When it comes to Timepieces, watch dealers can make money in several different ways. Obviously, transactional selling is the primary method that comes to mind and is often thought of as the only way. If you limit yourself to traditional methods you would be making a mistake that could cost you increased profits.
Proper usage of the internet will expand your customer base allowing for other deals than just normal sales. And by utilizing different distribution methods such as FedEx/UPS, DHL and, of course, the US Post Office entirely new markets are open.
- Traditional Sales
- Brokering Watches
The obvious way most watch dealers make money with watches is traditional sales methods. Most people believe that the amount of money made per timepiece is calculated at the point of sale. This is a misconception. In reality, you set yourself up to earn profits at the time of the buy. It is essential to make a strong buy to earn the most money. Knowledge of the market reduces the risk in overpaying, getting stuck holding on to a watch for a longer period, and/or ultimately taking a loss ☹.
One of the best ways to gain market knowledge is through your network of watch dealers. The network is very open to discussing timepieces and their valuations. Knowledge is power and it allows you to take risks. Or better yet, calculated risks.
If you find a piece you are interested in, for example, a Rolex Submariner with a purchase price of $7K. The next step is to check with the network of dealers to see how much they would buy it for from you. If you find out that they will pay you $6.9K, you then know your risk factor is $100. Worst case scenario is that if the piece did not sell retail, you could move the piece to another dealer only losing $100 and you would have to factor that into your decision to purchase at $7K initially.
In summary, you can see that the initial buy is key to your risk and to your desired profitability. Buying “right” gives you the confidence to Sell “right”.
Another method watch dealers make money is to broker watches. Brokering allows for another connection network.
Sometimes your customers are looking for timepieces that you currently do not have in inventory. Of course, as a great dealer, you are familiar with many different model watches and you have a network of other dealers where you can find these pieces for your customer. In other words, you are targeting your purchase to a specific model which is a guaranteed sale should you find the piece and you will be able to determine more accurately your margin.
Brokering assumes different risks. One risk is the condition of the watch. When you target a specific model you are limited to availability. And while it is always good practice, you have to make sure that the watch is a condition that your customer will buy. Second risk is the deal. Your customer may want a watch that you would not keep in inventory or want to sell normally. Therefore, before you buy this timepiece, you want to insure that the customer will buy it for agreed upon terms. The best method, to insure your customer will not back out is to take a non-refundable deposit. Remember, this transaction is different because you are looking for a specific model.
When brokering, I only deal with trusted watch dealers in my Network or recommended to me by someone in my network. This gives me the confidence that if there is a discrepancy it will be handled quickly and efficiently. I also give these transactions a personal touch by including some nice Hawaiian chocolates, cleaning cloths, and thank you cards. I ALWAYS want to make people I deal with happy.
Consignment is a great way to grow your business without an initial capital investment.
Sellers often times want to move their watch but are not interested in the selling process and managing the transactions. You add value to the seller by reducing his stress dealing with a high value sale, managing the money and finding the best buyer.
Most times, sellers will tell you the minimum acceptable amount they would take for the piece. They will often agree to allow you to earn anything over that amount or to an agreed upon minimum like $250 or $500 depending.
One key to success is to be very transparent with your seller. Never over-promise or inflate the market price. Make sure that the seller’s price is reasonable and that there is enough room for you to make money that is, at least, equitable to you.
Servicing and Refurbishing Watches
A lesser thought of a method to earn some money is by providing services for high-end timepieces. You can utilize your trusted watchmaker. Up until now, I have only spoken of dealers. However, a network of jewelers is also an important component of your network. Polishing and repairs should only be done by reputable dealers and they can be vital to your expansion and money-making opportunities.
As a trusted dealer, I am often requested for such services. Amongst my network, I have negotiated fast handling and reduced prices. Also, by dealing with a trusted network, I can handle any issues quickly and efficiently. By the way, jewelers can also be dealers both for sales and purchasing.
Parts and Accessories
There is money to be made by selling parts and accessories. That’s one of the easiest ways to watch dealers make money. You will be surprised how much can be earned by having spare links, buckles, bracelets, and straps. Also, people that come to you for parts will one day, most likely, become a watch customer as well.
Traditional methods of selling watches, that are acquired/purchased “right” can be very profitable with moderate risk. Brokering lowers the risk since you will be seeking a specific model. Consignment has its advantage as there is no capital outlay.
The key to success is to establish a strong network of quality watchmakers and jewelers on speed dial so whether it is timepiece sales, parts, and accessories or servicing you are the go-to dealer. Profitability will follow. If you are interested in learning how to become a watch dealer you should check out Watch Trading Academy or this blog post to show you how to start a watch business.