- The demand for high-end watches has increased since the COVID-19 pandemic.
- The explosion in online watch shopping is fueling the fortunes of a growing number of start-ups, all aiming to become the leading digital marketplace for pre-owned watches.
- Start-ups in the sector are raising money or flirting with the prospect of an IPO.
A multitude of companies are competing to become the eBay of high-end horology — including its online marketplace.
The demand for high-end watches boomed during the COVID-19 pandemic. But the Big Four watch brands – Rolex, Patek Philippe, Audemars Piguet and Richard Mille – persevere on the limited production runs that make their timepieces so rare. The result is an online boom in the business of buying, selling and flipping pre-owned and vintage watches and a growing number of start-ups competing to become the dominant digital marketplace.
McKinsey estimates pre-owned watch sales to reach $18 billion in 2019, and could top $30 billion by 2025. Pre-owned watch sales will be about half the size of the market for new, retail watches by 2025, up from about a third today. , according to the consulting firm.
“The pre-owned watch market is still like the Wild West,” said Toby Bateman, CEO of popular watch collector site Hodinky. “There are too many watch-selling platforms. And customers don’t necessarily know who they’re buying a watch from. They can’t guarantee it’s authentic. They can’t guarantee it’s not Frankenwatch. And they can’t guarantee that.” can be that the clock is working properly.”
On Tuesday, Hodinky launched its pre-owned watch shop, where it will buy and sell watches made after 1990. The company — which raised $40 million in December from the likes of NFL quarterback Tom Brady, singer John Mayer, Apple alum Tony Fadell, and more. Investor Peter Chernin – aims to be “the world’s leading brand for all things watches”.
Hodinki’s pre-owned shop will start with an assortment of 250 pre-owned watches and will offer certification and refurbishment from its state-of-the-art watch facility in Atlanta. Bateman said Hodinky’s advantage over a growing list of competitors is its expertise and history as a trusted name in watches.
Still, rivals are catching the attention of investors. Germany-based Chrono24 recently raised 100 million euros ($116 million) from investors including Aegle Ventures of General Atlantic and LVMH CEO Bernard Arnault. The investment was valued at over $1 billion for Chrono24, making it the first “unicorn” in the segment. The company said it has about 500,000 watches from more than 3,000 retailers and more than 30,000 private sellers.
Meanwhile, Switzerland-based Chronext was planning to raise about $270 million in an initial public offering, which could value the company at more than $1 billion. Yet Chronext said last week that it was postponing its launch due to “unfavorable market conditions for high-growth companies.”
Chronext has put together a star-studded board including former Facebook marketing chief Gary Briggs and former Barneys New York CEO Daniela Vitale — and aims to expand into the US and Asia.
Companies such as Watchfinder, Watchbox and Watchmaster are also expanding and pushing for market share. Even eBay is targeting the Rolex crowd, launching an authenticity guarantee program and targeting high-end watch collectors.
The question is, how long can the current watch boom continue, and whether there are enough online sales to go around. The Big Four watch brands that drive most of the high-end collections are all privately owned and have maintained their low production numbers despite huge demand to maintain their quality and exclusivity. According to a Morgan Stanley report, Rolex sold 810,000 watches last year, while Patek sold 53,000 watches, Audemars 40,000 and Richard Mille 4,300.
Demand is expected to outpace supply, at least in the near term. With stainless steel sports watches and other popular models impossible to buy at retail, prices are rising in the secondary market, with long waiting lists and scarce allocations. A Patek Philippe ref. The 5711 Green Dial, which retails for $35,000, went to auction in July for $490,000. According to Chronext, the value of the Audemars Piguet Royal Oak 15500ST (blue dial) has nearly tripled from 2017 to over $55,000, while the value of the Rolex Day-Date 40 has increased 76% from 2017 to over $50,000.
Industry executives say the proliferation of online watch collectors and information sites, along with global assets driven by stocks and crypto, have led to a whole new generation of young collectors buying and selling watches online. Social media has also driven sales, as more collectors prefer to flash their Swiss status symbols on Instagram and TikTok. For watch buyers and sellers, start-ups and online marketplaces, it remains to be seen how many of those new traders will stick with them if the old price and demand decline.
“There are far more people today who consider themselves collectors and enthusiasts than they were just a few years ago,” Bateman said.