![]() Sorry, but there isn’t a retailer large enough – or even two or three – closing or not, that could supply the amount of product to the grey market that is out there. That’s the type of narrative brands offer. “Well, a retailer in some foreign land was closing and it liquidated its inventory.” When you ask this question, most people in the know will answer by spinning a yarn. When that happens consistently for a period of time, clients and authorized retailers alike tend to stay away from purchasing any watch from that brand completely. If you’re looking at a watch that has a manufacturer’s suggested retail price (MSRP) of $12,000, which you can purchase with a modest discount from your local authorized retailer, but then look at it on grey market sites, where it’s being offered at $7,500 brand-new, you might instantly wonder what is wrong with the watch or the brand. The biggest challenge that the grey market creates (again, in my opinion) is to the brands themselves.īrands that take the most advantage of supplying the grey market eventually gain a reputation for their watches being essentially worth much less than the retail price indicates. When the brand representative walks into a brick-and-mortar authorized retail shop, he or she now hears, “I can’t sell any of your watches because my clients are buying them online for less than I can sell them for” or “why should I spend thousands of dollars and dedicate valuable retail space to your brand when your watches are being sold all over the Internet for much lower than my cost?” This state of affairs leaves the distributor losing sales. The grey market also causes challenges for a brand’s distributor, whose main priority is to sell watches to the authorized retailers. The negative effects of this turn of events on the official side of the industry are extremely damaging for authorized dealers, distributors, and even the brands themselves.įor the authorized retailers it causes problems because now a client walks in, tries on the watch, asks how much, then says, “Gee, I can get the same watch for 20 percent less from The retailer is then forced to either sell the watch for little or no profit or not make the sale at all. Since the Internet, grey market retailers have been able to create a presence on the web, so doing a Google search for a watch is likely to allow consumers visibility of the prices offered by grey market dealers and buy online. These pre-Internet transactions had little effect on the typical authorized retail channels because unless you actually walked into a grey market dealership, it was highly unlikely you would ever know they existed or that you could purchase watches at seriously discounted prices. Pre-Internet, grey market retailers often existed in major cities and had a storefront (think 47 th Street in Manhattan), where they displayed the watches and sold them at discounted prices. When a brand or retailer has excess inventory, it might approach grey market dealers with offers to purchase that inventory in bulk at deeply discounted prices. Simply put, this non-authorized side of retail provides the brand or retailer with the ability to clear excess or old inventory.Īnd the grey market has been around for many decades, long before the Internet. Grey market retailers are not part of that authorized retail chain, but they still manage to obtain and sell new timepieces. The distributor then sells the watches to authorized retailers, who sell the watches to retail clients. The classic authorized retail channel works this way: a brand manufactures watches, which are sold to official distributors throughout the world. It allows brands and retailers to clear slow-moving inventory when all − especially collectors − might be better served if brands tailored production more closely to consumer demand.Īs it pertains to the fine timepiece industry, the grey market is a store (online or brick and mortar) selling brand-new watches, but it is not part of a brand’s authorized retail channel. The grey market serves a purpose that, in my humble opinion, is detrimental to any brand involved and the industry as a whole. The truth is that the grey market exists because the brands themselves not only allow it to happen, but in many cases directly feed it. The following is a broad description of the grey market, how and why it exists, and what (if anything) could be done for a brand to eliminate – or at least minimize – its presence.Īnd let me be clear from the get-go: this is not a rebuke of online stores, grey market dealers, or the many people working on that side of the industry. ![]() ![]() Most recently, my post A Cautionary Tale on Buying New Watches Online was met with quite a few comments, quite possibly leaving more questions than answers. Friends, colleagues, and clients have posed many questions about the grey market for fine timepieces over the years. ![]()
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