Gray Market Watches – What Are They?

Gray Market Watches

Rolex Yacht Master -gray market watchesIf you buy luxury goods of any kind, you’ll notice that they tend to be sold only by a limited number of dealers.  Most luxury products are sold either by the manufacturer itself, or by a select group of retailers chosen by the manufacturer to represent their brand in public.

Luxury products that are sold outside of these networks are known as “gray market” products, and people who like luxury timepieces should be aware that gray market watches are available for sale all over the Internet.  What, exactly, are gray market watches?  Is it OK to buy them?  Is there a reason to buy gray market watches?  Is there are a reason to avoid them?

Read on for the full article about gray market watches.

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Gray Market Watches Bother Watchmakers

The first thing you should know about gray market watches is that their manufacturers don’t like them one bit.  There are several reasons for that, but the primary one is this – dilution of the brand’s reputation.

A lot of watch manufacturers have strict rules regarding the prices for which their products may be sold, and they don’t like to see them deeply discounted.  If you’re Rolex, or Audemars Piguet, you want the people to buy your products to know they’re buying something special and relatively rare.  For such brands, one ordinarily has to go to a factory-authorized dealer, and pay the manufacturer’s suggested retail price, which is rarely discounted.

Audemars Piguet gray market watches - large date tourbillonWhen people see you wearing that watch, they’ll know that you bought a fine piece of craftsmanship, and that you likely paid dearly for it.  The lack of discounts and the exclusivity of dealers gives the impression that these high end brands are both rare and special, and the companies that make these watches work hard to maintain that image.

Gray market watches undermine that, as retailers who are not authorized dealers of high end brands are not bound by the usual agreements with the manufacturer.  If you’re an independent watch retailer and you come across a good deal on a new Rolex, you’re free to legally sell it for any price that you like, including one that is a lot lower than the manufacturer would like to see on their product.

Gray market watches, in the makers’ eyes, reduces the value of their products in the marketplace, and gives the impression that their products may be less prestigious than they really are.  Nevertheless, you can still find Rolex gray market watches on the market.

How do retailers come to possess gray market watches?  There are various ways that this happens.  While authorized dealers of high end brands are prohibited from publicly selling their inventory at deep discounts, many of them occasionally sell them off at wholesale to other dealers as a way to maintain cash flow.  This practice is discouraged, but isn’t illegal.

In the years following the 2008 stock market crash, a lot of watch retailers who had been holding on to large inventories suddenly found themselves unable to sell their stock.  Many of them sold off portions of their inventory to other companies, who were free to do with them as they pleased, and these timepieces came to market as gray market watches.

On other occasions, retailers go out of business for one reason or another, and sometimes their inventories go up for public auction.  When that happens, other retailers end up with the stock and they can sell it for whatever price they like.

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Should you buy gray market watches?

Gray market watches are perfectly legal and most of them are perfectly fine products that are identical to those sold by authorized retailers.  If you can get a good price on a watch at a deep discount through a gray market seller, you’ll get the same watch that you’d get from a manufacturer-approved seller but you’ll get it at a better price.

Patek Philippe watches - men's white gold complicationsThere is one downside to buying gray market watches, however.  Most manufacturers will only honor their warranties if the watch was purchased through a legitimate, authorized dealer.  If you need to have your timepiece serviced by the manufacturer, they will usually require proof of purchase before they’ll work on the watch.  If you cannot provide proof that you bought it from an authorized dealer, then they will usually refuse to work on it.

For that, you’ll have to find someone on your own.  Most buyers don’t worry too much about this particular problem, as high end watches are highly crafted products that rarely create problems during the warranty period, which is usually two years.  A lot of buyers will also gladly make the tradeoff of losing a warranty in exchange for getting a prestigious timepiece at a steep discount.

Many retailers of gray market watches, including some very big companies, offer their own warranties with purchase, making the decision a less stressful one.

While makers are not excited about the idea of gray market watches, many of them will quietly acknowledge that the practice goes on and that they do benefit from it.  Makers earn their money on the wholesale end, so the more watches they sell, regardless of how they’re sold, the more money they make.  Plus, a lot of buyers enjoy owning more than one luxury watch, and today’s buyer of gray market watches might be the customer who buys at full retail next time.

In the end, watch manufacturers are in the business of selling watches, and every watch sold adds profit to the bottom line, whether they’re gray market watches or authorized ones.  Plus, if a company selling gray market watches advertises that they have a model from a normally-restricted brand for sale, that effectively becomes free advertising for the brand.


Gray Market Watches Conclusion

Should you buy gray market watches?  That’s up to you.  A lot of people value a warranty, and it’s always good to know that you’ll be able to get your expensive timepiece serviced if you need work done.  On the other hand, buying from the gray market can save you a lot of money on a timepiece that is already likely to be very expensive.

In the end, the choice should rest with the buyer. Thanks to the Internet, most brands of watches, including the very rare, expensive and exclusive ones, are available online.  Most buyers are savvy shoppers and want to get the best deal that they can.  For those buyers, gray market watches are often the ideal solution.