Is the gray market slowing down?

| March 29th, 2018

Is the gray market slowing down?
"Is the gray market slowing down?"

The main complaint about “gray market” watches—new watches sold by unauthorized dealers—is that they make it harder for authorized dealers to turn a profit on luxury watches.

Some quality brands are harder to find from non-authorized dealers than others, and discounts vary, but in many cases, a gray market watch can be bought for 25 to 35 percent less than what an authorized dealer would ask.

These aren’t fakes; they’re the real thing, although they are often close-outs or less desirable models. But if a customer tells an authorized dealer, “I can get this $40,000 watch online for $30,000,” that dealer will have to choose between negotiating or losing the sale.

The gray market probably never will go away entirely. Indeed, some retailers say it must be tolerated; otherwise the manufacturer would have to find less acceptable methods of disposing of surplus product, such as simply destroying it.

Retailers who sell authorized pieces, however, do have some advantages, which they should stress to the customer. Mainly, they sell peace of mind. They can assure the customer that the warranty is ironclad. They can provide expert information on watch technology, functions, and provenance, and the watch’s value as a collector’s item.

Navigating the gray area

Many watches found on the gray market in the United States were meant for sale overseas, but were sold to distributors who sold them to unauthorized distributors in North America. In this way, an individual consumer can buy a high-end piece by a big-name maker not only at a discount, but considerably faster than he or she could get it from an authorized dealer.

That consumer will often know that he’s buying a gray market watch. Authorized dealers, as a rule, don’t discount high-end watches significantly.

There’s nothing illegal about buying a watch from an unauthorized dealer. To the consumer, the downside only appears if and when the watch needs servicing. Gray market watches have no manufacturer’s warranty, and it’s easy for authorized distributors to identify watches that they didn’t sell.

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Source National Jeweler

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