Hi all-

I've been thinking a bit about the world of luxury watches and why selling them currently sucks. For me, it comes down to the hassle of listing and waiting, and relisting, and repricing etc. etc. without certainty about a fair price, and thus a fair sale. While I think ebay does provide some context, each piece is different, and often they need an expert eye to ensure they are listed correctly.

So, I wondered, what might be a better model? And I thought of OpenDoor. Essentially they price one's home based on a questionnaire, and using that and location, they algorithmicly determine value. Assuming you agree to the value, they will send an inspector out and modify as necessary. And then, voila, wire comes in, deed goes to them, and they resell. The upside for opendoor is that they charge 6% + a "market risk fee" (0-6%). (Note: they dont mark up the value of the house because they make money off the fee)

Would that model work for watches? Essentially fill out questionnaire about condition, model, etc. Include photographs. A price is generated based on historical comps. If seller agrees to the price, a set of specific photos are exchanged. A human (for the first time) is inserted into the process and verifies the claim. Human inspector approves, watch is exchanged, opendoor for watches sells the watch on their site for the same price minus the a flat fee and market risk fee.

Why is this better than an auction? Less fees, payment up front etc.
Why is this better than selling to a dealer? A fair price based on history, guaranteed.
Why is this better than selling yourself? No chasing payment, worrying about shipping, escrow, paypal disputes etc.


So, what do we think?

Note: I spent some time this weekend building a small web app and very basic model for speedmasters. If theres interest, I'll try to get something testable up at some point soon.

 

A question if I may to help understand the model further.
But the part about 'Human inspector approves'. So is the watch then shipped to you or whoever for approval. Thus adding the cost of freight and insurance etc? Or is the inspection all done just using photos? Which could also create risk still

When I sell to a dealer say. They still do all of the above. I then send them the watch. Paying for cost to do so. Wait then for them to verify and confirm its legit. Before they then give me the funds.

I like your idea above. But just wondering more about the detail of the Human inspection.

 

@Joe Apa I think somewhere in between. Initial quick inspection of photos to determine questionnaire accuracy, and then physical inspection as the final step. Shipping + insurance may be costly, but I expect the return rate will be fairly low (hopefully) as you can do some amount of vetting just based on photos.

 

Homes are a lot easier to price then watches. I'm working on something better, that let's the market decide.

 

The biggest problem I see in the industry is a seller looking to scam say. Or a buyer looking to scam.

As a buyer, I am not inclined to send funds over to a seller if I didnt see them have any status on forums I follow.

I rule out buying from certain countries over Ebay.

As such I would more likely send funds to a third party, knowing it would be returned if there was ever an issue with the watch. For that I would pay a slight premium to avoid lengthier PayPal refunds.

 

@Joe Apa Essentially an escrow service for watches.

@Foo2rama tough to compete with ebay on the ole' let the market decide.

 

That's true. But as long as you understand that the headache here is transferring to you

 

I have put a lot of thought into this, just as many on here have.

The real challenge is grading and logistics.

I think that a centralized clearing house for collectors would be awesome. One that has multiple locations in multiple countries, with a qnetwork of collectors/experts that help grade/describe, etc.

BUT what a pain in the ass to build something like that...and the investment. Not too mention, that takes it from a hobby to a business, and I think that would ruin the run for me.

Totally agree...selling is a pain in the ass.

 

My understanding here is that you are using technology to lessen the costs of labor, which then allows you to sell the watch at a lower price.

The core of it is a good idea, but I think that trusting a private seller evaluate his own watch to a questionnaire will end up as not very useful information. And if you cant use the initial evaluation, you'll be using your inspector full-time.

If you use your inspector full time, then the fixed 6% margin (or similar) does not work, as the amount of labor that will be required will force you to price the watches you then sell along more traditional lines to cover labor plus profit.

Frankly I think any fixed margin in unworkable. Unpopular watches will sell poorly, you must dispose of them at lesser margin, else you hold up a significant portion of your capital in dead inventory. Popular watches sell quickly, and you are leaving money on the table if you price at a fixed 6% markup.

There are clearing houses that exist, in a sense. They go vet watches, but the selling side of their businesses (many of them) are auctions. This is because many business do not just want to be cogs in the chain to the retail customer. They want to get to the retail customer directly, and remove all of the other middlemen

Argh! All of the headache for the fraction of the profit!

 

You make an interesting point. Is your opinion that a quick scan of photos wont be able to tell you a lot of the information that a private seller might "misinterpret"?

The business is not required to accept every kind of watch. Narrowing the pool preserves a lot of the upside here.

Assume you pay the expert inspector per watch. What would it cost? 200 per watch? Doesn't seem totally unreasonable to pass some percentage of the cost on to the customer.

Thanks for your input. Good food for thought!

 

I have 8 watches that I want to sell. Wanting to sell for various reasons, and some I have been wanting to sell for almost a year. I was at 12+ watches I wanted to sell but was able to sell a few several months back. It is so much easier to buy. Total pain in the ass to sell.

When I sell, I will use OF, WUS or ebay. It really depends on the watch. Right now I have a couple of Omegas with more service parts than most here would like, so I won't even bother to list it here. Those will be listed on ebay. I have a very nice condition vintage JLC, that will get listed here, as I think it would sell better here given the condition, and many issues mitigated by selling to a member here (not a noob member). Modern Omegas, those I would list on WUS and OF.

 

I think maybe you should gain the knowledge to be the expert inspector, so that $200 or whatever amount will be yours

You of course have to pass all costs to the customer, else you'd be a charity yes?

