Buying used luxury watches is a risky venture. Selling a used luxury watch can lead to you getting fleeced by a more knowledgeable buyer. I wanted to learn more about the used watch industry so I went down to the European Watch Company in downtown Boston for a few days to see how the industry works. The used watch industry and how it works was something I never considered. My key takeaway is that relationships and trust are critical to survival. Here is what I learned.
Buying used luxury watches is a risky venture. Selling a used luxury watch can lead to you (the seller) getting fleeced by a more knowledgeable buyer. I wrote a previous article on things to look for when buying used, but the ultimate moral of that story was to be careful. Recently, I came to know a watch store owner by the name of Albert Ganjei, who founded a used watch store over 20 years ago: the European Watch Company, a store that now sells hundreds of luxury watches every month, both in their Boston store and online. I asked him if I could learn about his business and how the used watch industry works. He agreed. Here are the lessons I took away from that experience:
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How to Get Into the Business
Albert Ganjei, the owner and founder of the European Watch Company, was a software engineer before he founded the company over 24 years ago. He had an interest in watches but got his start by selling quartz watches in the late 1980’s as a hobby. He realized that going into business as a luxury watch dealer wasn’t far from his reach. He borrowed $20,000 from friends and family and opened the European Watch Company (EWC) on Newbury Street in Boston. Today, Newbury Street is one of Boston’s most exclusive shopping districts, with boutique shops of the most respected brands in retail, but it wasn’t always like this. Boston’s Back Bay area (home of Newbury street) experienced a revival since Albert opened the EWC. As the area has grown, so has the EWC. Albert started off his business with a single display case and a handful of luxury watches. Today when you go into the shop, it has a dozen or so cases filled with the best luxury watches on the market, including Patek Philippe, A. Lange & Sohne, Breguet, Blancpain, Audemars Piguet, and FP Journe, all who make watches that sell used for $30,000+.
The store itself is fairly simplistic. It’s located in the lower street level (think sub-basement) of a late nineteenth-century brownstone building on Newbury street. There is nothing imposing about the store. The display cases are simple yet full of luxury watches (as opposed to many stores that have massive cases occupied by 3-4 watches). There is no plush leather couch or salon seating area. It is a simple store with a simple atmosphere, yet specializes in Patek Philippe, Audemars Piguet, FP Journe, Vacheron Constantin, A. Lange & Sohne, Jaeger LeCoultre, and the list goes on (they also have a pretty awe-inspiring collection of vintage watches). During my visit to the store for this article, Albert was proud of the new LED ceiling lighting. I point this out to demonstrate that the EWC is not an exclusive atmosphere. They are a shop set up to connect customers with fair-priced watches; money doesn’t get wasted on creating a fancy or exclusive environment.
How Trades Are Handled
Buying used (when it comes to watches) is the best value in most cases if you can find a reliable seller. I have written on that previously, which you can view here. Tony, one of Albert’s longest and most trusted employees will tell you that buying used eliminates the initial markup that the watch companies get when you buy new. Rather, when you buy used, you as the customer capture the most value or utility. For serial watch collectors such as myself, buying used also provides an excellent opportunity to trade watches, including trading up. My personal experience has been that most watch stores won’t let you trade in multiple watches for 1 new one. I learned that EWC is an exception to my general experience. EWC is one of the few places that will trade you multiple watches for a very nice upgraded watch. A lot of stores don’t like to do this; they want you to trade in a watch and pay cash for the difference to create cash flow. Albert seems to care more that you become a loyal customer than he cares about the cash flow. He’s in it for the long game; an example of “old fashioned customer service” that seems to be a diminishing art.
