Any purchases made on this website may earn us a small commission, please click if you want to learn more.
At first glance, the term “grey market dealer” does not look appetizing at all. It is one shade of color away from being a “black market dealer” where many stolen watches are sold. In reality, however, the grey market could not be much further away from the black market.
The term grey market dealer sounds quite disparaging – and sometimes can be used in this way (although rarely). Anyone who is worth their salt in the world of watches simply knows that grey market means second hand.
There are plenty of legitimate grey market watch websites on the internet such as Chrono24, BobsWatches & LuxuryBazaar.
Table of Contents
What Is A Grey Market Rolex Dealer?
A grey market Rolex dealer is simply a second-hand watch dealer. They do not sell fake watches, they do not sell stolen watches.
The simple function of a grey market watch dealer is to buy a used watch from one individual and sell this watch to another individual for a profit.
Grey market dealers will usually operate in cash payments (through bank transfer), but can also offer other deals such as part-exchanging models for other stock. Since they buy and sell watches regularly, they will often have a lot of variety, somewhat comparable to an authorized dealer.
Authorized Dealers
Authorized dealers are exactly what their name suggests. They have been authorized by elite brands to sell their brand new products. Often referred to as AD’s, authorized dealers are limited on the number of pieces they can buy from each brand of a particular range. In addition to this, they are also forced into secrecy about disclosing how much they pay for each watch, along with various other contractual terms.
This is mostly beneficial for the large watch brands since they are able to force AD’s to buy their entire range. If you want to buy the hottest and most profitable models to resell, you must also buy the less popular and out of fashion models too.
What Is The Use Of The Grey Market?
The grey market provides a useful exchange of preowned watches. Without the grey market, it would be very difficult to value your own watch and find a buyer.
Most luxury watches depreciate (or appreciate) at different values. As an example, taking a Panerai home from the store may remove 25% of the original sales price. If you were to take a Submariner home from the store, at current price levels you might make a 20% profit.
If you ever wish to sell your watch, or part-exchange it for a new model. The grey market is ideal. It is liquid and simple to use. There are hundreds of grey market dealers with their own reputation and stock all across America. As they make money from each transaction, they will be happy to help you find what you want.
Eliminating Pitfalls & Dangers Of Buying A Preowned Watch
If you are selling your watch to a grey market dealer, you will likely get less money than you would from a private individual. However, with the increase in watch crime, this is often a surcharge worth paying.
Desperate individuals have and will continue to try and steal luxury watches in order to try and make money. When selling to a dealer, this risk is completely eliminated.
The risk is also mitigated when buying a preowned watch. If buying from an individual, you could always be tricked with a cloned watch or something with a movement problem not realized until days later. When buying from a reputable dealer, they will always look to fix any problems you may have since their reputation and business are worth a lot more than $10000.
Knowledge Of The Product
Due to the fact that a grey market dealer is selling watches to feed his family, he (generally) knows a lot about what he is selling. The average grey market dealer will have a very broad knowledge across a variety of models and brands, this is simply not there with an authorized dealer.
Often staff in authorized dealerships will only know facts about the current range and nothing about models that existed before they had this job. In addition to this, not all AD’s have contracts with every single brand. An AD that does not deal with Patek Philippe may have no idea what a Nautilus is, or how much it’s worth. Simply because they have never sold this brand or come into contact with it before.
Why Do People Hate The Grey Watch Market?
The grey market has become hated by some watch buyers in recent years. The main reason for this is that dealers will be viewed as greedy for selling watches for more than they are worth.
This is a common misconception of a grey market watch dealer. Of course, the dealer must pay taxes, rent, salary to employees and afford to put food on their table. However, watch prices are mostly based on supply and demand.
Why Prices Have Escalated
Just 15 years ago, grey market watch dealers were a lot more loved and appreciated than they are now. This is because they could often offer lower prices – specifically on Rolex sports models. And this is specifically why grey market dealers are disliked today.
As the popularity of Rolex has skyrocketed, the brand has held back its production and caused a decrease in supply. The decreased supply, coupled with the increased demand has caused prices to increase significantly.
Rolex Flipping Out Of The Back Door
If you are a customer who is able to buy a Rolex Submariner from an authorized dealer, this will set you back around $9000. Nothing has changed for these people.
However, due to the supply and demand issue described earlier, this has presented a new opportunity for scalping. The customer is now able to sell the Rolex submariner for $11000 to a grey market dealer and make a $2000 profit for themselves.
The grey market dealer can now sell this submariner to a customer for $13500, making a $1500 profit for himself. Even though the grey market dealer has sold a watch for $13500, he is likely unable to buy this watch for $9000 from an authorized dealer. So in this example, he must pay more and charge more.
If the supply of Rolex submariners were to increase, this would cause prices to fall. Then we may get back to the prices of the early 2000s where used watches actually sold for less money than new watches.
Grey Market Dealers Are More Open Than Authorized Dealers
This phenomenon is mostly due to the transparentness of the marketplace. If for example, you see that a grey market dealer is selling a Breitling Aerospace for $2900. You could be cheeky and pretend you haven’t noticed. If you then ask the dealer how much they would buy your Aerospace for, you now know their profit margin. If they say $2200, you can be pretty confident they’re looking to make around $700 pre-tax profit on the sale.
Due to contractual constraints, authorized dealers cannot disclose how much profit they are making from their watch sales. Neither do they (usually) buy any pre-owned watches themselves.
A popular figure thrown around on the internet is that authorized dealers make approximately 30% on brand new Rolex sales, although this number has never been proven.
