Online trading platform Chrono24 has long been considered a root cause of global grey market watch sales, but the company’s CEO says the problems can all be traced back to the Swiss watchmaking industry, and his business can actually help to control the problem.
In The Big Interview with WatchPro that will be published in the August edition of the magazine, chief executive Tim Stracke says that the digital tools at his fingertips can dramatically reduce grey market transactions.
If they [watch brands] want to manage the grey market, we are probably the best partner they can work with. In the past, some considered Chrono24 to be the root cause of the grey market. Now they realise that we are just the ones that made prices transparent for our users . If brands want to control the grey market, we can help them. We have solutions that work impressively well,” he suggests.
The explosion in grey market sales over recent years may have coincided with the rise in digital marketplaces like Chrono24, but the industry concedes that the greatest problem is over-supply of watches into the global sales channel.
Chrono24 prices provide a perfect barometer of that oversupply and its impact on prices of new and unworn watches that are flushed out into the grey market.
“Our data broken down to specific watches gives a very deep insight on grey-market prices. And if brands reduce supply by a little bit, you will then see how grey market prices adjust. In partnerships, we help them control their grey market better than they can do it on their own. A lot of brands are working with us today on this,” Mr Stracke reveals.
Chrono24 says it can work with watchmakers to more accurately match supply to demand right down to individual watch SKUs, and the results can be almost instant. “I would say it only takes a few months for the grey market price to change once supply is reduced. Also, when you reduce supply to improve the health of prices in the market, you can directly work with Chrono24 to keep those prices stable,” Mr Stracke urges.
The world’s biggest watchmakers say they are committed to tackling the grey market as it undermines sales through authorised dealers and erodes confidence in the value of watches that consumers buy when they find the same watches advertised online at significant discounts.
However, Mr Stracke suggests these groups continue to work in a way that makes future over-supply more likely.
“When I speak to the watch industry CEOs, I ask them how they incentivise their sales teams. Most have bonuses based on revenue, which means that those people will keep pushing watches into the market that might not find customers at full retail [price]. Within a watch brand, you might have a salesperson responsible for expansion in North America. They serve an account that is taking huge amounts of watches, more than they could ever sell, so it looks like they are feeding the grey market. If the salesperson gets a bonus based on how many watches they sell, you know they are going to keep on selling to this dealer, even though they know it is creating a problem,” he describes.
“It is interesting that the big families: Rolex, Patek Philippe and Audemars Piguet and some of the smaller companies, are doing very well today. The bigger groups have more challenges because there is more pressure on revenue from the stock market,” Mr Stracke concludes.