For the first 20 years of its existence, Watchfinder has bought every watch that is then resold on its ground-breaking site. That is about to change with carefully selected third party sellers invited to trade via an online marketplace. How will the new-look business fit into an incredibly challenging sector? Rob Corder spoke to CEO Arjen van de Vall to find out.
WATCHPRO: It is great to speak with you again, and it seems important in such a fast-moving market that we get regular updates. The latest news from Watchfinder is that you are launching a marketplace, so watches can be listed on consignment with you.
ARJEN VAN DE VALL: It is very exciting for us and for the industry as a whole that, for the first time in our 20 years, Watchfinder is branching out from our model where we own 100% of our inventory into launching a marketplace where we work with third party sellers.
WP: What prompted you to go in this direction? What is your thinking?
AVV: They key for us is to offer choice to customers. We want to ensure our clients have access to the widest and deepest selection of high quality watches. That has always been our number one priority. To accelerate that aim, opening up our platform to third party sellers allows us to significantly enhance the offer.
Secondly, this is part of the internationalising we have been doing over the years since we were acquired by Richemont in 2018. Our ambition with the marketplace is to launch it first in the UK and then roll it out in countries where we will be active in the coming years. That helps us to compete with the broadest selection of fine watches much more quickly than if we continued to buy and own all our inventory.
WP: When will dealers and end customers first see this marketplace in the UK?
AVV: We do not have a fixed go-live date yet, but it will be in the first quarter of the new fiscal year, which would be in spring 2023. Communication is key, and this conversation is the first time we have spoken publicly about it.
WP: Are you comfortable with this being described as a direct competitor to Chrono24, or is it going to be something different?
AVV: No, I see it much more as a complementary offer. The key difference between us and more pure play platforms is that the quality of what we do is central to the plan. This is more of a quality than a quantity proposition.
If you look at what we plan to do, every watch that we offer on the platform from third party sellers will be inspected, tested and authenticated before it lands in the hands of a client.
In addition, all of the watches we sell — similar to our own inventory — will have a 24 months Watchfinder warranty.
We will offer part-exchange or trade-in services across all third party products and, additionally, we have a very strong omnichannel proposition that helps us
to promote and raise visibility for the watches that we sell in our boutiques, as well as online.
Everything is about quality products and services. There will be curation in terms of which sellers we want to bring onboard. These third parties have to be professional and expert traders. In terms of the products being added, they have to complement the inventory we already own.
From a sellers point of view, this is a very different proposition in terms of the service we provide and access to the customer base we have built up over the past 20 years in business.
Watch traders are always looking for new sales channels, so I would say it is more complementary to existing players in the market.
WP: In terms of sellers, have you spoken to many of them, and can you tell me what their reaction has been?
AVV: I cannot tell you which sellers will be brought on board at this stage, but we have presented them with a proposition that is highly relevant to what they are trying to do. We are not just coming up with a concept that looks great in a Powerpoint presentation, it has to be something that is really appreciated and adopted by sellers.
We have had a lot of engagement with sellers over the past few months so that we can best understand what they need and demand. We have also been learning about the ways they work with other platforms so that we can fine-tune the service that we offer to ensure it meets their requirements.
The feedback has been overwhelmingly positive. You can see from the reaction of sellers that they appreciate the opportunity to work with Watchfinder and reach our audience through a platform that has a lot of trust and credibility.
There is no question that there is strong interest in working with us, and the best of them want to work in partnership with us to develop the channel and provide the best possible client experience.
It will only be after the marketplace is launched and fully operational that we will see exactly what customers and sellers think, but we have certainly been very encouraged by the conversations we are having.
WP: Is the intention to only have professional companies selling on the marketplace, or is the ultimate aim to enable consumer-to-consumer transactions?
AVV: At launch, the focus will be on professional sellers because carefully choosing sellers and engaging with them to develop the platform together will lead to the best possible experience.
We would be interested in exploring C2C in the future, but not from day one for the platform.
WP: it does not feel to me like there is an obvious gap in the market for another luxury watch marketplace. We already have eBay and Chrono24 as pure play marketplaces. The hybrid model you are moving towards has been a huge challenge for companies that combine selling their own inventory with watches on consignment. Chronext and Zeitauktion have been laying off up to half their staff, and Watchmaster just went into administration.
