Rob corder

CORDER’S COLUMN: Consigning watches with dealers is not risk-free

The time has passed, for now, to get rich quick by buying and selling watches. The shake-out will leave fewer, but more professional, players controlling the market.

For the past few years there has been a debate about which business model is best when it comes to trading new or used watches on the secondary market.

Some of the biggest players in the global industry, such as WatchBox and Watchfinder, buy all the watches in their inventory; authenticate, service and refurbish them all, before they go back on sale.

Others like eBay and Chrono24 are pretty much pure technology plays with watches held by their owners and advertised on light touch marketplaces with additional security services like escrow or, in the case of eBay, professional authentication of watches as they travel between the seller and buyer.

Consignment, until recently, has been the preserve of major auction houses, which charge hefty fees for ensuring watches, often rare vintage pieces, are authentic, as described by their owners and securely stored.

Businesses like Chronext and the now defunct Watchmaster operate hybrid models so that, if customers wanted to sell their watches, they could sell them to the company or consign them.

In either case, the watches would need to be sent to the companies to be checked by watchmakers.

This consignment model needs to come under closer scrutiny, and customers should be aware that it has proved risky in recent months.

First, the secure storage facility of Watchmaster, one of Europe’s largest traders, was broken into in Berlin with watches valued at around £12 million stolen.

Concerned customers naturally wanted the watches back that had been consigned to Watchmaster, or to be paid for them.

Watchmaster was not able to do either and fell into administration leaving owners of consigned watches high and dry.

Here in the UK, Newcastle-Upon-Tyne dealer WatchTrader & Co., which also used the consignment business model, has just been raided by the National Crime Agency for alleged money laundering.

Watches with a reported value of £10 million were seized as part of the investigation.

Individuals who have consigned watches for sale with WatchTrader are reportedly being contacted by the National Crime Agency, and being asked to provide details of how they acquired the pieces in the first place.

While there is no suggestion that WatchTrader’s clients have broken the law, they are likely to be caught up in the investigation as the provenance of watches worth £10 million is established.

Even clients with impeccable papers proving their legitimate ownership of watches consigned to WatchTrader, are in for an anxious wait to see what the feds do next.

And there’s the rub. Consignment was popular when the market was booming and watches sold fast.

Now the secondary market is all-but seized because of falling prices, watches are taking much longer to sell.

This is putting the traders’ business models under extreme pressure, driving many out of business, and that calls into question what happens to watches that have been consigned to them.

My advice is to be more diligent today than you might ever have thought necessary two years’ ago.

Work with only highly respected and trusted traders.

If you do want to consign you watch (owners typically trouser more of the sale price this way) then fully insure your treasure before it leaves your sight, and be sure your insurer knows what you are doing, because they are not well set-up for this type of thing.

The time has passed, for now, to get rich quick by buying and selling watches. The shake-out will leave fewer, but more professional, players controlling the market.

That might mean slimmer profits for casual traders, but at least it will be a safer market for all.

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