Why doesn't consignment work?

 

We need to talk about a serious matter today. It's called business. If you allow a couple of minutes to familiarise yourself with the core principles, you will have a better understanding of the matter; consequently, you will benefit from the insider knowledge I am happy to share. 1. There are three parties involved in the business of second hand watch dealings. The seller, dealer, and the buyer. 2. A single, one-off transaction could be structured in such a way that it is beneficial to any party. However, multiple transactions with multiple parties can only take place if every party gets what they want, repeatedly. 3. Second hand dealing is a complex process. 4. Expectations and requirements: Seller They are a smart and mature seller who understands two key issues: the security of the transaction and the value of time. A smart seller is not going to waste their precious time dealing with time wasters, nor are they willing to risk their life inviting strangers into their home. Disposing of a large collection of any kind is a serious challenge.  5. Expectations and requirements: Buyer A sophisticated buyer has multiple requirements, coupled with very high expectations. The top priority is price. The price has to be right. The right price is hard to define, but 20-30% below retail for near mint stock is 'about right'. Overall condition of the watch, security of transaction, guarantee on performance, insured delivery and post sale servicing and maintenance are some of the other crucially important requirements. Meeting and exceeding those expectations is essential for repeat business.  6. Dealer's role: The dealer's role is to generate profit, grow the business, and keep both seller and buyer happy.  Selling is easy. Finding desirable stock at the right price is extremely difficult. Dealers are not gamblers, they are risk averse. They are not watch collectors either, they buy with the brain, not the heart. A dealer's greatest asset is their reputation. 7. What is a consignment? Consignments are deals where the seller sells the watch through a dealer. The consignor (watch owner) maintains the rights to the watch until the watch is sold. The selling price is set by the owner, while the risk of transaction is on the dealer. After the sale, the dealer is paid a fixed amount by the owner. While in theory, a consignment sale may look mutually beneficial, in reality, such a form of selling only benefits one party. Since the watch owner is not in a hurry to dispose of the watch, and retains full control of the sale, the asking price is almost always set too high. Practically, the dealer has no say nor authority to lower the price; so the watch remains unsold for a long period of time. On the other hand, the dealer bears all the responsibility and liability for the watch, including the post sale guarantee. The watch is eventually sold to a buyer who is a novice watch enthusiast, who sooner or later finds that they have been ripped off, paying above market price. Such a buyer would never return, and this is why accepting watches on consignment is cancer to the watch dealer.  A dealer who accepts goods on consignment will sooner or later run out of stock and customers.  Dealers who publicly seek goods on consignment either don't care about their reputation or haven't sufficient funds to run a successful business. Entrusting your watch to a dealer could be very risky as well: dealers do go out of business, companies change ownership, and deals where one party has full control over the other are recipes disaster.  In conclusion:  If you are thinking of disposing of your watch collection: find a reputable dealer who is capable of meeting your expectations. Meaning: money in your account, to the last cent, straight away.  As a buyer: the best place to buy a new watch is the brand's watch boutique. The second best place is from a reputable second hand dealer. Everything else is a casino.  No matter what you do, stay away from consignment stock. It's a cancer that will slowly destroy your appreciation for horology and ruin your enjoyment of fine watches - for ever.