What Is A Grey Market Dealer & Why Should You Buy From One?

Don’t confuse Grey Market dealers with Shady dealers!

Wanna watch rather than read? Watch below:

When it comes to buying luxury watches, the cost of some of the watches can be quite high.

The grey market is a solution for many potential buyers.

A grey market watch dealer is a store (online or brick and mortar) such as Luxury Bazaar that sells luxury watches for significantly less than a brand’s authorized dealer or boutique.

The usual authorized retail store works like this: the brand manufactures its watches and sells to official distributors across the globe.

The distributor sells the watches to authorized retailers, who sell the watches to retail clients. Although grey market watch dealers are not a part of the authorized dealer chain, they still manage to get ahold of — and sell — luxury watches.

When a brand or retailer has excess inventory, they may reach out to grey market dealers with offers to purchase that inventory in bulk at deeply discounted prices.

Pre-internet, grey market retailers often existed in major cities and had a storefront where they could display the watches and sell at highly discounted prices.

Before the internet, these transactions made little difference on the typical authorized retail channels. Unless you actually walked into a grey market watch dealer’s store, it was highly unlikely you would ever know they existed or that you could purchase watches at highly discounted prices.

Now that the internet is such an integral part of the business, grey market retailers have been able to create a far bigger presence on the web.

A Google search for a luxury watch now allows consumers to see the prices offered by grey market dealers and buy their luxury watches online.

With sales falling at authorized dealers, more unsold timepieces are finding their way from the Swiss-dominated watch industry’s controlled official retail networks to grey market watch dealers, where they are often sold at significant discounts.

Swiss watchmakers say they hate the grey market because high discounts damage the meticulously crafted aura of prestige and make it harder to sell their goods at the full price.

However, these brands may also have sold to grey market watch dealers when their product wasn’t selling.

Chinese demand for luxury timepieces boomed after the 2008 financial crisis, leading to a surge in production and retail prices.

But demand for these watches has dropped significantly in the past two years as extremist attacks have deterred tourists from visiting Europe, where many of the watches are sold, and China has cracked down on luxury gift-giving by civil servants.

The end to the boom in the demand for Chinese watches is forcing luxury watch brands to begin working quietly with dealers in the grey market.

This is occasionally to help with sales but is generally done to secure some influence over how the unofficial resellers are selling, according to dealers and industry executives interviewed by Reuters.

Grey market watch dealers can cause challenges for a brand’s distributor, whose main priority is to sell these luxury watches to the authorized retailers.

When a brand representative enters a brick-and-mortar authorized retail store, 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 causes the brand representative to lose out on sales and, in effect, lose income.

But brand representatives aren’t the only ones being negatively affected by the system of selling excess watches to grey market watch dealers.

If a customer is interested in a watch that has a manufacturer’s suggested retail price (MSRP) of $12,000 and can purchase it with a slight discount from your local luxury watch dealer, they may be interested.

However, if the customer then finds the same watch on a grey market watch dealer’s site for $7,500 brand new, they may start to wonder if there’s an issue with the watch or the brand.

Brands such as Omega, Breitling, Audemars Piguet, Romain Jerome, Graham and many others are plentiful at grey market dealer prices and are just as amazing as the ones in the authorized retailer’s showcases.

During the high points of sales, the luxury watch industry can take home 20 percent of sales as profit, while their retailers are still left with an attractive margin of up to 45 percent.

But when business is slow, the manufacturers do not allow official retailers to cut sticker prices significantly, fearing that this may damage the brand’s reputation and value in their customers’ eyes.

This policy may be the reason retailers are pushed to sell their excess watches to grey market watch dealers.

Although grey market watch dealers may pose a problem for luxury watch brands, the availability of these watches at a high discount is a huge boon for consumers.

The United States is the second-biggest market for Swiss watches and is a hub for grey market watches.

Online platforms such as LuxuryBazaar.com and others allow American consumers to easily access grey market watches for far less than they might be sold for at a luxury watch retail store.

Though the brands don’t particularly like working with grey market watch dealers, it’s the brands themselves that are the largest suppliers of the grey market.

Whether they sell directly to grey market watch dealers or use a grey market wholesaler, the brands often sell the excess product to generate cash flow and rid themselves of slow-moving inventory.

Retailers can largely be blamed when it comes to the “as needed” watch.

These are the watches that grey market dealers have a demand for and need to buy more of. When grey market watch dealers are in need of a specific watch, they can call the retailer and purchase more.

In the United States, authorized dealers are widely known in their industry, but it’s acceptable to allow distributors to push their excess inventory to grey market watch dealers at a discounted price, the same way luxury brands do.

Unlike fake watches, grey market watches are legal, authentic luxury goods sold by their brands.

Audemars Piguet Watches

However, they don’t tend to come with the factory warranties that are standard at luxury retailers because luxury brands refuse to service watches that were not sold through their official networks.

While this may be a problem for some luxury watch buyers, the more price-conscious buyers may prefer the convenience of buying online with options to trade in old watches, finance their purchases, and buy warranty and service plans through the grey market dealer.

Grey market watch dealers allow consumers to buy beautiful, luxury watches at steeply discounted prices.

Grey market dealers have grown significantly with the rise of the internet, allowing them to offer alternative options for service and financing on their products.

Though grey market watch dealers may cause some hardship for luxury watch retailers, they are an excellent alternative for customers who are looking to buy a luxury brand watch for less than the average retail price.

Grey market watch dealers are often used for purposes other than just a more competitive price. They are commonly used to purchase watches that require a wait time from an authorized dealer or the manufacturer.

For example, certain watches sell for way above retail price because otherwise,

you would have to wait 1+ years for it from an authorized dealer. Impatient buyers prefer to overpay than to wait.

The watch shown here is the Richard Mille RM 11–03 Rose Gold & Titanium. The retail price on this watch is $131,500. However, getting it for the retail price from a Richard Mille boutique or authorized dealer requires a wait of 2+ years.

If you want this watch today you will pay $180,000 and you can only get it from grey market watch dealers. That’s a $50,000 over retail!!

At that price, getting your hands on one of these is still extremely difficult!

Same thing with many Rolex models that require a very long wait at an authorized dealer.

So if you’re looking to get your hands on a watch at below retailer pricing or avoid waiting in line for a while, check out www.LuxuryBazaar.com.