Not so long ago, snooty Swiss luxury watch brands would cringe at the mention of e-commerce. The romance of handcrafted luxury didn’t gel well with the cold, impersonal offerings of the virtual world, they professed. However, in the past two decades, as the online retail space expanded at breakneck speed, the inevitable reality finally hit home. In late 2016, Richemont chairman Johann Rupert expressed his concern “about a massive change” in the way business was being done. “I’m talking about a massive change in e-commerce,” he told financial analysts. “Folks, we’re seeing such rapid change and we better be ahead of that curve. Our goal is to position Richemont so that we’re ahead of curves.”
Soon after this realisation, Rupert set out for a massive management restructure, huge buybacks and a carefully crafted distribution strategy at Richemont. The company’s new game plan included a slew of surprising acquisitions. In January 2018, Richemont took over Yoox Net-a-Porter (YNAP),a Milan-listed online luxury retailer. Five months down the line, the group acquired WatchFinder, the UK-based pre-owned watch retailer known for its strong after-sales service.
The two takeovers have made Richemont a strong player in the luxury e-commerce field. Online retail now accounts for 16 per cent of the group’s sales, compared to just 1 per cent before the YNAP deal. More than 50 per cent of these sales take place on mobile devices. In the past one year, YNAP sales expanded by double digits, while WatchFinder saw single-digit growth.
Thanks to the diverse tastes of young, internet-obsessed watch enthusiasts, the global luxury watch market is opening up to pre-owned watches like never before. While there have always been some e-commerce sites like eBay, Chrono24 and Chronext catering to this segment, the business is now getting more organised and competitive. “Today, vintage watches have an audience beyond the collectors’ circles and auction houses don’t have the capacity to deal with the huge inventory. As per our estimate, it’s worth $500 billion, almost 25 times more than the value of watch exports from Switzerland last year ($21.2 billion),” says Patrik P. Hoffmann, executive vice president of WatchBox in Switzerland.
In the past two years, WatchBox, an international e-commerce platform for pre-owned luxury watches has given a fillip to this segment. Established by industry veterans Danny Govberg, CEO of the renowned Govberg Jewelers of Philadelphia, Liam Wee Tay, former owner of Sincere Watch, and investor entrepreneur Justin Reis, WatchBox is changing the rules of the game with the most incredible, digital-driven platform that
promises trust, transparency and education to the discerning. “Chrono24 and eBay don’t own the watches they sell. We own an inventory of timepieces worth $70 million. We buy these watches, our in-house technicians refurbish them and we then put them up for sale with a 15-month warranty,” explains Hoffmann, who has been in the watch business for more than 30 years.
In a market rife with scams and fake watches, WatchBox has established its credibility with a highly secure and dependable tech-network, which makes transactions for the end customer unbelievably easy. The company works through 39 traders worldwide, who are the first point of contact for the clients. “Almost 90 per cent of our business development happens over phone calls. Our traders—three in Switzerland, nine in Hong Kong and 27 in the US—build a relationship with customers, taking note of the minutest details of their collection, hobbies, tastes, marital status etc, and advise them accordingly. Our website has over 4,000 videos and 3,000 watch reviews to help enthusiasts who want to delve deeper into the making of a watch. And then we have this superb mobile app, which gives an instant valuation of the most popular watches,” says Hoffmann.
Last year, in a bid to lure more clients, including retailers across the globe, WatchBox acquired Chronofy, a valuation subscription service that enables its users to know the exact value of a pre-owned watch at any time. “This app is like the Kelley Blue Book of watches. You can put up a collection of timepieces and follow the change in its value over months. This is something the brands or the retailers aren’t equipped to do. It is like asset management. Currently, we have 29,000 people registered with us and the total value of their watches is worth $900 million,” says Hoffmann.
Historically, most luxury watch companies have shied away from selling second-hand watches for the fear of losing out on sales of new watches. However, the rising popularity of pre-owned watches is not lost on them. Swiss watch giants like Breitling, Audemars Piguet and the LVMH group are now trying to exert greater control over the second-hand trading of their watches. “Sure, the brands are buying back their old watches from the market, but they don’t have a solution for reselling them. It’s difficult for a brand to explain to their customers why and how the value of their watch has gone down by 30 or 40 per cent in 10 years. It’s tricky. Our traders, on the other hand, have built this trust among clients, offering the most reliable evaluation and ease of selling a timepiece. The after-sales service of pre-owned watches is going to be another big challenge for the brands,” says Hoffmann.
Though the race to embrace digital sales is getting hotter, not all channels offer the same credibility and personalised service that WatchBox does. “We are not just a retailer. We are a tech company driven by data, analytics and algorithms. We are fair and transparent in our pricing. We have a system in place to go back for details like how much time did it take for us to sell a particular watch, the original price of the piece and how much did we ultimately sell it for. We have done around 45,000 transactions in the last two years,” says Hoffmann.
Govberg, the CEO of WatchBox, has set a target of increasing the company’s inventory value to $120 million by the end of this year. With a workforce of 175 people worldwide, WatchBox is now getting more and more retailers on board. “The traditional watch industry is not very innovative when it comes to distribution. So, the retailers are happy with what we bring to the table—the expertise and the tools for the trade to buy and sell secondhand watches. We have also shown our concept to some of the leading watch brands and they believe that we can together help take over the grey market,” says Hoffmann.
Backed by Singapore-based private equity firm CMIA Capital Partners, which invested $100 million in the company in 2017, WatchBox clocked a revenue of $200 million and reported 40 per cent growth last year. According to Hoffmann, this is just the beginning of a dynamic growth story for the company, which is now getting into partnerships with leading players in the traditional distribution system.
To bring its clients closer to the heart of watchmaking in Switzerland, WatchBox also opened a chic new office in Neuchâtel earlier this year. The 2,300 square-foot space includes a trading floor for clients, a lounge and a studio. “We want to interact with collectors, CEOs, artisans and watchmakers more closely. This is the ideal place for more frequent events,” says Hoffmann, who is working on newer partnerships with retailers
across the world.
Hoffmann conducted a one-of-a- kind auction of pre-owned watches at the Beau-Rivage hotel in Geneva over three days in May this year. WatchBox presented a selection of more than 80 exceptional recent timepieces, including some of the most sought-after models from Rolex, Patek Philippe and Audemars Piguet. “The Geneva Auction Week provided an opportunity to seek out watch collectors and enthusiasts who are not yet familiar with our brand, quality and rarity of our timepieces. We want to show them that we offer an alternative to auctions when buying and selling pre-owned luxury watches, thanks to the power of our platform and the advice given by our experts. Our focus is on expertise and proximity; “click and buy” only forms a very small part of our activity,” he says.
In May, WatchBox also announced a partnership with high-end Swiss retailer Les Ambassadeurs, extending the company’s digital reach into the brick-and-mortar space. “The idea was to create a fully-integrated service platform, where the retailer would use our evaluation tool and propose a trade-in price to the customer. The customer can then buy a new watch in exchange of the credit note from the retailer. And we get the old watch to sell through our channels. So, this way, we have brought together the primary and secondary markets in the most efficient fashion,” says Hoffmann, who is looking to expand the business to Dubai and India. “We already have a team of 60 people in India and we should be able to start operations by the end of this year.”