AVV: First and foremost we believe that our proposition is unique, and not just copying what has gone before. I believe that the quality of the watches that will appear on our platform, coupled with the additional services like the two-year warranty and the ability to trade in and to buy watches using finance will set us apart. Plus, our physical stores and omnichannel proposition is something that no other player offers.
I am also convinced that we can elevate the quality of sellers’ and customers’ experience to a new level that today’s platforms cannot.
They are generally focused on growing the quantity of watches on their platforms as fast as possible. We will not go that route. Our focus will be on offering the very best watches from our own inventory and from third party sellers that have proven to be capable of delivering the same level of service and quality product.
We have done our research, but we will only really see if there is an appetite for this after we launch.
There is a keen interest in the market for this because of our strong brand and positioning. It remains for us to ensure that, for each transaction on our platform, it is superior to that of any of the rival platforms in the market today.
WP: You mentioned authentication and testing of every watch. How does that work?
AVV: First, the sellers that we work with have a clear commitment to offering only the highest quality watches. In addition, once a watch is bought, it is sent from the seller to us and we take care of testing, authentication and fulfilment so that we can offer our two year guarantee.
WP: One of the early decisions taken by Watchfinder, which set a standard for the industry, was that you professionally photographed every watch on the site after it has been refurbished so that they all look fantastic. How will you maintain this with consigned watches that you will not see until they are sold?
AVV: This is one of the reasons that we will only work with selected partners so that the quality of the inventory and the experience is the best in the market. That means great watches, beautifully photographed and professionally described.
As we evolve, it is also very likely that services like photography will be integrated at some stage.
WP: Another great advantage for Watchfinder is that you have been active for 20 years (2022 was the 20th anniversary), which means you have a long history with your customers. How does that help you run the best possible marketplace?
AVV: We and the rest of the secondary market are perfectly transparent about prices. This has been very important in growing the pre-owned market to the size it is today and has drawn in customers to the likes of eBay and Chrono24.
When it comes to sellers, these platforms provide less transparency, but we want to provide rich data on things like supply and demand for individual watch references. This helps sellers fine tune their inventory to make it most likely to sell at the best prices.
We are sitting on a wealth of information, and we do not want that to remain the exclusive advantage of Watchfinder. We want to share it with our partner sellers so that they are as educated and informed as they can be.
WP: If I was a seller, there would be three things that I would consider when choosing which platforms to work with. Number one would be the time it takes to sell a watch; number two would be the price I can achieve and number three would be the fees, either for listing on a platform or as a commission when a watch sells. What is your competitive proposition in these areas?
AVV: Clearly, the greatest competitive advantage we have is our operational excellence. All marketplace transactions will go through the same process as our owned inventory sales, and this has speed and quality of service at its heart.
The only variation with a third party sale is that the watch has to be shipped to us first before it goes onto the customer, but there will be priority given to this process so that the experience is as close as possible to a sale of our own product. This applies to returns and the guarantee.
Ultimately, we want the customer to get exactly the same experience whether they buy our products or watches from a third party.
In terms of price, regardless of whether you own watches or sell them on consignment or wholesale, this is always about purchasing at the right price and then add on sufficient margin to make it a sustainable business model.
What we propose to do is provide a wealth of information to our third party sellers so that they make the best possible price decisions. It is not just about being the cheapest, it is also about finding the right price when you buy and when you sell.
Lastly, we have not yet made an announcement on our fees, but we obviously need to be competitive. What I can say is that, at launch, there will be no fixed monthly or yearly fees. There will be a fixed fee and a commission fee for each transaction.
What you get in return for competitive fees is the ability to plug into the 20 years’ experience we have, the infrastructure and the ability to offer products with trade-ins, our warranty and with customers using financing. That is a very competitive offer.
WP: Can you expand on how that trade-in offer will work?
AVV: We know that trade in is a conversion drive, that that is something that is missing in the marketplace today. Ultimately it is about not just meeting our clients’ expectations, it is about exceeding them.
