ADs selling preowned at market price...ethical dilemma?

[Marcjvr]

Noticed that a local AD is currently selling a 2019 AirKing in like new condition for $1,000 over MSRP

What happens if they get a brand new AirKing in stock from Rolex and a buyer walks in looking for an AirKing... do they hide the new model in the back until they sell the preowned one for more than MSRP?

Would Rolex care how they handle that situation?

If a new to Rolex customer walks in it would look ridiculous to see a brand watch selling for less than the preowned one in the case next to it. So the AD would have to do some explaining which could get quite awkward

I would love to know how Rolex would prefer ADs to operate in this situation

[wholecz]

Oh man I know a AD sold a Patek aquanaut to a client who does not really like it and that client returns the aquanaut to the AD two days later. So the AD sold the aquanaut as second hand at market price after return. I know the AD was intended. NASTY.

[mykii]

Originally Posted by wholecz

Oh man I know a AD sold a Patek aquanaut to a client who does not really like it and that client returns the aquanaut to the AD two days later. So the AD sold the aquanaut as second hand at market price after return. I know the AD was intended. NASTY.

I don't get the latter part, re: intended and nasty, but this happens all the time. IMO, there is nothing wrong with it, and ADs operating at grays is fine with me. They can validate the product better than a gray seller, and offer the same service and availability. Win win to me. .

[wholecz]

Originally Posted by mykii

I don't get the latter part, re: intended and nasty, but this happens all the time. IMO, there is nothing wrong with it, and ADs operating at grays is fine with me. They can validate the product better than a gray seller, and offer the same service and availability. Win win to me. .

The reason I say the AD were intended is because they knew that client does not like an aquanaut, they still offerd one to that client because they knew that client was gonna return it so they could resell the aquanaut at the market price.

[77T]

It’s not an ethical matter, it’s a market issue.

First, for an AD to sell preowned Rolex, the shop’s contract states they must have them in a separate display case away from the new inventory.

In the event a new, high demand choice SS model comes into the shop, and a used one is selling for over MSRP, the owner will likely keep the new one in the safe. But if they choose to display it, then the customer has a choice - one which is obvious to the casual observer.


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[JSolution]

Originally Posted by wholecz

Oh man I know a AD sold a Patek aquanaut to a client who does not really like it and that client returns the aquanaut to the AD two days later. So the AD sold the aquanaut as second hand at market price after return. I know the AD was intended. NASTY.

Yeah that is a liberty.

[jon_jon]

This seems like old news that has been going on for at least a few years since the SS Rolex craze started.

[Marcjvr]

Originally Posted by jon_jon

This seems like old news that has been going on for at least a few years since the SS Rolex craze started.

Correct, which is why I am wondering what guidance Rolex offers, if any, on the matter

It certainly appears as a conflict of interest. This is where it gets concerning for Rolex:

If AD1 is selling preowned watches at market price. AD2 down the road is not. AD2 realizes he is missing out so he either decides to start his own preowned watch at market price offering. Or he is incentivized to contact a big TS and sell out the backdoor to them.

So is one approach ok and one approach not?

[Harry-57]

ADs sell new watches for MSRP or MSRP minus discount depending on AD, make and model. ADs who sell used watches sell them at market value. This could be below MSRP, around the same as MSRP, or above MSRP depending on the make and model. Where's the ethical dilemma?

If an individual wants to sell something for considerably below what it is worth, that is the decision of the individual. They should not presume than anyone else is obliged to and they would be ill advised to attempt to run a successful business - unless they were planning to run it into the ground.

[Tricolore66]

Market price is market price, determined by what buyers are willing to pay, and as much as we’d like to think dealers set pricing it has as much to do with buyers as sellers. People expect big discounts on new PM models, so it works both ways. If AD’s are prohibited from selling pre-owned watches it only empowers the grey market, and if you’re paying market price wouldn’t you rather buy from an AD?

I don’t see any issue with it, but I think Rolex has an obligation to ensure these are bonafide pre-owned watches, such as limiting them to one year old or older from original purchase date, separate display cases, and possibly limiting internet advertising. There are dealers who will always game the system, and there always will be no matter what the rules are.

