Skip to main content

The Grey Market Rolex Discount

Today, I happened to notice that Jomashop is selling a large number of Rolex references, many at a discount relative to the official price.
My subjective impression is that this does not happen very frequently, so I wanted to more formally tease out some implications of this development. I assembled a spreadsheet of the listings and ran some numbers.

For this discussion, I will focus on the references which Jomashop identifies as "Men's" (due to the fact that I am unfamiliar with the other references which are listed). Jomashop lists 197 references for sale at a discount relative to list. This is a remarkable variety of watches on the grey market, expecially considering that Rolex contracts likely penalize ADs who resell through third party dealers. The average discount across these references is 10% with a minimum discount of 1% (mostly 36mm Datejusts in precious metals with unique dials) and a maximum discount of 31% (Cellini Pink Dial Automatic Men's 18kt Everose Gold Watch ref 50705RBR). Please note that the average I'm reporting is not weighted by the inventory of each reference (in fact, nothing here will involve such weighting since Jomashop doesn't reveal its stock numbers).

I was curious if the discount was constant across all price points.
Scatterplot of Jomashop Rolex discounts.
The answer is no. Discounts are typically higher for higher priced references, as shown by the figure here. I ran the numbers and, for every $10k increase in price, Jomashop increases its discount by .46% (approximately half of one percent, this result is statistically significant).

Next, I was curious if the discounted references were connected to materials, in some way. The answer is yes. Approximately 85% of the discounted references (168) were in gold or platinum.

Finally, let's turn to the topic of which models are discounted and by how much.
Discount amount by model.
Approximately 91% of the discounted references were one of three models. There were 22 Cellini references, 55 Datejust references, and 102 Day-Date references. The Cellini had the highest discount, at 14.2%. As the figure shows, the Day-Date has the widest range of discounts, with an average of roughly 11.6%. The Datejust had the lowest average discount, at 5.4%.

In summary, these listings on Jomashop suggest that buyers should carefully consider whether they are willing to pay full retail for certain references. At higher price points, they should likely expect a lower price from sellers. I'll also note that the overrepresentation of precious metal references in these discounted listings is consistent with my last piece, where I noted that Rolex' costly foundry may not presently generate the type of revenue the brand expects (hence gold reaching its tendrils into the Explorer 1 design, in a coming piece I will share feedback I received suggesting this may not be the case).

Comments

Popular posts from this blog

Whither HODINKEE?

Hey, remember me? Regrettably I've allowed Horolonomics to lay fallow for too long, since earlier this summer really.  I can't exactly explain why, but it is fair to say that the pandemic is at least partially responsible.  I've had quite a few articles I've wanted to post in the interim, but I'm finally awakening from my temporary hibernation in response to pending developments at HODINKEE. As I explained in my interview over at Watchsignals (full disclosure: I'm an official advisor), the good people at HODINKEE set me upon my path as an enthusiast and collector of watches.  I can't exactly remember when I started reading it, I think it was when Kevin Rose joined the team, probably around 2015.  I'd used his first startup "recommendation engine," Digg, and listened to his podcast for a while (Diggnation, which was really fun) and that is when HODINKEE popped on my radar.   It is fair to say that a great deal of the emergent interest in watch

The History of the Radioactive Rolex with One Complication

My family and I have a tradition when we visit the beach. We search for sea glass. When jagged and sharp shards of broken glass land in the ocean the constant sluicing of sand changes them. Over decades or more the edges soften. Clear glass becomes cloudy. Given enough time the entire shape of the glass can morph, from rectangular to ovoid. Each piece of sea glass is inherently unique due to imperceptibly small forces which slowly accumulate, resulting in major changes. We know this is also true of vintage timepieces. After decades lume changes in hue. Dial faces crack, craze and fade. An object which was often mass produced consequently becomes a “pi├Ęce unique.” Watches are engineered to accurately and unchangeably mark the passage of time. We love and value vintage watches for the fact that they are altered by time itself. The story I offer here underwent similar changes. It began as an effort to understand more about an unfinished chapter in the history of Rolex. It b

Scarcity as Strategy in Horology

Watch industry observers have spent a lot of time dissecting the unavailability of steel Rolex sports models this year (submariner, GMT, etc). These timepieces are presently impossible to buy at the manufacturer's suggested retail price (MSRP). You can acquire them outside official channels but only at a multiple of retail. For one summary of this topic check out episode 48 of Hodinkee radio below. I've listened to a lot of explanations and, frankly, almost all of them miss the point. While I don't know everything I should about perlage I do know something about economics. And economics explains almost everything about this watch industry phenomenon. Horolonomics 101 Rolex is involved in rationing: a shortage which is, for the most part, manufactured and intentional. With this discussion I will explain two things: 1) what rationing does and, 2) why Rolex would do this. The TL;DR on what follows is that the shortage: is inefficient. Creates profit for watch bu