The trade-in experience is the same as if you were dealing directly with the third party seller. At the moment, the trade-in would be with Watchfinder, so it is an opportunity for us to add to our inventory. In the future, we might be able to offer sellers the ability to take trade-ins through the system so that they can build their own inventories.
Marketplaces are always evolving and we are always looking at ways to add complementary services. If we see enough traction with our seller base, offering them the ability to take trade-ins could be the next thing we develop.
WP: Do you have a plan to prevent a buyer seeing a watch that they want on your platform, from a third party seller, but contacting that seller directly to do a deal so that they don’t pay commission?
AVV: Yes and no. We do not want to shield the identities of our sellers, but obviously we want to make agreements with them for a fair trading environment. We know the issue exists, but we will not try to artificially minimise the chances of it happening.
We truly believe that the experience that we will offer when buying through Watchfinder will be far superior to going direct.
WP: You said this would launch initially in the UK. Does that mean the marketplace will be ringfenced within the country because of the complexity, taxes and pricing issues of trading with the rest of the world?
AVV: You answered your own question. The UK is effectively a closed market today that significantly limits us to open up to the world as a first step. Down the line we will open new marketplaces or expand into other countries and we want to make that as seamless as possible.
Unfortunately, looking at Europe, there is no longer a border-free system that allows us to operate in a seamless, client-friendly way. So, at the moment, the marketplace will be UK-centric. Over time, we obviously want it to become a global platform, but there are a lot of restrictions and complications we need to work through before we get to that point.
WP: What would a perfect launch look like from a customer perspective? Can they expect to see 10-times more inventory and choice on day one?
AVV: No, it is not really a quantity play from day one with an inventory of 100,000 watches versus the couple of thousand we have today. A good outcome would be us doubling the inventory on offer when we launch and then gradually scaling up over time.
We already have our launch partners that we are working with to make sure we have a competitive offer when we start. When it is alive and growing, we will see what the appetite is for onboarding more sellers.
It is important that, from a Watchfinder customer point of view, there is a clear difference between the inventory before and after we launch the marketplace.
WP: We are speaking in December and it has been a rollercoaster year for the secondary market with prices soaring up until March and dropping sharply since. There seemed to be a bit of recovery in September but then the decline began again and continues through to today. What is your reading of the market?
AVV: Clearly it is still a challenging market. With that said there are still markets where we are doing exceptionally well. We are ahead of what was already an ambitious plan in some of our European markets. It is tougher going in other parts of the world.
What is clear is that the speculator segment and investor-collectors are still hesitant to buy certain watches at two- or three-times retail prices, and I can understand that if the price is still too high. In other cases, the volume segment is still strong. There is significant interest. If you look at the traffic we have and the time people spend on our site, you can tell there is interest. But conversion-wise and price-wise we are at a different level to where we were last year.
Looking at prices, we can see that the market is still evolving, but at a much less steep level than we saw in April and May with the 30% drop from peak. It is a different picture now. There are pieces where we are seeing stability and in some cases some gradual increases, but as a whole we have some way to go to get back to the glory days of 12 months ago.
WP: There is an important difference between the prices advertised on sites like Watchfinder and the prices being offered to somebody selling. I’ve heard there are now only a few watches — Daytonas, Royal Oaks, Aquanauts and Nautiluses, most likely — where dealers will buy for above retail prices. That is a massive change in the market because it destroys the business model of the flippers who buy from authorised dealers.
AVV: Six years ago, the only watch that sold structurally for over retail was the Daytona. It is difficult to predict. The pre-owned model is not based on speculation. It is a gateway into the luxury watch world. Speculators created the boom of the past 24 months and it could well be that prices settle back again to where we were before that boom.
From the point of view of brands, the model a few years ago was very much about manufacturing and wholesaling. We are now in a position where many manufacturers are embracing a scarcity model. The question is where that will settle.
We can see that demand for new watches is still very strong. Manufacturers are tracking very strong sales in most of their territories, and that is a clear indicator that there is still enough appetite in the market to invest in luxury watches.
How and where the pre-owned market settles is the question that everybody is trying to answer. What is key is the ability to buy at the right price point. That is something we are very closely monitoring.