[deuxani]

This is a huge part of the problem. AD's becoming grey dealers on the side and driving the prices up. A new Daytona comes in, sell it to someone who will return it in a couple days and then resale it for double the price with a mega profit. Other AD's do the same, together they can make the second-hand prices higher and higher so no mortal can buy watches anymore as nothing is ever available at retail price.

But if this is the market and people still buy watches at double or triple the retail price, this will never change.

[mykii]

Originally Posted by wholecz

The reason I say the AD were intended is because they knew that client does not like an aquanaut, they still offerd one to that client because they knew that client was gonna return it so they could resell the aquanaut at the market price.

But the AD doesn't know what the client would do, or if they would buy it, nor was it the client's only course to "return it" to the AD.

I think selling used watches at ADs is a fantastic business model, and can provide some purpose to the market as a whole at the same time. I don't think this is a particular ethical conflict though - it's a business, designed to make money, not a charity.

Originally Posted by Tricolore66

Market price is market price, determined by what buyers are willing to pay, and as much as we’d like to think dealers set pricing it has as much to do with buyers as sellers. People expect big discounts on new PM models, so it works both ways. If AD’s are prohibited from selling pre-owned watches it only empowers the grey market, and if you’re paying market price wouldn’t you rather buy from an AD?

+1.

[supernova]

Unless you think Capitalism is an ethical dilemma, then no. An AD is open to make money and if people are willing to buy pre-owned higher than MSRP from them, then good for them.

It's definitely what I be doing if I had an AD, I wouldn't care about a watch enthusiast's feelings on paying more than MSRP, my concern would be to make as much money and improving the living standard of my family.

[macrowatch]

Originally Posted by Marcjvr

Correct, which is why I am wondering what guidance Rolex offers, if any, on the matter

It certainly appears as a conflict of interest. This is where it gets concerning for Rolex:

If AD1 is selling preowned watches at market price. AD2 down the road is not. AD2 realizes he is missing out so he either decides to start his own preowned watch at market price offering. Or he is incentivized to contact a big TS and sell out the backdoor to them.

So is one approach ok and one approach not?

I think they are silent in official guild line, but very loud in indirect guild line. Meaning, they require separate section for Rolex that meets all build out criteria. There are clearly no used watches here in this space. What the AD chooses to do in the non branded section of the store they are much more at liberty to choose.

[Captain Lee]

I purchased my 2018 BLNR "pre-owned" from an AD at a reasonable market rate. They had sold the watch new and it still had a couple stickers intact on it. I paid a modest premium for a discontinued "new" used watch. I was happy to be able to get that model via an AD considering it's no longer in production. I don't see a problem with them pricing watches based on the market value once the card has been swiped. Collusion with "buyers" to do this is a different issue but when you're talking selling something for 50-100% over retail I can understand the temptation.

[77T]

Originally Posted by deuxani

This is a huge part of the problem. AD's becoming grey dealers on the side and driving the prices up.

AD’s are not, by definition, grey dealers when they sell pre-owner Rolex models.

Sellers don’t drive up prices. Instead, it is the buyside demand that drives up prices when inventory doesn’t meet demand volume.



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[brandrea]

Originally Posted by 77T

It’s not an ethical matter, it’s a market issue.

First, for an AD to sell preowned Rolex, the shop’s contract states they must have them in a separate display case away from the new inventory.

In the event a new, high demand choice SS model comes into the shop, and a used one is selling for over MSRP, the owner will likely keep the new one in the safe. But if they choose to display it, then the customer has a choice - one which is obvious to the casual observer.


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Interesting information Paul ... I didn’t know the bit about separate display cases, but makes total sense

[Rashid.bk]

Not unethical or anything else. It’s not milk or COVID 19 vaccine, it’s a luxury item no one needs and the market(us) decide how much this trinket costs. It wasn’t unethical when the same ADs offered discounts under MSRP for new watches and sold used ones for far less or greys offered huge discounts versus today selling a bnib LV for over $20k. Now if they were selling new watches with market adjustments on top like car makers do, that would be unethical(sadly this happens in some oconus markets).

