Are Grey Market Dealers Causing the Rolex Shortage?
Rolex is in extraordinarily high demand right now and there just aren’t enough new watches to fill that demand. As a result, people turn to the grey market, which is really just jewelers and other Rolex sellers who are not official Rolex dealers. This is often called the secondary market. It is the only way to buy a pre-owned Rolex. Because people face difficulty getting new Rolex models from authorized dealers, many sellers buy new models at a premium and sell them for well above retail.
And they sell very well.
As a result of this situation, some are blaming the Grey market for the shortage of Rolexes. After all, if an authorized dealer can make a sale at a higher profit by getting a new Rolex into the hands of a grey market seller, why wouldn’t that be the smart business decision?
The truth is, simple economics doesn’t support this theory. The factor driving the shortage of Rolexes is very simple. There are fewer Rolexes produced than what the market wants. The primary rule of economics is the law of supply and demand, which says that when demand is high and supply is low, prices go up. Because people want their Rolexes, they are willing to pay a premium on the grey market.
Grey is a critical term here. This is not the black market. It’s just not an official Rolex dealer. Just as you might go to a car dealer who isn’t with Ford, Toyota, Lexus or any other manufacturer, you might go to a jewelry store without a contractual relationship with Rolex in order to buy a fine watch. This is completely legal and part of any healthy market of items that are often sold and resold.
Rolex authorized dealers are required by Rolex to sell to the ultimate buyer, the person who will wear the watch. Selling directly to anyone other than the final buyer is a violation of their contract. Pre-owned Rolexes, on the other hand, can be bought or sold however two people are willing to do so. Some people wait one, two or three years to get a Rolex and then sell it a premium to a seller who adds a premium.
The problem is supply.
It’s that simple.
To alter the situation, either demand will need to decrease or Rolex will need to produce more watches. Rolex has shown a complete unwillingness to increase capacity, believing at present they cannot do that without impacting quality. As for demand, it seems that won’t be diminishing any time soon. If you choose to get a Rolex on the grey market, you’re sure to enjoy having that beauty on your wrist. Just make sure you deal with a trustworthy pre-owned Rolex Dealer.