How to Buy a Rolex — Inside the Luxury-Watch Gray Market

Photograph-Illustration: The Lower; Pictures: Getty

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The wealthy can have just about something their diamond-encrusted hearts need — three-minute private-jet flights, a silly yacht, this marriage ceremony — except it’s an enormous fancy watch. Not that they’ll’t afford it. It’s an entry subject.

Technically, there are two methods to purchase a luxurious timepiece. The primary: You waltz right into a boutique with a reputation like Rolex, Audemars Piguet, Patek Philippe, or Richard Mille emblazoned throughout the storefront home windows and ask for a salesman. But when you must Google Maps the instructions since you’ve by no means been there earlier than, this isn’t the way you’re going to search out one. See these blinged-out wrist clocks contained in the show case? Yeah, the gross sales man isn’t going to truly promote you a kind of. He can’t. The stock on the first marketplace for the so-called hype or trophy watches might be so low there isn’t even a wait checklist. So that you’ll do the second: Discover a grey market luxury-watch vendor.

The grey market luxury-watch vendor will reply to your DM straight away — he doesn’t care who you might be, so long as you possibly can pay. And he has the stock: spectacular diving options you gained’t really use, uncommon watch-face colours, so many diamonds. You’ll be able to see for your self on his Instagram. The one catch: You’ll have to pay — money or crypto — generally tens of hundreds of {dollars} above prompt retail value.

Neel Alwani can promote you an Audemars Piguet Royal Oak or a Patek Philippe Nautilus — stainless-steel fashions designed by Swiss watchmaker Gérald Genta that appear to be in every single place (together with the wrists of Jay-Z and Leonardo DiCaprio) aside from the precise boutiques. By reselling these fashions secondhand, he self-reported $113 million in gross sales final yr (although he didn’t confide in me his yearly income).

The 26-year-old actually appears like $113 million in gross sales. The net presence of those sellers is commonly a mix of the identical substances: uncommon sneakers, flying non-public, and Skittles-colored sports activities vehicles. His most up-to-date automotive buy, he says, a black Maybach, sits alongside an orange McLaren, a crimson Ferrari, a Lamborghini, and an Audi R8. A comparatively down-to-earth Mercedes-AMG C 63 rounds out his self-described assortment. “If you’ll are available in and purchase a $500,000 watch and I’m driving a Toyota, that doesn’t make sense,” he says.

A lot of the vehicles reside within the storage of a five-bedroom, five-bath Miami dwelling with a pool that he shares together with his two youthful brothers, each of whom work within the enterprise. His mother and father bought a second dwelling subsequent door, making it really feel extra like a compound with fixed motion.

Alwani grew up within the watch world, albeit with patrons who have been extra of a cruise-loving crowd. His mother and father owned shops again dwelling in St. Maarten. When Hurricane Irma hit and destroyed each infrastructure and tourism in 2017, enterprise got here to a halt. By 2018, Alwani was on his personal, promoting out of his condo in Miami’s Brickell neighborhood. All the Alwanis are photogenic. Posing with critical wrist bling and diamonds in entrance of helicopters and sports activities vehicles provides them a Kardashians-of-the-watch-world really feel. “Miami is quite a bit about displaying off — for me that’s nice — all I’m doing is capitalizing on that,” Alwani tells me.

Even the act of buying is extreme luxurious theater. The watches, posted to Instagram or TikTok and generally offered inside minutes, are dealt with with black gloves. Many are then delivered to patrons — principally males of their 20s, 30s, and 40s prepared to pay extra for the sort of wrist sweet that indicators success — through armored autos.

To promote, he is dependent upon a formulation of YouTube subscribers (291,000) and Instagram followers (214,000). He additionally items watches to extra Insta-famous pals and will get free publicity.

At every step, everybody makes a bit of cash. Take the Audemars Piguet Royal Oak 15500ST. As soon as the in-demand mannequin is bought at retail for about $26,000; it’s resold for greater than double and immediately can commerce wherever for $60,000 to $100,000. The watches are then flipped through eBay-style marketplaces or straight by the DMs of particular person watch sellers. The posh manufacturers vet potential prospects, with salespeople doling out watches on a case-by-case foundation to attempt to keep away from promoting their storied fashions to outright flippers. Not surprisingly, it doesn’t work. A pal of a pal lately satisfied a Rolex salesperson in Aruba that he wished a Rolex Submariner to put on on his marriage ceremony day. He flipped the watch weeks later to pay for his honeymoon. (Spokespeople from Rolex, Audemars Piguet, and Richard Mille all declined to remark for this story.)

“A watch might be offered and acquired ten instances earlier than it’s really worn — it’s being traded from so many fingers,” Alwani says. On most days, he sells about $435,000 in watches.