I currently run a mostly hands-off e-commerce business selling roadster luggage. I have been running it for years without having to touch any of the inventory or take any customer calls for the last several years - its that automated.

The pre-owned watch business is not that kind of thing. There are various touch points at all points during the chain from buying to selling that needs all sorts of expertise. From a knowledgeable inspector, to a good photographer, to a knowledgable staffer who will create credible listings, to a trustworthy warehouseman and shipper (you are potentially keeping several hundred thousand bucks worth of inventory yes?) - all of these jobs directly touch your inventory. If you plan hiring every job out that you can run this business completely remotely, plan to be in the hole unless your business is in the high millions in sales. If you plan on running at a smaller scale, you have to do much of the touch work yourself.

 

Sorry I don't grok. You may absorb some costs and add others.

I defer to your experience in this, as I notice this is also your business. And I do agree about shipping being a challenge. That said, we can agree to disagree here. If you are attempting to sell watches for a significant premium i.e. analog/shift, photography and listing prose may matter. However if the pricing model works, the trick is not squeeze every dollar out of every watch, the trick is to buy and then sell as many watches possible.


Anyway, there are many questions still to be answered, and I appreciate your thoughts and comments. Keep em coming!

 

OP: I don't know if you're now just rejecting my observations because I'm poking holes at your model, but you should be glad that I'm doing this now when there's only pride on the line, instead of you having an actual running business before you discover these things for yourself. Learn to profit from the mistakes of people who have gone before:

In the grand scheme of running a business, all costs are passed on the customer eventually, including the toilet paper in the office. You never absorb any cost without having someone else pay for it. Who do you think pays for Facebook ads? Packing tape? My ultrawide monitor? Business 101. The trick is to have a business that, with investments in automation and the economics of scale, increases efficiency and lowers overall costs so you can offer a better value proposition (in most cases a lower price) than other sellers who have not made these investments or who cannot scale

Photography and listing descriptions are not optional. We are not talking about looking at a Hodinkee ad and having stars in your eyes afterwards. Large, well-lit pictures and relevant descriptions. Who do you think will be taking these pics and writing these descriptions? A minimum wage admin? Of course not, not unless you're expecting them to run off with your goods. Anyone actually qualified to do this will ask for more money. And where will they be working from? Your garage? Their garage? Who's studio setup will they be using? Whos computer and internet connection will they be working from? Unless you do it yourself, someone needs to pay for all of that.

To buy and sell as many watches as possible, the key is correct pricing, not an across the board 6% or whatever you decide to markup. This is what I said previously:

"Frankly I think any fixed margin in unworkable. Unpopular watches will sell poorly, you must dispose of them at lesser margin, else you hold up a significant portion of your capital in dead inventory. Popular watches sell quickly, and you are leaving money on the table if you price at a fixed 6% markup."

This has nothing to do with extracting every last miserable cent from your buyer. Pricing correctly equals selling quickly. And here's free statistical information - the lower the price of the watch, the easier it is to put on margin. i.e. people will more easily accept a $100 markup on a $1000 Seamaster quartz than $250 markup on a $2500 Speedmaster (i.e. both at 10% markup). All other things equal. there is an inverse relationship between the price of the watch you are selling with the margin the market will bear.

I am not knocking you personally. The world needs more people with great ideas. I've personally helped in one way or another several people get their own watch business started. But roughly 2/3 of my own business ideas that have actually started fail. So you can imagine the sorts of ideas that didn't even get off the ground.

 

There's a lot of better ways to sell - in theory. In practice, there's nothing wrong with the way watches are sold now, whether it be eBay, dealers, or private sales on watch forums. Hell, in theory eBay is the perfect venue where the open market dictates the price. If people are involved, any system will be flawed. Some days you might get two or three bidders who are hot for your item and get in a bidding war. Other days you might not have much interest and your item sells for a pittance. As far as a set price, who's to say what a watch is worth at any given time? The watch inspector in your model? No thanks! The way you have it worded, the inspectors are the determining factor which smells like Communist Socialism! (hahaha, just kidding!) Anyway, I'll do my own research and set my own price. Free enterprise baby!

 

Agree with ulack. Whilst I think it's worth reviewing any business model from time to time, I believe existing arrangements are OK, given that one element in our specific interest field is provided by this very Forum. This facilitates the first option for a buyer - a contact channel with with known, respected sellers whose reputation - established and maintained on the Forum - is continuously at risk. For me this offers the best (safest) way to buy, i.e. by 'buying the seller'. The second option is the more risky, on such as eBay, where there's a fun element and a chance to exercise built-up knowledge and nouse, and pleasure is gained either by dodging lemons or achieving a discounted price. Otherwise, by virtue of geography, logistics, difficulties in standardising descriptions and condition definitions, systemising the process is impossible without resorting to so much human intervention by exception that the 'system' fades into the background.

 

I'm actually one of the guys who is trying to figure out a better model. You would think that a background in physical goods e-commerce would help but dammit pre-owned watches are so variable and require so much human intervention that it's almost impossible to create rule sets and be correct every time. Not just statistically correct, but correct every time. Because a mistake with a single client takes as much time to correct than manually working on 10 clients correctly in the first place.

There's a reason people are buying and selling this way for decades with little change. It's not because there was no one smart enough to come along and suggest a brand spanking new model. More and more I am starting to believe that it has gone on for so long this way is because the existing model for the most part is the best way for most people.

 

Shazam!!!!

 

Just to mix metaphors - am I now a Real Boy, Gepetto?

 

Why would someone with the expertise to inspect watches not want to go into the watch dealing business for themselves?