Rolex's Certified Pre-Owned Business [Part 3 of 4] Will Rolex and Authorized Retailers Take Over the Pre-Owned Rolex Market in the Long Term?

The biggest topic in the watch industry right now is Rolex's entry into the pre-owned watch market through a new program called "Certified Pre-Owned Rolex" (hereinafter referred to as CPO Rolex), which it has launched with Bucherer, a prestigious, long-established European watch retailer.

In Part 2 last week, we looked at why Rolex launched its certified pre-owned service, its reasons for doing so, and the future it aims for. In Part 3, we will consider its impact on the pre-owned watch market.

Introducing pre-owned Rolex watches you can trust!

　　The appeal of a CPO Rolex is that it comes with the same quality guarantee as a new current model.

　After being sold and used more than three years ago, it has been thoroughly serviced by Rolex's official after-sales service and comes with a two-year international quality guarantee from Rolex, although this is shorter than the current "five-year international quality guarantee" for genuine new watches. Just like a certified pre-owned car from an automobile manufacturer, there is no other pre-owned Rolex that you can purchase with such peace of mind. In other words, even those who have never purchased a pre-owned watch before or who are concerned about pre-owned watches can make a purchase with confidence.

　Rolex has announced that from spring 2023, it plans to expand this business to authorized retailers around the world if desired, in addition to the stores of Bucherer, a prestigious, long-established watch retailer based in Switzerland that has a close relationship with Rolex, in six European countries.

　And with the introduction of this CPO Rolex, a new option has emerged for people who wanted to buy a new Rolex but, even if they were able to pre-order, would have had to wait several years for it to arrive.

Expanding business opportunities for authorized retailers

　CPO Rolexes also represent a major business opportunity for authorized dealers who sell new, current Rolex watches. As the most popular brand, demand for Rolex watches consistently exceeds supply, leaving authorized dealers with a constant need to sell. CPO Rolexes could be one solution to this problem.

　However, I don't know what the margin is for selling a new Rolex, but based on common knowledge in the watch industry, the margin for a CPO Rolex is likely to be lower than for a new one.

　However, by being able to exclusively sell CPO Rolex watches, which come with the same official warranty as current new Rolex watches, overseas authorized dealers are in an overwhelmingly advantageous position in terms of credibility and trustworthiness compared to general used watch dealers when it comes to selling not only current new Rolex watches, but also pre-owned Rolex watches.

　CPO Rolex watches also provide psychological relief for authorized dealers, who are under a lot of stress when they are out of stock of new Rolex watches and can only apologize to customers who come to the store hoping to buy one.

　Furthermore, we can watch as "scalpers" resell current Rolex models to pre-owned Rolex specialists and make a quick profit, or as pre-owned Rolex specialists make a profit by selling new current models for several times the retail price.

Will the introduction of CPO Rolex have only a minimal impact in the short term?

　However, Rolex's entry into the used market and the start of sales of CPO Rolexes will not suddenly change the used Rolex market.

　Some overseas watch media outlets have reported on this news from the perspective of "Can CPO Rolexes sold by authorized dealers and used Rolexes sold by traditional pre-owned watch dealers really coexist?" and "In the future, Rolex may be able to control the distribution of all pre-owned Rolexes just as much as it does new ones." Many overseas pre-owned watch dealers have acknowledged that this situation is unexpected and perplexing, and are deeply concerned about the future development of the pre-owned watch business.

　That said, in terms of distribution volume and prices, it is unlikely that a crisis like this will occur in the short term of four to five years, in which pre-owned watch dealers who have been dealing in pre-owned Rolex watches will be hit hard and be unable to do business.

　There are two reasons for this: the overwhelming difference in distribution volume, and the fact that CPO Rolexes are priced higher than non-CPO Rolexes.

　This probably goes without saying for those familiar with the pre-owned watch market, but at least half of the watches traded in the pre-owned watch market, and approximately 7 to 8 percent in the online market, are pre-owned Rolexes. In other words, the current circulation of pre-owned non-CPO Rolexes is overwhelmingly large. This is because pre-owned Rolexes are the most numerous and most important business commodity for pre-owned watch dealers. In other words, there is a huge market inventory.

　On the other hand, the number of CPO Rolex watches cannot be easily increased because the certification requires that the watch be submitted to an official Rolex after-sales service center and that Rolex provide a two-year international warranty.

　Moreover, the selling price will inevitably be higher due to the added cost of official maintenance services. According to estimates by several overseas watch-specializing online media, the selling price will be about 25% higher than the selling price of a non-CPO Rolex, a pre-owned Rolex currently on the market.

　Furthermore, just to be clear, models sold as CPO Rolexes after receiving official after-sales service are manufactured more than three years ago. However, they will likely be relatively new. This is because no other watch brand has higher standards for precision and quality than Rolex. Since they come with a two-year official international warranty, they are likely limited to models from an era (up to 25 years old) for which Rolex can supply official replacement parts, guaranteeing functionality and quality roughly equivalent to current models. In other words, vintage and antique models that watch collectors collect will likely not be CPO Rolexes. At the moment, there are no vintage or antique models currently available for sale online from Bucherer.