates.

Isn’t that by definition what is happening with each dealer setting the terms of their bundles?

Quantitatively speaking, every collector can adjust their risk appetite to determine how much they care about 100% authenticity. And then be thankful we are only talking about Rolex games and not PP games for cost of admission.

[David001]

Why would Rolex allow ADs to charge whatever they want and make more money, with no benefit to them?

It may also harm their very clever product marketing plans.

They don't want to drive demand or hype down on the hot watches, they've spent years creating that. The move now appears to be to create the same across other models, so expect the hype around the new OPs to continue/increase until everyone is just as desperate for a turquoise 41mm OP as they are for a SS Daytona.

Letting ADs choose their own sales strategy doesn't fit into that equation.

[RyanJ]

Originally Posted by drfrankenstein

+1

Perfect reply to all those who cry “free market/capitalism.” It is a rigged system.

These are luxury items that no one needs. The luxury market isn't fair and doesn't need to be.

There's rumors that other luxury brands actually burn unsold products so they don't need to sell them at a discount. Think about that for a second.

[teck21]

Originally Posted by superpop

Price of less desirable models would probably drop to a negotiated discount. But they would make more on the marked up hot products. This would be more transparent though than an assumed bundle or vague promise of a hot model after spending enough. My point is, flippers are driving the price of hot models and grabbing up a big part of the limited supply and causing false scarceness and inflated pricing. Without the flippers, pricing would probably stabilize on all models with a small premium for hot models and a small discount for less desirable models but this would all be controlled by the AD channel, not a bunch of leaches that are offering no added value and a higher price with the risk of being scammed or ripped off. AD's could still reward high spenders with better pricing, that is a free market.

Would prices stabilise? Everyone is speaking of the inevitable crash.

If that were to come to pass, how would the large number of these buyers feel?

A very large part of the Rolex brand is that their watches ‘retain their value’, never mind that it’s mostly untrue. Have Rolex prices at an AD ever, ever gone down at any point in history?

Rolex is not going to put that at risk, since they don’t have to, and have the power not to.

Not to mention Rolex clearly has their idea of a hierarchy of watches they want to preserve.

I agree that the problem is the flippers, and since Rolex does not allow them to set prices (for reasons I brought up), I would go even further to say the problem lie with the ‘good’ ADs.

The honorable ones.who do not make popular models unprofitable to flippers by not making them pay close to real prices via bundling or purchase history. They are the ones feeding the flippers.


Sent from my iPhone using Tapatalk

[Rado63]

Everyone wants to buy from the AD because then it's guaranteed to be authentic. SO go to an AD and see what you can buy. What you want is on EBay, C24 , or some reseller website. Where do all the resellers get the watches, some come from flippers but established resellers have contacts all over the world and buy from AD's everywhere. Some resellers pay over MSRP to those AD's so they split the profits. This is what I have heard, no first hand evidence.

[eonflux]

Originally Posted by Rado63

Everyone wants to buy from the AD because then it's guaranteed to be authentic. SO go to an AD and see what you can buy. What you want is on EBay, C24 , or some reseller website. Where do all the resellers get the watches, some come from flippers but established resellers have contacts all over the world and buy from AD's everywhere. Some resellers pay over MSRP to those AD's so they split the profits. This is what I have heard, no first hand evidence.

If ADs sell to greys below MSRP, why wouldn’t ADs sell to greys above MSRP?
Grey markets emerge when MSRP and demand don’t line up, in either direction.

[padi56]

Originally Posted by LoveTheCrown

One more issue with buying from a Grey: I once purchased a Daytona (116520); the last version without the ceramic bezel. There were no papers with it and I was too naive back then to understand the importance of this. Anyway, the crystal did not have the engraved crown at the 6 which bothered me so I went to my AD and asked if they could send it into Rolex and replace it with an engraved crystal. Well, that’s when the ‘fun’ started. I received a lawyers letter a few weeks later telling me it was a stolen watch. After about a month of going back and forth escalating with various threats, I received my cash back. But it taught me a valuable lesson. Buying from a grey not only costs more, but has some very real risks


Sent from my iPhone using Tapatalk

Well having these so called papers which in the real world are just a warranty paper that you get for most products today. And again in the real world these so called papers are far easier to fake than the watches .And again even in the grey market especially ones with bricks and mortar stores, its very doubtful they would knowingly sell anything fake or stolen.Today Rolex watches have stopped being watches bought to be worn and enjoyed they are now little more than ££££$$$$ to many.And while this persists the grey market will thrive as today many bought from ADs are just flipped to the grey hopefully for profit.