Relationships Are Critical
I spent a few afternoons hanging around the EWC to get a feel for the business and the customers after I decided I wanted to write about them. I had been a shopper before, but wanted to truly know what goes on there. The thing that struck me most was how many people came in to say “hi” to Albert. Sure, they also browsed the watches, some tried on the watches, but many came in because they wanted to visit Albert; he was a friend in addition to a respected businessman. It made me realize that the used watch business has a lot of repeat customers and becomes a relationship business. It’s hard to find that today, especially in the era of big-box retail and a watch industry where buying and selling used leads people to put their guard up to avoid being ripped off. This wasn’t the atmosphere within the shop; Albert was respected and past customers came by to visit a friend, someone they trusted. Being respected in business is easier said than done. Nobody wants to be a business or person that is known for lying, cheating, or stealing, yet so many find themselves with poor reputations. A reputation takes years to build but can be lost with a single transaction. It was obvious that years of work had gone into garnering the respect of his customers. That struck me as a key to survive in this industry.
You Have to Let Customers Experience the Watches
The EWC is usually packed with gawkers and customers. On an average Saturday, the EWC will get over 300 customers (and gawkers) coming through the door. The first time I stopped by, I was amazed at the number of people who flock to the store. What amazed me more was the respect they treated each potential customer by letting them try on any Patek Philippe, A Lange & Sohne, Audemars Piguet, or Vacheron Constantin. This might seem like a no-brainer if you ever want to sell anything, but try walking into a high-end jewelry store with a group of 5 friends and ask to try on ALL of the watches I just mentioned, “just to check them out.” Good luck being taken seriously. When I was in there, the store had about 6 salespeople working the floor, all interacting with the gawkers and actual customers with respect, showing both groups the luxury timepieces and telling their stories (you may say “of course” but so many stores judge their visitors and focus on the potential customers; the EWC company treats everyone the same. This is not common in luxury watch stores).
Honesty and Transparency
Honesty and transparency are critical when dealing with something so often counterfeited (and has been for centuries). Used watch stores have to post their prices online to survive, contrary to most of the new watch industry. The EWC posts every watch in their inventory on their website with an established price. Like most of the jewelry industry, the prices are somewhat negotiable, but one thing that caught my attention was that the published prices don’t have a massive markup built into them that the customer has to whittle away through negotiation. The prices that are advertised are fair, competitive market prices.
I asked Albert about his sales patterns. He is a “got nothing to hide” type businessman. He told me something I found really interesting. Most people that come into the store on the weekend don’t buy, mostly because they are with friends or family. Despite the crowded weekends, few sales occur. Come Monday, those same customers come back or call to buy the watch they saw. Of course, this is also because people want to do pricing research in addition to wanting time to mull over the purchase, yet it speaks well for the store that people still choose EWC after shopping around. Most of the store’s sales occur online (about 80%), which many in the watch industry have come to accept as a necessary evil. It is an evil because of the proliferation of fake watches (including some very high-quality fakes); people have come to be very distrustful of sellers online, making established relationships with customers very difficult.
How to Get Rare Pieces? A Good Eye and Again…Relationships
While I was in the store, one of the employees was excited enough to make me think he had just struck gold. He invited me over to investigate. He was using a Geiger counter to measure the small amounts of radiation being emitted from the luminescent hands of a rare 1965 German military vintage Blancpain Fifty Fathoms. The employee explained that only a few of the originals of this watch are known to exist. I asked Albert how you get to be good enough in the industry to come across rare watches like this? He again emphasized the long game: it’s about relationships and never burning the customer. He told me a story about a customer that brought in a few watches on trade. Albert didn’t necessarily want all the watches as some would be difficult to sell but chose to buy them all anyway so the customer didn’t have to find another buyer for one of the watches. At first, this made no sense to me — how do you survive as a business buying things you can’t sell? Then he explained that the small loss he experienced on that individual piece is more than made up by this customer’s repeat business. It’s not about counting the profit on each transaction, rather the relationship.
The luxury watch industry is a fascinating aspect of the overall watch industry. It is much more complicated than I thought, but it made me realize how important transparency and trust are as well. Contrary to the new watch industry that is very guarded with pricing and costs, the used industry would never survive. However, like most things in life (as I seem to say on this blog) — a lot of the industry comes down to trust through relationships.