A rush of companies is vying to become the eBay of high-end watchmaking – including the legendary online marketplace itself.
The demand for high-end watches exploded during the Covid-19 pandemic. But the Big Four watch brands – Rolex, Patek Philippe, Audemars Piguet, and Richard Mille – are sticking to the limited editions that make their timepieces so rare. The result is an online boom in the buying, selling and flipping business of used and vintage watches and a growing number of startups competing for the dominant digital marketplace.
McKinsey estimates that used watch sales reached $ 18 billion in 2019 and could top $ 30 billion by 2025. Sales of used watches will be about half the size of the market for new retail watches by 2025, up from about a third today, according to the consulting firm.
“The used watch market is still very similar to the Wild West,” said Toby Bateman, CEO of Hodinkee, a popular watch collecting site. “There are many platforms for selling watches. And customers don’t necessarily know who they’re buying the watch from. You can’t guarantee it’s real. You cannot guarantee that it is not a Frankenwatch. And it cannot guarantee that the watch will work properly. “
On Tuesday, Hodinkee opened its second-hand watch shop, here it will buy and sell watches produced after 1990. The company, which raised $ 40 million in December from the likes of NFL quarterback Tom Brady, singer John Mayer, Apple alum Tony Fadell and investor Peter Chernin – aims to be the “world’s leading watch brand.”
Hodinkee’s thrift store will begin with an assortment of 250 used watches and provide authentication and refurbishment from its state-of-the-art watch facility in Atlanta. Bateman said Hodinkee’s edge over its growing list of competitors is its expertise and history as a trusted watch name.
Still, competitors are attracting investors’ attention. Germany-based Chrono24 recently raised € 100 million ($ 116 million) from investors such as General Atlantic and Aglae Ventures from LVMH CEO Bernard Arnault. Chrono24 valued the investment at more than $ 1 billion, making it the first “unicorn” in this segment. According to its own information, the company carries around 500,000 watches from more than 3,000 retailers and over 30,000 private sellers.
Meanwhile, Switzerland-based Chronext planned to raise about $ 270 million in an initial public offering that would have valued the company at more than $ 1 billion. However, Chronext said last week it was postponing its debut due to “adverse market conditions for high-growth companies”.
Chronext has put together a high-profile board of directors – including former Facebook chief marketing officer Gary Briggs and former Barneys New York CEO Daniella Vitale – and plans to expand into the US and Asia.
Companies such as Watchfinder, WatchBox and Watchmaster are also expanding and pushing for market share. Even eBay is targeting the Rolex crowd, launching an authenticity guarantee program, and targeting upper price range watch collectors.
The question is how long the current watch boom can continue and whether there are enough online sales. The Big Four watch brands, which power the majority of the high-end collection, are all privately owned and, despite popular demand, have kept their low production numbers to maintain their legendary quality and exclusivity. According to a report by Morgan Stanley, Rolex sold 810,000 watches last year, while Patek sold 53,000 watches, Audemars 40,000 and Richard Mille 4,300.
Demand is likely to exceed supply, at least in the short term. For sports watches made of stainless steel and other popular models that are hard to buy in retail, with long waiting lists and tight contingents, prices are rising on the secondary market. A Patek Philippe Ref. 5711 Green Dial, which sells for $ 35,000, sold for $ 490,000 in July. The values of the Audemars Piguet Royal Oak 15500ST (blue dial) have almost tripled since 2017 to over $ 55,000, while the value of the Rolex Day-Date 40 has increased by 76% since 2017 to over $ 50,000, according to Chronext.
Industry officials say that global prosperity fueled by stocks and cryptocurrencies, along with the proliferation of online watch collectors and information sites, has spawned a whole new generation of young collectors buying and selling watches online. Social media has also boosted sales as more and more collectors like to flash their Swiss status symbols on Instagram and TikTok. For watch buyers and sellers, startups and online marketplaces, it remains to be seen how many of these new dealers will remain when used prices and demand decline.
“There are far more collectors and enthusiasts today than there were a few years ago,” said Bateman.