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In December 2022, the Swiss luxury watch brand Rolex launched a certification program for its second-hand watches (Rolex Certified Pre-Owned). The objective was to bring under its control a part of the second-hand market which had grown significantly over the years, but remained poorly regulated. At the time it was an operation that many commentators considered revolutionary, because luxury companies usually consider the second-hand market something to stay away from and which damages the sales of new products.
After three years we can say that Rolex’s program has been a success: not so much for the company’s turnover but for the value of the brand. This year, sales of Rolex certified pre-owned watches are estimated to top half a billion dollars, according to data analytics firm WatchCharts.
Over the past decade, and especially during the pandemic, the market for second-hand luxury watches has grown so much that it is making it increasingly difficult for big brands to continue to ignore it. Rolex wasn’t the only one to intervene: programs like its have also been started by companies like Vacheron Constantin and Richard Mille. Oliver Müller, founder of the consultancy firm LuxeConsult, told the Wall Street Journal that this year the trade in second-hand Swiss watches will be worth around $25 billion, or half the market for new watch sales.
It is an enormous percentage if you consider that in the rest of the luxury sector, sales of second-hand products are a marginal share: for example, the resale of luxury clothing and bags, according to estimates by the consultancy firm Bain, is worth around 13 percent of the main market.
Rolex’s decision to enter the certified pre-owned market was aimed at protecting its prestige, rather than seeking a new source of revenue. The program is in fact structured in such a way that the operational work and profits remain with the independent retailers already authorized to sell the brand’s new watches, such as Watches of Switzerland and The 1916 Company.
It is these retailers who are responsible for sourcing second-hand watches, verifying their authenticity and maintaining them according to the standards established by Rolex. Only at the end of this process does Rolex officially certify the watch as original, accompanying it with a two-year warranty. Even the final price is not set by the brand, but by the retailers, who assume the entire commercial risk and collect all the margins from the sale. In this way Rolex manages to maintain control over the quality and image of its product, concentrating the buying and selling of used items in the shops with which it already has relationships.
Recent data shows how much certification affects consumer choices. According to Morgan Stanley, buyers are willing to pay on average 28 percent more for a used watch certified as authentic by Rolex compared to a non-certified one. It is a surcharge that many accept to reduce the risk of purchasing a fake and to be sure that, since it is a mechanical watch, it has been serviced and works correctly.
The main beneficiaries of the program are the authorized resellers, who can expand the offer and intercept an already existing demand, and the more prudent customers, willing to pay higher prices in exchange for greater safety. On the contrary, many unauthorized independent retailers see their room for maneuver reduced, especially on the most popular models, which now find competition in the official channel that is difficult to match in terms of trust and reputation. In this way the parallel market is redefined: a part of used watches which for years had remained outside the control of the producers tends to fall within circuits regulated directly by the brands.
Furthermore, for some models, the used market is already more expensive than the new one. There are often long waiting lists to buy new Rolex watches: this is why many collectors prefer to pay more on the secondary market in order to get the desired watch immediately. For example, the GMT-Master II model, known as Pepsi, costs over 12 thousand dollars (more than 10 thousand euros), while on used sites it costs over 22 thousand dollars (almost 20 thousand euros). It is not uncommon for second-hand Rolex watches to sell for double the list prices, and sometimes even higher.
As he wrote New York Timesmany insiders point to the 2017 auction of the Rolex Daytona that belonged to actor Paul Newman, sold for 17.8 million dollars (around 15 million euros), as the beginning of the current interest in collectible watches. In recent years, the market’s growth has also been driven by a new generation of luxury retailers specializing in used goods, such as WatchBox and Chronext, and by Watchfinder, purchased in 2018 by the Swiss luxury group Richemont. These companies operate with highly curated websites and physical stores in strategic cities such as London and Hong Kong. In addition to reselling watches, they purchase them directly or accept them in exchange, allowing customers to transform the value of their collections into liquidity or new purchases.
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