How to Buy a Rolex — Inside the Luxury-Watch Gray Market

Picture-Illustration: The Minimize; Pictures: Getty

The wealthy can have just about something their diamond-encrusted hearts want — three-minute private-jet flights, a silly yacht, this marriage ceremony — except it’s an enormous fancy watch. Not that they’ll’t afford it. It’s an entry problem.

Technically, there are two methods to purchase a luxurious timepiece. The primary: You waltz right into a boutique with a reputation like Rolex, Audemars Piguet, Patek Philippe, or Richard Mille emblazoned throughout the storefront home windows and ask for a salesman. But when you need to Google Maps the instructions since you’ve by no means been there earlier than, this isn’t the way you’re going to seek out one. See these blinged-out wrist clocks contained in the show case? Yeah, the gross sales man isn’t going to really promote you a type of. He can’t. The stock on the first marketplace for the so-called hype or trophy watches could be so low there isn’t even a wait checklist. So that you’ll do the second: Discover a grey market luxury-watch seller.

The grey market luxury-watch seller will reply to your DM immediately — he doesn’t care who you’re, so long as you’ll be able to pay. And he has the stock: spectacular diving options you received’t truly use, uncommon watch-face colours, so many diamonds. You possibly can see for your self on his Instagram. The one catch: You’ll have to pay — money or crypto — typically tens of hundreds of {dollars} above urged retail worth.

Neel Alwani can promote you an Audemars Piguet Royal Oak or a Patek Philippe Nautilus — chrome steel fashions designed by Swiss watchmaker Gérald Genta that appear to be in every single place (together with the wrists of Jay-Z and Leonardo DiCaprio) aside from the precise boutiques. By reselling these fashions secondhand, he self-reported $113 million in gross sales final yr (although he didn’t open up to me his yearly income).

The 26-year-old definitely seems to be like $113 million in gross sales. The web presence of those sellers is usually a mix of the identical components: uncommon sneakers, flying personal, and Skittles-colored sports activities automobiles. His most up-to-date automobile buy, he says, a black Maybach, sits alongside an orange McLaren, a purple Ferrari, a Lamborghini, and an Audi R8. A comparatively down-to-earth Mercedes-AMG C 63 rounds out his self-described assortment. “If you’re going to are available in and purchase a $500,000 watch and I’m driving a Toyota, that doesn’t make sense,” he says.

A lot of the automobiles reside within the storage of a five-bedroom, five-bath Miami house with a pool that he shares along with his two youthful brothers, each of whom work within the enterprise. His dad and mom bought a second house subsequent door, making it really feel extra like a compound with fixed motion.

Alwani grew up within the watch world, albeit with consumers who had been extra of a cruise-loving crowd. His dad and mom owned shops again house in St. Maarten. When Hurricane Irma hit and destroyed each infrastructure and tourism in 2017, enterprise got here to a halt. By 2018, Alwani was on his personal, promoting out of his condo in Miami’s Brickell neighborhood. All the Alwanis are photogenic. Posing with severe wrist bling and diamonds in entrance of helicopters and sports activities automobiles offers them a Kardashians-of-the-watch-world really feel. “Miami is so much about exhibiting off — for me that’s nice — all I’m doing is capitalizing on that,” Alwani tells me.

Even the act of buying is extreme luxurious theater. The watches, posted to Instagram or TikTok and typically offered inside minutes, are dealt with with black gloves. Many are then delivered to consumers — largely males of their 20s, 30s, and 40s keen to pay extra for the sort of wrist sweet that indicators success — through armored autos.

To promote, he depends upon a method of YouTube subscribers (291,000) and Instagram followers (214,000). He additionally presents watches to extra Insta-famous associates and will get free publicity.

At every step, everybody makes a bit of cash. Take the Audemars Piguet Royal Oak 15500ST. As soon as the in-demand mannequin is bought at retail for about $26,000; it’s resold for greater than double and immediately can commerce anyplace for $60,000 to $100,000. The watches are then flipped through eBay-style marketplaces or immediately via the DMs of particular person watch sellers. The luxurious manufacturers vet potential prospects, with salespeople doling out watches on a case-by-case foundation to attempt to keep away from promoting their storied fashions to outright flippers. Not surprisingly, it doesn’t work. A good friend of a good friend lately satisfied a Rolex salesperson in Aruba that he wished a Rolex Submariner to put on on his marriage ceremony day. He flipped the watch weeks later to pay for his honeymoon. (Spokespeople from Rolex, Audemars Piguet, and Richard Mille all declined to remark for this story.)

“A watch could be offered and acquired ten instances earlier than it’s truly worn — it’s being traded from so many fingers,” Alwani says. On most days, he sells about $435,000 in watches.

