Watch Dealer Markups – A Proposal

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Rolex - watch dealer markup

We’re in the middle of the greatest watch shortage in modern memory. It’s basically impossible to get any almost any current Rolex (and many OMEGAs, Pateks, Vacherons, etc.) from an Authorized Dealer (AD). The cupboards are bare. We can argue about why that’s happening, but the fact remains: there’s a massive mismatch between supply and demand. And there is an answer: watch dealer markups . . .

Authorized dealers who add to the manufacturer’s suggested retail price rub a lot of people the wrong way. Want to become The Internet’s Most Hated for an hour? Just be a car dealer who puts an absurd markup on a new car and the vitriol comes pouring forth. It’s a well worn trope. Everyone agrees: the Authorized dealer markup (ADM) is an evil, evil, thing.

Wrong. the ADM is good for the consumer. In fact, watch manufacturers should take a page from the car industry and encourage their dealers to mark up desirable watches to the moon.

Ben Bridge Rolex display

If manufacturers allow dealers to mark up watches to what the market will bear it would solve the current shortage in one fell swoop. Suddenly, instead of buying a new-in-box gray market Rolex Daytona on Chrono24, you could walk in to your local watch store and buy it yourself.

As a buyer, you’d get all the benefits of purchasing an authorized watch, with full manufacturer support and known provenance. The dealers would make more money – a most welcome shot in the arm after the Coronageddon lockdown and the supply drought.

Rolex handoff

The manufacturers? They seem OK with yearslong waiting lists, screwing over their customers and vendors while enriching secondhand dealers. Apparently they’re profitable enough. But unhappy dealers and frustrated customers do not a long term future make.

Allowing stratospheric watch dealer markups is fundamentally unfair! Desirable pieces will only go to people who will pay for them! That goes against everything that we care about as watch collectors!

Watch dealer markup - Rolex president

I understand. I really do. But face the facts: how do you think it works today? If you want a desirable timepiece right now and you’re not somebody whom the manufacturer wants to use for marketing (hello Kardashians), you can do one of three things:

Get on a waitlist and wait  If you think you’re ever going to get a Audemars Piguet Royal Oak because you rolled into an AD and asked to be on the waitlist without a pre-existing relationship, you’re a mook.

Buy a bunch of stuff at the AD – Buy watches from your dealer that you probably neither want nor need, a practice that establishes a “relationship” with the authorized dealer that secures the watch you really, really want. This is an authorized watch dealer markup by another name. The only difference? There’s no price transparency.

Buy from a secondhand site At least your soul is pure, given that you paid a markup to an anonymous Internet Person! How do you think those pieces are getting on Chrono24 anyway? It’s either people who have “great relationships” with the ADs, or those who are kicking some of their profits back (likely both). Do we really want to encourage these assholes? Why is putting third parties in the middle and making them money any better than making the dealers money?

Watch dealer markup - Role datejust

An unrestricted watch dealer markup policy would make the transaction transparent. Do you know how things get allocated in markets (watches, COVID-19 vaccines, etc) when there’s no price transparency? Any way the sellers want. Maybe it’s their friends. Maybe it’s people who bribe them. Maybe it’s only “desirable customers” (i.e. rich and white).

Dealer markups create an equitable system. They reduce access to a simple metric that everybody can understand. Every other way of selling sought-after watches is cronyism of the worst sort. It’s beneath us as an industry.

Hodinkee radio

I also support limitless watch dealer markups because they’d strip away the false veneer of culture and sophistication that grifters have slathered on this hobby. They’d reveal the industry for the money-grubbing conspicuous-consumption rathole that it is. Unrestricted watch dealer markups are the purest, fairest method of allocation. All of us – from the manufacturer to the consumer – should embrace it.

18 COMMENTS

  1. Yep…. good ol’ fashioned capitalism.

    So, am I to understand (by reading this article) that ADs are prohibited by the manufacturers from marking up prices above MSRP?? That’s crazy and anti-liberty. And, as you’ve pointed out… counter-intuitively… bad for the consumers.

    I was at an AD yesterday. They had some of the new Datejusts… just in. But, that was it for Rolex. Plenty of Breitlings. Plenty of IWCs. Plenty of Cartiers.

  2. Yep, this is the way to do it. And it saves Rolex, Patek, and Royal Oak from having to cut an increased MSRP when/if demand comes back down. Like IWC embarrassingly had to do.

    People whine about this all the time for cars they can’t afford even at MSRP, like they would be the one to win the allocation lottery.

    And it is much better for the image of Rolex, etc., than the grey sales. Any hate is going to go to the dealers, not Rolex, so really Rolex should embrace dealer markups.

    Just be honest ADs. Call it a market adjustment, and don’t put on some etching, corrosion protection, or tacky add-ons to try to justify the increased price.

  3. The last time I was in Tourneau in NYC their actual Rolex displays were picked clean, but they had a bunch of used Rolexes at way above MSRP. Tell me that’s not more embarrassing than a market adjustment on the new Rolexes.

    • Agreed – going into an AD and being given a choice of NOTHING NEW or a used piece above the price of new is weird and frankly beneath the image that both the mfrs and dealers are trying to project.

  4. Love that closing paragraph! The arbitrage will level out regional variances in price soon enough.

    Baruth came to the same conclusion with auto dealers. It’s not a desirable system, just better than any alternative.
    https://www.hagerty.com/media/opinion/c8-dealer-markups-stink-but-hate-alternative-more/
    “Imagine having to buy a Blazer or a four-cylinder Silverado from your Chevy dealer in order to get on the list for a C8. Wouldn’t you just rather slip the guy 20 grand and not take up that space in your driveway? Sure you would.”

    Does the buy a friend in the AD technique ever really work? If they can keep bilking a sucker along buying less scarce stuff, why give him what he wants?

    • Buying a friend TOTALLY works and it’s the big difference between cars and watches because most people don’t have the room for redundant cars but watches have lower storage, transportation, and transaction costs than cars, so it works “better” here.

      (And high end brands like Ferrari work like this anyway).

      (NB: This piece was already mostly written when the JB piece came out, but he and I think the same way on a lot of the economics here)

      • I guess the success stories are never heard because nobody wants to admit to the indignities once the prize is attained. It seems like a sucker’s game because it’s deliberately vague, open-ended, unwritten, a deal that can keep changing and never deliver.

    • LOL, my guy, have you ever visited Europe or anywhere else in the world (I mean really visited, not just to the Louvre)? He isn’t being racist, but stating more of what the corporations may want.

  5. Alas, the grief of not being able to buy a Rolex at an AD. A pain so deep it’s like losing your livelihood and loved ones to something like a viral pandemic. My heart breaks for all affected.

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