Everyone has heard of a black market or even The Black Market. In movies and TV shows.
The Black Market is often portrayed as a network of shady figures moving guns, drugs, and other illegal items across borders and into the hands of bad guys. In reality, the black market is mostly stolen goods and knock-off products being sold as the real thing.
Let us talk about but equally important to the luxury watch buyer is the grey market. The grey market is made up of the legal but sometimes ethically dubious watch dealers who sell high-end timepieces at massive discounts.
Even the wealthiest shopper is going to appreciate finding a Rolex watch for 40% off the list price.
This is an example of what you might find on a grey market website. Before making that purchase, though, it’s important to understand exactly what the grey market works and how it affects the luxury watch industry.
What is the grey market?
The grey market is not a place or thing. It’s the term given to retailers (usually online) who purchase the unsold product and resell them at a huge discounted price. Usually, these retailers buy their product in bulk from authorized watch dealers who have been unable to move their inventory and are trying to recoup losses.
Grey market retailers are not doing anything illegal. Thus, which is why they not only don’t fight hard against the perception of being resellers, they openly discuss their business practices. For some people – both consumers and watch dealers – the grey market provides a necessary, even welcome service.
To luxury brands, who would prefer to work exclusively with authorized dealers, the grey market represents a complex quandary.
For luxury watch brands (think Rolex and Tag Heuer, among many others), authenticity is their greatest asset. There is no end to the number of counterfeiters in the world making cheap yet surprisingly accurate fakes and knock-offs. To ensure the value and uniqueness of their creations, watchmakers need to minimize where authentic watches can be attained.
This is where authorized dealers come in. Watchmakers make exclusive arrangements with certain dealers to sell their timepieces. For the watchmakers, this arrangement makes it easier to undermine counterfeiters. For the dealers, they get to claim a certain level of exclusivity in the products they sell. And for the buyers, they can feel 100% secure that they’re getting the real deal.
Where do grey market watches come from?
As mentioned earlier in this article, most grey market watch retailers get their products from the authorized dealers. There are two reasons behind this. The first part is when authorized dealers make their arrangements. They are often required to buy the products in bulk and are not permitted to sell the unsold product back to the watchmaker. If a large amount of inventory doesn’t sell, the dealers have to find something to do with it.
The second part is the recent downturn in the luxury watch market. Though wristwatches have remained surprisingly popular in the age of mobile phones, luxury watch brands are hurting. The reasons for that downturn are multifaceted. However, the bottom line is that many authorized dealers are stuck with the expensive product. The grey market offers a plan solution.
Should I buy from a grey market?
Watchmakers would, for the most part, prefer you didn’t buy from the grey market. Similarly, authorized dealers would rather sell their product to the consumer at full price than unload their inventory for a massively reduced fee. Yet, the watches being sold on the grey market are real, not counterfeits, so why wouldn’t the average buyer shop there?
There are a few reasons why you should consider avoiding the grey market. The first is that any watch sold by an unauthorized dealer will have its warranty voided. The luxury brands all offer warranties on their products, but those are no longer are in effect for secondhand products, even if the watch is technically brand new.
Secondly, in order to protect the identity of the authorized dealers who unloaded their product to the grey market, resellers will sometimes remove the serial number. Not only is this potentially illegal (for the seller and you), it means that if your watch is stolen, you’ll have no way of getting your watch back or making an accurate insurance claim.
You should also be cautious because, while many grey market websites are legitimate businesses that sell exactly what they claim to sell, there are still unscrupulous folks in the arena. It’s not unheard of for a reseller to have bought a used luxury watch and claim it was brand new. This uncertainty is the inherent risk of buying from an unauthorized dealer.
What are the grey market websites?
There are numerous grey market websites that operate exclusively in luxury watches. The US-based Authenticwatches.com and IconicWatches.co.uk, based in northern England, are two of the biggest names. They both offer guarantees about the authenticity and quality of their products. Jomashop.com, in New York City, has been selling luxury watches, as well as jewelry and bags, for over three decades.
Perhaps the biggest grey market reseller is Chrono24, a global market that is so large, luxury brands have started to accept them as an inevitability. One luxury brand, Frederique Constant, has even gone so far as to work directly with the website, selling their own product at the original, full list price. That’s a stark sign that luxury watchmakers have seen the writing on the wall.
Is it unethical to buy on the grey market?
As discussed, there are some inherent risks and drawbacks to buying off the grey market. Furthermore, some authorized dealers may be illegally offloading their product to grey market dealers, depending on the terms of their arrangements with the watchmakers. On the other hand, luxury brands are now working with the grey market and some even seem to be actively supporting it with their policies.
All of that makes the ethical question of buying from the grey market a bit murky. The product is generally real and most of the sellers are legitimate businesses, so it’s hard to argue that there is anything technically wrong in shopping grey market.
All we can say is if you want to be assured that you are buying an authentic, one-of-a-kind and totally new luxury timepiece, you should probably go straight to the source. Otherwise, every watch collector has to decide for him or herself whether buying from a grey market is worth it.