Alwani retains about $25 million value of watches in inventory — which interprets to roughly 300 watches at any given time — 20 instances greater than the close by Rolex boutique, in keeping with Alwani. His stock comes through frequent consumers with connections to the gross sales employees who can nonetheless rating the watch at retail. Some buy no matter they’re supplied from the boutique, as a result of they know they’ll flip the watches at greater than double the value inside days. The typical worth of the fashions Alwani sells is $75,000, which earns him lower than $3,500 in revenue. Because of this, he says, his prospects belief he isn’t climbing up costs as a lot as the subsequent man who might cost $5,000 for promoting the identical watch.

Presently, an unworn now-discontinued Rolex Submariner “Hulk” with a inexperienced dial from 2019 sells for $29,500, in comparison with about $10,000 for one bought at retail from a Rolex boutique when it was nonetheless in manufacturing. “Should you go to a boutique, you can be begging for a yr and by no means get it,” Alwani says. “With me, it takes per week and we deal with you want royalty.”

The used-watch business isn’t a brand new one. Within the ’90s, sellers would attend cash-and-carry commerce reveals in drab career-fair-type convention facilities in cities like New York, Chicago, and Las Vegas, staying in low-cost lodges for a couple of days. They’d lease tables and jewellery instances and haggle over their secondhand wares earlier than issuing flimsy receipts. Safety employees roamed the realm to forestall outright theft. The members-only reveals allowed the largely male sellers to trade hundreds on the spot and resell them to their purchasers for a revenue.

A few of right this moment’s consumers are utilizing the cash that’s bubbled up in the previous couple of years, from shopping for into crypto, meme shares, NFTs, and different fast moneymakers, says Tim Stracke, founding father of Chrono24, an eBay-style market for watch promoting based mostly in Karlsruhe, Germany. Stracke launched Chrono24 in 2003 and it has turn into the most important web site for secondhand watches, with greater than $2 billion in gross sales and three,000 sellers. Sellers interviewed for the story say that purchasers typically point out crypto windfalls when making a purchase order.

In-demand watch fashions had been simpler to seek out even 5 years in the past. However as demand grew, firms stored output largely the identical. About 5 years in the past, the Chinese language marketplace for designer watches collapsed partly as a consequence of an official crackdown on bribery prohibiting present giving to authorities officers to curry favors. That elevated the variety of new watches out there from retailers. Quite than let these watches be offered at retail for steep reductions, producers together with Richemont (which owns Cartier and Montblanc) spent two years repurchasing roughly 500 million euros in their very own watch inventory and destroyed it. The sudden shortage spiked costs.

The coronavirus hit — and ensuing shutdowns — created one other payday. With extra demand from consumers who couldn’t journey or spend on meals and leisure leading to even fewer of probably the most in-demand fashions out there at retail, the costs of secondhand watches began hitting crypto-style highs, Stracke says.

Strolling right into a designer-watch boutique and being unable to make a purchase order solely will increase desirability somewhat than frustration, says Cait Lamberton, a advertising professor on the College of Pennsylvania’s Wharton Faculty who research consumption habits. “Luxurious follows completely different guidelines,” says Lamberton. “Hermès desires to be a family title, however Hermès doesn’t need everybody to have Hermès.”

“When paying in your groceries, you don’t have a Ferrari. While you’re sitting on the restaurant, your home isn’t there,” says Adam Craniotes, 49, a watch collector and the founding father of Redbar Group, an in-person watch group. “However you’ll be able to gown down as a lot as you need and appear like a bum, and in case you are carrying the $100,000 watch, you’ve obtained the look.” Craniotes lately offered his Audemars Piguet Royal Oak for a $61,500 revenue, which he used to mix his New York condominium with the unit subsequent door.

In his finest French accent, Stracke recounts a narrative the place a well-known Swiss watch CEO as soon as defined to him how he feels concerning the grey market. “It’s a bit of bit like having an affair,” he informed me. “You meet her, you like her and you’ve got intercourse together with her — however in public you don’t know her.” He additionally identified that Chrono24’s buyers, together with LVMH chief government Bernard Arnault’s household workplace, personal a majority stake in Bulgari, which is understood for its watches.

At Chrono24, the fastest-growing phase is 18-to-25-year-olds who purchase watches that begin at about $20,000 on the positioning, says Stracke. For some time, promoting crypto returns has helped make this extra palatable. “They’re shifting their crypto wealth right into a considerably actual wealth” by cashing out to make the acquisition, he says. “The younger youngsters think about these watches an attention-grabbing asset. They’d by no means spend $20,000 on only a timepiece, but when this timepiece feels a bit of bit like an NFT in your wrist, which may really feel extra affordable.”

