Global sales of pre-owned luxury watches will hit $5 billion this year, according to Paul Altieri, chief executive of second hand Rolex dealer Bob’s Watches (Bobswatches.com). Management consultant Bain & Company thinks it will be far bigger at $17 billion. There may be a dose of self interest in plucking such an enormous number out of thin air, and the evidence to support it is open to challenge. But with Chrono24 claiming to be on track for $1.2 billion in transactions (a figure that includes new and unworn watches as well as used), and eBay reckoned to do another $1 billion+, the estimate may not be as farfetched as it first appears. Bob’s Watches claims it sold Rolexes worth $32 million last year, and expects that to rise by at least $10 million this year, as Rob Corder discovered in conversation with the man who claims to be America’s most trusted pre-owned Rolex watch trader.
The oldest business advice in the world is to turn your passion into a moneymaking enterprise; an adage that Paul Altieri, chief executive of Bob’s Watches, has taken to heart. The avid Rolex watch collector, who made his first fortune from mass market jewellery and cash for gold upcycling, is now running Bob’s Watches, which claims to be the biggest dealer of second hand Rolexes in America with sales on track to touch $45 million this year.
America’s relationship with pre-owned luxury watches is different to the UK. Here, the biggest authorized watch retailers such as Watches of Switzerland, Bucherer, Fraser Hart and Ernest Jones steer clear of second hand watches and focus their energies on new watch sales.
Equivalent chains in the United States, such as Tourneau (now owned by Bucherer) are authorized partners of Rolex and most other premier Swiss watch companies, but also have a major certified pre-owned watch business. Watchbox, a more recent entrant into the secondary market, is part-owned by Govberg, an authorized dealer for around 50 Swiss watchmakers.
Bob’s Watches, which was founded 10 years ago, deals solely in pre-owned and vintage watches, with Rolex accounting for well over 90% of its stock. Because he was a Rolex collector himself, the company’s owner Mr Altieri is aware of all the pitfalls of buying and selling watches in a market where both dealers and customers risk trading in fakes, Frankenstein refurbs and over-inflated claims of rarity or provenance.
He set out to bring transparency to the second hand market by publishing a newsletter featuring hundreds of Rolex references and their prices. That transparency has survived to the present day, with Bob’s Watches publishing both the price of the watches it sells, and the price it is prepared to pay for the same model if somebody wants to sell it. “In those early years, I kept hearing more and more from customers who wanted to know what their watch was worth, what I would pay for their watch, and how they could be assured they were getting a fair deal. I soon came to realize that there was no open source information on the prices of second hand watches. When we started Bob’s Watches it was just a price list where we published a list of all the models with current buy and sell prices. Then we decided to put that information on a website so that people could see it and we could make constant pricing updates to it as needed,” Mr Altieri describes.
To illustrate the model today, take a Rolex No Date Submariner 114060 Steel Oyster, which is on sale for $7295, and Bob’s Watches will pay $5600 to anybody that wants to sell the exact same model. The difference between the two prices, in this case $1695, is used to pay for authentication and servicing of the watch before it goes back on sales and, of course, a profit margin for the business.
The simplicity of the business model is a key strength, but it would also be its downfall if Bob’s pays the wrong price for its watches. That risk is minimized because Mr Altieri does not obsess about outbidding all other potential second hand watch buying businesses. All he wants to do is keep it simple, transparent and useful to his thousands of buyers and sellers. “Unlike most competitors, all of the watches on our site are in stock, ready for immediate sale and shipment. And we buy and restore all of our watches on the site so our clients don’t need to wait for their watch to sell like with the consignment model. Customers want a simple and safe solution so we cash them out immediately on the spot and then handle getting the watch serviced, cleaned and repaired as needed. It is as simple as that. A lot of our customers are successful, busy people, and they just don’t have the time to deal with it. It takes a lot more capital to do it our way, but that is what our customers prefer,” he explains.
At the time we spoke Bob’s Watches had around 340 Rolex watches on sale today, all of which have been checked, repaired, cleaned up by authorized Rolex service centers. They are also authenticated by Watch CSA, an agency with a team of watch experts trained to spot fakes or false claims.
Neither Bob’s Watches, nor Watch CSA have any formal relationship with Rolex, so they are trading on their historic reputations. Bob’s Watches is an independent pre-owned watch dealer and thus we have no affiliation with Rolex, but we have become the most trusted name in pre-owned Rolex watches because people know we don’t cut corners. Before the price even becomes a consideration, customers want to be certain they can trust who they are buying from. Folks place an enormous amount of trust in us before they buy an expensive watch and we don’t take that for granted – not for a minute,” stresses Mr Altieri.
The company claims it will only ever use genuine Rolex parts and works with over a dozen full service watch repair facilities. “It is much more expensive to repair a watch using only genuine Rolex parts but we think it’s worth every penny in the long run. We outsource the restoration and repairs of all our watches to these authorised service centres, including to Rolex itself for certain watches,” Mr Altieri says.
Bob’s Watches is just one of many companies that are transforming the secondary market for luxury watches, and these companies are also influencing the primary market for new watches. The sheer volume of second hand watches in the world, all of which have a resale value, makes the potential size of the market enormous. “The numbers always tell the story. Think about new sales for Rolex, which are about $8 billion to $9 billion per year (retail value). That means that in the last 10 years, up to $90 billion have been sold world-wide. That is all potential pre-owned inventory that will someday come to the resale market. And that is just Rolex and that is just in the last 10 years. By our estimates it easily exceeds $5 billion per year already and could double in less than five. We estimate that eBay alone does almost one billion dollars per year in just used Rolex watches,” Mr Altieri calculates.
Second hand operators are also unafraid to innovate at the retail level, whether that is online or in the physical world. The future, Mr Altieri, will be shaped by customers, not manufacturers. “The only constant I see is change. Brick-n-mortar retail has changed. Forever. When you walk into our store you won’t find any fancy watch showcases. Instead, we hand you an iPad and a glass of wine. The customer selects the watches they want to purchase from our website and we provide them. Welcome to a new way of retailing,” he says.
Change is also on the cards for Bob’s Watches. Right now the business is all about pre-owned and vintage Rolexes, but Mr Altieri would like to offer new watches to his growing customer base as well. “We are looking to offer our customers the ability to purchase new watches someday soon. But it would need to be a good fit — a watch brand that is complimentary to Rolex since that is our speciality now. A brand like Oris or Omega might be great but Rolex will always be at the top of our list. We’re still waiting for the phone to ring. We do get a fair number of customers every month wanting to buy new watches. These watches would all be sold at full retail,” he pitches.
Irrespective of whether Bob’s Watches earns authorized dealer status for any of the world’s biggest brands, the company is certain there is scope to grow dramatically. The target, according to Mr Altieri, is to continue to grow at 30-35% per year so that in five years sales will hit $100 million. “We don’t have any debt and we don’t have shareholders or a board to answer to; and we have not taken any venture capital money so we do not have anybody breathing down our necks demanding targets are hit. We can patiently grow at a sustainable level,” he concludes.