Should you invest in watches?
There’s a lot of hype going around right now about how watches are good investments. Alex WIlliams was nice enough to throw some gasoline on the fire in his New York Times article, “Watches Are Yet Another Easy Way Rich People Make Their Money Into More Money”.
Alex contends that watches are another vehicle for the wealthy to make their money grow, but I think it’s a little more complicated than that.
I think that, yes, there have been some extremely fortunate people that have bought the right watches at the right time and because of that they have been able to make a profit, but the majority of people buying watches will never see their investment do anything but depreciate.
If you are lucky enough to buy the right watch at the right time, that’s only half the battle. The other half is selling at the right time and selling the right way so that all your earnings aren’t pissed away when you sell the watch. Real estate costs around 8% to sell if you use an agent, stocks cost $7 per trade, but how much does it cost to sell a watch?
Selling the watch yourself is an option, but it is risky. It’s up to you to research, photograph, price, and list your watch to sell. It’s up to you to know the ins and outs of different services and the safety of them. Once you list the watch you have to field the offers (if any) and try to sort out the legitimate ones from the scams. (Word of advice: if the buyer says they’ll pay more than you’re asking if you ship the watch immediately, it’s a scam) Ebay takes 10% and PayPal takes 2.9% for almost 13% and you take all the risk too. The forums are your best bet, but you have to have references and that takes transaction history on the forums and you’re still the one sending your watch and hoping the buyer holds up their end.
Consignment is a safe option, but it takes time. In consignment, you and the dealer work together to sell the watch. You provide the watch and the dealer provides the reputation, customer base, and trust that they’ve built up to sell the watch. The dealer assumes all the risk in selling and deals with all the negotiation. The average consignment rate for most dealers is 20%. That means that for them to list your watch on their site and have it displayed in their case is 1/5 of the total sale price. (FYI: At FLÂNEUR our maximum consignment fee is $800)
Selling to a dealers is a secure option and you can get paid instantly. The problem with selling to a dealer is that you will lose 35% or more because dealers typically pay a maximum of 65% of the watches retail value. The reason why they pay so little is because they have money tied up in the watch that they can’t use for anything else until they sell the watch. They have overhead including employees, rent, insurance, and other costs to account for. There’s no guarantee that they will sell the watch for the price they want and there’s even the possibility that they might have overpaid if the market changes.
So, should you invest in watches?
If you’re ok with speculating on shiny objects and are comfortable with selling watches yourself or figure you can make enough to cover the cost of selling when it’s time to cash out then yes. If you’re on a tight budget and not sure you can pick winners then no.
Want to sell or consign a watch to FLÂNEUR? Request more information here.