Marketers are currently tapping into Hong Kong's rapidly growing pre-owned luxury product market. WatchBox’s marketing director, Natasha Li, spoke with Sharon Kwok about how the company has adopted an omnichannel strategy to unlock the underestimated potential of the city's timepieces.
Based on global sales over the last 15 years, WatchBox estimates that there is close to US$400 billion of watches sitting in people’s watch boxes around the globe.
“Hong Kong, the US, and China make up the three largest watch markets in the world, and Hong Kong is on top. This is why the founders of WatchBox saw an untapped opportunity to create a trusted omnichannel platform, offering liquidity to watch collectors around the globe and change the landscape of a currently very fragmented sector of the luxury watch industry,” Li said.
WatchBox is a global platform specialised in buying, selling and trading of pre-owned luxury timepieces founded by watch industry veterans Danny Govberg and Tay Liam Wee. The company established dual headquarters in the United States and Hong Kong in Q4 of 2017 and continues its global expansion with a division recently launching in Neuchâtel, Switzerland in Q2 of 2018. The founders believe that pre-owned timepieces have the potential to lead the watch industry's next revolution.
“Obviously Asian customers are now being more open-minded towards pre-owned products. People go for pre-owned watches because some models are no longer in production, or they are looking for a specific model.” Li explained.
She adds, “There is an increasing number of millennial customers that don’t have a problem buying pre-owned products, and they are looking for something new, trendy but with quality. Some of them just want to keep the watch for a short period of time, then they can sell it and buy another model.”
Li expanded that part of the allure for consumers was that the value of some luxury timepieces may increase over time and that some customers purchase as a long-term investment.
“Some brands can hold value better than others. But whether the pieces would increase in value depends on many factors, such as whether the model is still in production, the auction price, market demand, mechanical and cosmetic condition of the piece, and availability of the accessory sets and paperwork.”
Li said that while the average watch price is US$13,000 at WatchBox, in Hong Kong, the average sales price is significantly higher, approaching US$20,000.
“We allow the market to drive pricing for watches. We have extensive data on watch prices from our own experience as well as our proprietary technology that has recorded millions of watch transactions. We use big data to predict the price that a watch will sell on the market, combined with solid estimates of the cost to refurbish them to like-new condition, to offer a fair valuation for watches submitted to us.”
WatchBox offers an extensive selection of pre-owned luxury timepieces, including exclusive, hard-to-source and limited production models by 40 leading watchmaker brands. Approximately 4,000 pre-owned pieces are currently in stock. With over $400B of watches that have been exported from Switzerland in recent years, there is no shortage of supply.
“Trust, pricing transparency and authentication are central tenants to WatchBox. At WatchBox we have pre-owned luxury watch specialists and expertly trained watchmakers responsible for the authentication, verification and presentation of each and every watch that is offered for sale.”
Li commented on the company's omnichannel approach to the pre-owned luxury watch category in what is traditionally a brick and mortar industry:
“We see many others just adopt the brick and mortar directly on the online store, but that doesn’t work. We provide so much function in our WatchBox app and online educational content to educate our customers before they make the purchase decision or meet us in person.”
Technology plays a crucial role in the company’s approach. Through the mobile app, customers can access an extensive inventory catalogue of pre-owned watches, real-time pricing valuations, sell/trade functionalities, augmented reality “try-ons", educational knowledge, collection management advice, tech support, as well as interactions with the larger horological community. The company also leverages its website, social media, and dedicated concierge teams with personalised client service.
“We believe that vertical selling is the key to any brand’s future success and we believe we are bringing this to the watch market. In recognising the limitations of an online shopping platform and the fact that a traditional store environment is not aligned with the interests, behaviours, and needs of many modern consumers, WatchBox developed its personal commerce division as a solution to client needs.”
WatchBox also believes editorial content is key to the modern eCommerce experience. It launched WatchBox Studios as an in-house creative studio and video production division to connect with global consumers. Representing the foundation of WatchBox’s digital media strategy and the company’s position as a video-first frontrunner, WatchBox Studios produces daily live streaming programs, hands-on watch reviews, and educational videos for users.
Li said collaborations work especially well in the Hong Kong market where the company has worked with fashion brands to launch events for members. It also hosts highbrow private events such as whiskey and wine tasting to engage customers and create occasions for them to talk about watch products.
Looking forward, WatchBox's goal is to elevate the pre-owned market and give value to the secondary market. As customers gain profits from their existing collection, they're enabled to purchase new watches at a faster rate.
In 2018 WatchBox expanded to Switzerland and South Africa. In 2019, it plans to expand to other regions including other Asian countries and to the Middle East. For its e-commerce business its seeking to continue growth rates of 35%-40%.
Li explains, "We are operating at a US$200 million run rate for 2018, and are looking to achieve a US$500 million annualised revenue in the next 2-3 years.”