Alwani retains about $25 million value of watches in inventory — which interprets to roughly 300 watches at any given time — 20 instances greater than the close by Rolex boutique, in keeping with Alwani. His stock comes through frequent patrons with connections to the gross sales employees who can nonetheless rating the watch at retail. Some buy no matter they’re supplied from the boutique, as a result of they know they’ll flip the watches at greater than double the worth inside days. The typical value of the fashions Alwani sells is $75,000, which earns him lower than $3,500 in revenue. That is why, he says, his prospects belief he isn’t climbing up costs as a lot as the following man who might cost $5,000 for promoting the identical watch.

At present, an unworn now-discontinued Rolex Submariner “Hulk” with a inexperienced dial from 2019 sells for $29,500, in comparison with about $10,000 for one bought at retail from a Rolex boutique when it was nonetheless in manufacturing. “For those who go to a boutique, you may be begging for a yr and by no means get it,” Alwani says. “With me, it takes per week and we deal with you want royalty.”

The used-watch trade isn’t a brand new one. Within the ’90s, sellers would attend cash-and-carry commerce exhibits in drab career-fair-type convention facilities in cities like New York, Chicago, and Las Vegas, staying in low-cost accommodations for just a few days. They might hire tables and jewellery instances and haggle over their secondhand wares earlier than issuing flimsy receipts. Safety employees roamed the realm to forestall outright theft. The members-only exhibits allowed the principally male sellers to change hundreds on the spot and resell them to their purchasers for a revenue.

A few of right now’s patrons are utilizing the cash that’s bubbled up in the previous few years, from shopping for into crypto, meme shares, NFTs, and different fast moneymakers, says Tim Stracke, founding father of Chrono24, an eBay-style market for watch promoting based mostly in Karlsruhe, Germany. Stracke launched Chrono24 in 2003 and it has turn out to be the biggest web site for secondhand watches, with greater than $2 billion in gross sales and three,000 sellers. Sellers interviewed for the story say that purchasers typically point out crypto windfalls when making a purchase order.

In-demand watch fashions have been simpler to search out even 5 years in the past. However as demand grew, firms stored output largely the identical. About 5 years in the past, the Chinese language marketplace for designer watches collapsed partially attributable to an official crackdown on bribery prohibiting present giving to authorities officers to curry favors. That elevated the variety of new watches accessible from retailers. Quite than let these watches be offered at retail for steep reductions, producers together with Richemont (which owns Cartier and Montblanc) spent two years repurchasing roughly 500 million euros in their very own watch inventory and destroyed it. The sudden shortage spiked costs.

The coronavirus hit — and ensuing shutdowns — created one other payday. With extra demand from patrons who couldn’t journey or spend on meals and leisure leading to even fewer of essentially the most in-demand fashions accessible at retail, the costs of secondhand watches began hitting crypto-style highs, Stracke says.

Strolling right into a designer-watch boutique and being unable to make a purchase order solely will increase desirability slightly than frustration, says Cait Lamberton, a advertising professor on the College of Pennsylvania’s Wharton Faculty who research consumption conduct. “Luxurious follows totally different guidelines,” says Lamberton. “Hermès needs to be a family title, however Hermès doesn’t need everybody to have Hermès.”

“When paying in your groceries, you don’t have a Ferrari. Once you’re sitting on the restaurant, your own home just isn’t there,” says Adam Craniotes, 49, a watch collector and the founding father of Redbar Group, an in-person watch neighborhood. “However you possibly can gown down as a lot as you need and appear to be a bum, and if you’re sporting the $100,000 watch, you’ve received the look.” Craniotes lately offered his Audemars Piguet Royal Oak for a $61,500 revenue, which he used to mix his New York apartment with the unit subsequent door.

In his finest French accent, Stracke recounts a narrative the place a well-known Swiss watch CEO as soon as defined to him how he feels concerning the grey market. “It’s somewhat bit like having an affair,” he advised me. “You meet her, you’re keen on her and you’ve got intercourse along with her — however in public you don’t know her.” He additionally identified that Chrono24’s traders, together with LVMH chief govt Bernard Arnault’s household workplace, personal a majority stake in Bulgari, which is understood for its watches.

At Chrono24, the fastest-growing section is 18-to-25-year-olds who purchase watches that begin at about $20,000 on the positioning, says Stracke. For some time, promoting crypto returns has helped make this extra palatable. “They’re shifting their crypto wealth right into a considerably actual wealth” by cashing out to make the acquisition, he says. “The younger youngsters contemplate these watches an attention-grabbing asset. They might by no means spend $20,000 on only a timepiece, but when this timepiece feels somewhat bit like an NFT in your wrist, that may really feel extra cheap.”