[Xenon]

Capitalism

[Rado63]

It does seem to be unethical if I could get my inventory to the other side of the room and then charge a higher price. The SA somehow is not aware that a new Air King is in stock but not in the retail case, so will steer the client to the pre owned case. Unfortunately what if the other store down the street is also owned by the same AD their they sell pre owned? Isn't any better. is it?

[Watchflair]

Business is business. Immediate purchase on the secondary market commands a premium.

Would you sell the Aquanaut for MSRP or would you sell it at market price? Same deal with the Airking?> I think not...

[prnceofpersia23]

I had a similar situation when I wanted to purchase a pre-owned Milgauss at a slight premium at my AD. They went and pulled a new one out the back for me at MSRP and discounted it as well. I have a relationship and purchase history with this AD.

The prospective buyer of that Air-King may not have the same result. The AD could keep the new AK for a client with a relationship and let the buyer without purchase history buy the used one. This is the the current market environment. Wouldn't you do the same as a business/AD owner?

Look at it this way, they will likely sell both the new and used Air-Kings anyway, so their bottom line is the same no matter what. To which customers is completely their call.

[Rashid.bk]

Originally Posted by Watchflair

Business is business. Immediate purchase on the secondary market commands a premium.

Would you sell the Aquanaut for MSRP or would you sell it at market price? Same deal with the Airking?> I think not...

Very good point, I’m no AD but if I decided to sell my 5711 today that I bought ten years ago, as an example, I would want the most.

I’m sure the only watches in the used section priced like that are the usual suspects, there are surely great deals on Breitling, Omega and Cartier, no complaints there I see.

[joli160]

What,s wrong with buying at market price, it is today’s value

[Tools]

Rolex would not have any idea what a Dealer was selling used watches for, nor would they care.

[MRPWRPATX21]

The exact flip of the "I can't believe ADs would try to get market price for in-demand watches" is "why should a consumer in a truly capitalist economy feel entitled to be able to purchase something that is immediately worth more than they paid, without undertaking much, if any, risk?"

I don't see how one is any more/less "right" or "just" than the other. I'd certainly love to be able to buy a couple of things at MSRP without any wait list, but the fact that Rolex is controlling supply/demand to create this situation (and thus the conundrum faced by ADs) is exactly the thing that makes that watch I'm after so special AND retain it's value so well. This isn't a complicated subject if you think beyond the new age mindset of "it's not fair that someone has something that I don't have/I have the right to [insert literally anything under the sun here]" that is permeating through our country right now.

[BDII]

Originally Posted by deuxani

This is a huge part of the problem. AD's becoming grey dealers on the side and driving the prices up. A new Daytona comes in, sell it to someone who will return it in a couple days and then resale it for double the price with a mega profit. Other AD's do the same, together they can make the second-hand prices higher and higher so no mortal can buy watches anymore as nothing is ever available at retail price.

But if this is the market and people still buy watches at double or triple the retail price, this will never change.

Yup... when mine sold me my black dial Daytona, he mentioned several times he would buy it back from me if I decide to sell


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[Marcjvr]

Thanks all so the crux is then if I am an AD and I am selling a BLRO to a name on the list, or putting it in my display case I would be a complete fool.

My better option is to try and bundle it with some PM pieces to maximize my profit. Or ask my uncle to buy it and return it immediately so I can flip it for market price. Or contact a Gray and sell it out the back door to them at some spread between MSRP and market price

Rolex being no fools must recognize this opportunity for the ADs and thus must at least set some rules/advice for ADs to follow

[timlaw]

i dont see the AD's problem as the stainless professional model will never be on display in the shop anyway as it will have been sold to a vip or waitlist buyer after direct contact between the AD and the lucky punter

for mere mortals the pre owned watch is on display at market price and wouldnt you rather buy your pre owner Rolex from an AD to avoid any provenance issues

[ChipotleBanana]

Nasty practice and IMO highly unethical.