Bonetto Cinturini

March 30, 2024By Bonetto Cinturini

The grey market is a business model that has always been a great problem for many luxury watch manufacturers, above all with very valued luxury accessories that have become almost a global icon. It cannot be denied that choosing to buy a pre-owned wrist accessory has advantages over purchasing a new model: today the grey market gives purchasers access to a wide variety of used and new models for all tastes at lower prices than those in the official price lists. No wonder it has become an important part of the market.
Watchmakers can certainly not ignore this growing business, which is convenient for both sellers and purchasers. It is, in fact, a greatly expanding market with a current value of around 20 billion Francs.

 

A simple, safe secondary market

Why is the “secondary” market convenient for buyers and sellers? The answer is simple: because it is an easy and safe place to find what you are looking for. For traders and private sellers, the grey market is convenient for various reasons: first of all, official retailers need to sell reserves (often a lot) of new watches, while private vendors are above all interested in earning through the sale of pre-owned watches of a well-known brand. But this is no longer a novelty: for a while some luxury watch manufacturers, among which Audemars Piguet and Breitling in particular, have been well aware of the business potential of today’s used watch market. The solution they found to guarantee a good portion of it is CPO (Certified Pre-Owned). Admittedly, on balance, a quality watch that lasts for many years and whose owner has changed various times can give a higher profit. Even Rolex, in December 2022, declared that it wanted to enter the CPO market, and immediately started collaborating with its official retailer Bucherer, a novelty that was certainly unimaginable when it entered the market.

 

Rolex luxury watches appear on the pre-owned market

A true revolution for the most famous watches in the world: Rolex (surprisingly!) appears on the pre-owned market, allowing clients to purchase famous brand models, but only under the perquisite that the internal and external conditions, as well as the operation state, of the pre-owned watches have been verified. These watches are certified, just like authentic models and sold on the market with an international two-year guarantee. This is great news for luxury accessory enthusiasts, considering that authenticated watches will also receive their own version of the Rolex “wax seal” tag. This does not mean that Rolex watches can be bought everywhere, though. Certified models can only be found in the few sales points that are authorised to supply them – initially only at the Bucherer boutiques in Switzerland, Austria, Germany, France, Denmark and the UK, but the number of authorised retailers will increase over time.

 

Rolex and the grey market: why does selling used watches follow the CPO programme?

Placing the highest number of models possible on the market has always been the goal shared by Rolex and the other luxury watch brands. The reason for this is simple: manufacturers of a product in general (not just watches) can receive the profit deriving from its sale only once, through direct sale or through the official retail network. To understand the underlying interest strategy, just think about the automobile sector, which tends to convince buyers to choose the preferred model in the least time possible. After it has been bought, the manufacturer’s only interest is the maintenance, which is an additional source of income. The same conditions are true for the Rolex watch world: it is commonly known that there has always been an incredible inflation spiral around these accessories, no matter whether new or pre-owned. This phenomenon is tied also to the emotional implications felt by most luxury watch enthusiasts: the prestige, beauty and elegance of these models push clients to spend important sums of money in order to wear them on their wrists.
So why did Rolex decide to enter the second-hand market? Because when it started it certainly could not imagine that, in the future, people would be willing to pay large amounts for an old-fashioned Submariner or a Daytona, and when we say large amounts, we mean prices that are even 1000 times higher than the price list. It goes without saying that, in the same way as with vintage cars that are always appreciated for their fascination and elegance, even old-fashioned luxury watches are a good source of profit for their manufacturers.

 

What does Certified Pre-Owned mean for Rolex and its clients?

Today, official Rolex retailers are authorised to buy Rolex watches that are at least three years old back from owners. The resale procedure for these watches includes a guarantee verification by Rolex, in order to check their operation and originality. Once these aspects have been verified, the models are given an official authenticity seal and are ready to be sent to Bucherer shops, complete with a two-year guarantee as a “Certified Pre-Owned” model. Obviously, not all clients know about CPO certification: selling used Rolex watches is part of many retailers’ daily work routine, but in some cases the purchaser can have doubts and be undecided. Despite this consideration, it should be said that Bucherer can only sell certified models from its brick-and-mortar or online shop. The sale of CPO watches on the secondary market is currently not permitted by Rolex: it is a strategy for removing watches from the grey market and keeping control of used models. The dealer determines the sales price considering the service costs, and on the basis of the market situation at the time.

 

CPO vs grey market: how different are the prices of new models?

Rolex is not interested in lowering its prices, but rather in keeping model prices very high or, more correctly, higher than the price of other similar watches on the grey market. You can see how official Rolex CPO models are decidedly more expensive than identical and new models sold by reliable traders that operate on the grey market. Rolex CPOs sold by the authorised sales point cost around 38.3% more than pre-owned watches on the grey market. CPO watches evidently cost more than those sold on the grey market because they have been serviced and are certified.