In Dallas, Josh Navarro, 32, and Michael Bell, 31, settle for Bitcoin for the watches they promote as a result of so many shoppers wished to pay with cryptocurrency that they have been dropping offers. The 2 are a part of a foursome that opened Wolvyn final yr. Their Design District boutique has a deliberate man-cave vibe, stocking $40,000 in hard-to-find whiskey for purchasers to drink whereas they store. The objective is to supply a little bit of Southern hospitality: Potential patrons can come, spend, and settle in for a day with a cigar in hand. Rolexes make up the majority of their stock, with hard-to-find fashions together with the Daytonas, Submariners, and Oyster Perpetuals drawing in prospects. “We attempt to create our retailer to be between Thom Browne and Saint Laurent,” says Navarro.

They’ve Texas-style safety. The shop has roughly 15 to twenty weapons, together with AR-style rifles unfold out in numerous components of the store. And the corporate sends armored autos to ship watches offered over $150,000. Even their very own vehicles are stocked with weapons tucked into every door.

Navarro launched the enterprise greater than a yr in the past after a number of years spent flipping watches on-line for pocket cash and dealing in building. Making hundreds from every sale satisfied him to ditch the home-improvement enterprise. Along with his brother Andrew, he joined forces together with his longtime pal Josh Bell and Josh’s youthful brother, Michael.

Within the final yr, the youthful Bell has helped make Navarro the star of the corporate’s YouTube channel, The Wolves of Watch Avenue, which has garnered almost 19,000 subscribers. The channel’s aesthetic is a bit like a badly produced actuality present. However the movies, Navarro says, have earned them purchasers out of state, permitting them to extend stock twentyfold within the final 12 months. “It helps break down any boundaries,” he says. A latest add is titled: “How NOT to Shoot a Gun When Carrying an EXPENSIVE Watch!” Up to now it has 4,000 views and counting.

Navarro lately began driving a Ferrari, which his 3-year-old calls “the UFO.” The steering wheel, with its prancing horse, has turn out to be a backdrop to lots of the wrist pictures he posts on his private Instagram account to his 3,500 followers. On the corporate’s TikTok, he confirmed off a glamorous photograph of his spouse that was newly tattooed on his forearm. Viewers might clearly see the Patek Philippe Nautilus on his wrist. Weeks later, he offered it for $145,000, pocketing $15,000 in revenue.

There are clues to what firms could do in the event that they determine they wish to rein in who resells their watches. In 2021, Richard Mille began providing licensed pre-owned watches by Westime, a California-based retailer. Like vehicles, the licensed pre-owned designation is drawing patrons as a result of the watches get serviced by Richard Mille after which embody a two-year prolonged guarantee. The used watches begin at $200,000 and run into the tens of millions. They’re normally offered out.

As the one approved reseller of the model within the U.S., the corporate needs to manage the expertise for the client. “We wish to guarantee that we’re promoting to the tip client and never somebody who’s attempting to flip the watch,” says Westime president Greg Simonian. Oftentimes it’s unimaginable to inform and a few patrons do find yourself reselling the watch, he provides. On the flip aspect, established watch retailers together with Watches of Switzerland Group, identified for principally promoting new merchandise, are beginning their very own secondhand gross sales arms. The retailer, a licensed vendor for Rolex and different manufacturers, now sells pre-owned timepieces after buying the pre-owned watch firm Analog Shift in 2020.

However manufacturers should transfer shortly if they need an opportunity at taking again the resale market earlier than the luxury-watch increase busts.

Even with demand (and costs) nonetheless excessive, there are indicators of hassle. The grey market value for a discontinued Patek Philippe Nautilus in metal with a blue dial value $226,000 this February and dropped to $173,596 in July, in keeping with Chrono24 knowledge. In 2015, the watch was value about $25,000, its retail value on the time. Although even with the drop, the fluctuations don’t matter, as a result of there’s a slim likelihood they’ll be accessible at their retail costs anytime quickly, says Craniotes. “For those who purchased something at checklist value, you might be nonetheless making out like a bandit,” he notes.

In the previous few months, Alwani offered a portion of his current watch inventory at a loss so as to unencumber money to buy items on the decrease costs that are actually accessible. And income for 2022 are down almost 50 %.

Not that considered one of his 214,000 Instagram followers would ever be capable of inform. On his YouTube sequence, Alwani purchased his youngest brother a $280,000 Porsche 911 Turbo, blindfolded him, and led him to the shock. It was the costliest present he has ever gotten anybody.

For now, he’s planning for an additional dip by shifting stock extra shortly slightly than letting it sit and danger additional depreciation. And he’s extra targeted on fulfilling particular requests from patrons for watches that he doesn’t even have in inventory. That approach he can shortly get the piece from one other vendor and promote to his shopper at a revenue with out proudly owning the look ahead to greater than a day. After seeing costs go up for the previous few years, a dip is inevitable, he explains. “It’ll by no means go to zero,” he says. “Nevertheless it’s gotta rain generally.”