In Dallas, Josh Navarro, 32, and Michael Bell, 31, settle for Bitcoin for the watches they promote as a result of so many purchasers wished to pay with cryptocurrency that they had been shedding offers. The 2 are a part of a foursome that opened Wolvyn final yr. Their Design District boutique has a deliberate man-cave vibe, stocking $40,000 in hard-to-find whiskey for purchasers to drink whereas they store. The aim is to supply a little bit of Southern hospitality: Potential consumers can come, spend, and settle in for a day with a cigar in hand. Rolexes make up the majority of their stock, with hard-to-find fashions together with the Daytonas, Submariners, and Oyster Perpetuals drawing in prospects. “We attempt to create our retailer to be between Thom Browne and Saint Laurent,” says Navarro.

They’ve Texas-style safety. The shop has roughly 15 to twenty weapons, together with AR-style rifles unfold out in numerous elements of the store. And the corporate sends armored autos to ship watches offered over $150,000. Even their very own automobiles are stocked with weapons tucked into every door.

Navarro launched the enterprise greater than a yr in the past after a number of years spent flipping watches on-line for pocket cash and dealing in building. Making hundreds from every sale satisfied him to ditch the home-improvement enterprise. Along with his brother Andrew, he joined forces along with his longtime good friend Josh Bell and Josh’s youthful brother, Michael.

Within the final yr, the youthful Bell has helped make Navarro the star of the corporate’s YouTube channel, The Wolves of Watch Road, which has garnered almost 19,000 subscribers. The channel’s aesthetic is a bit like a badly produced actuality present. However the movies, Navarro says, have earned them purchasers out of state, permitting them to extend stock twentyfold within the final 12 months. “It helps break down any boundaries,” he says. A current add is titled: “How NOT to Shoot a Gun When Sporting an EXPENSIVE Watch!” To this point it has 4,000 views and counting.

Navarro lately began driving a Ferrari, which his 3-year-old calls “the UFO.” The steering wheel, with its prancing horse, has turn into a backdrop to most of the wrist photographs he posts on his private Instagram account to his 3,500 followers. On the corporate’s TikTok, he confirmed off a glamorous photograph of his spouse that was newly tattooed on his forearm. Viewers might clearly see the Patek Philippe Nautilus on his wrist. Weeks later, he offered it for $145,000, pocketing $15,000 in revenue.

There are clues to what firms might do in the event that they resolve they need to rein in who resells their watches. In 2021, Richard Mille began providing licensed pre-owned watches via Westime, a California-based retailer. Like automobiles, the licensed pre-owned designation is drawing consumers as a result of the watches get serviced by Richard Mille after which embody a two-year prolonged guarantee. The used watches begin at $200,000 and run into the thousands and thousands. They’re normally offered out.

As the one licensed reseller of the model within the U.S., the corporate desires to regulate the expertise for the client. “We need to ensure that we’re promoting to the top client and never somebody who’s attempting to flip the watch,” says Westime president Greg Simonian. Oftentimes it’s inconceivable to inform and a few consumers do find yourself reselling the watch, he provides. On the flip facet, established watch retailers together with Watches of Switzerland Group, identified for largely promoting new merchandise, are beginning their very own secondhand gross sales arms. The retailer, a certified seller for Rolex and different manufacturers, now sells pre-owned timepieces after buying the pre-owned watch firm Analog Shift in 2020.

However manufacturers should transfer shortly if they need an opportunity at taking again the resale market earlier than the luxury-watch growth busts.

Even with demand (and costs) nonetheless excessive, there are indicators of bother. The grey market worth for a discontinued Patek Philippe Nautilus in metal with a blue dial price $226,000 this February and dropped to $173,596 in July, in keeping with Chrono24 information. In 2015, the watch was value about $25,000, its retail worth on the time. Although even with the drop, the fluctuations don’t matter, as a result of there’s a slim likelihood they’ll be out there at their retail costs anytime quickly, says Craniotes. “Should you purchased something at checklist worth, you’re nonetheless making out like a bandit,” he notes.

In the previous couple of months, Alwani offered a portion of his present watch inventory at a loss with a purpose to unlock money to buy items on the decrease costs that at the moment are out there. And earnings for 2022 are down almost 50 p.c.

Not that one in every of his 214,000 Instagram followers would ever be capable to inform. On his YouTube sequence, Alwani purchased his youngest brother a $280,000 Porsche 911 Turbo, blindfolded him, and led him to the shock. It was the most costly present he has ever gotten anybody.

For now, he’s planning for an additional dip by transferring stock extra shortly somewhat than letting it sit and threat additional depreciation. And he’s extra targeted on fulfilling particular requests from consumers for watches that he doesn’t even have in inventory. That means he can shortly get the piece from one other seller and promote to his shopper at a revenue with out proudly owning the look ahead to greater than a day. After seeing costs go up for the previous couple of years, a dip is inevitable, he explains. “It’ll by no means go to zero,” he says. “Nevertheless it’s gotta rain typically.”