Hong Kong’s status as Asia’s ‘watch hub’ draws luxury pre-owned trading platform Watchbox
Watchbox has selected Hong Kong for its first foray outside the US, providing an online marketplace for the trade in second-hand luxury watches – with a warranty
Hong Kong’s status as Asia’s watch hub made it a natural choice for the co-location of Watchbox, a US based e-commerce platform focused on pre-owned luxury watches, backed by venture capital from Singapore, according to its founders.
Watchbox debuted in Hong Kong six months ago, reflecting the first time the platform has extended itself physically outside the US, as part of a collective effort by four luxury watch industry veterans, including Watchbox founder and CEO Daniel Govberg.
“We are all from the primary sector. We know how to deliver the high quality and standards and are now going to do that for the secondary [market],” said Govberg, who is also CEO of Govberg Jewelers.
Govberg first started selling pre-owned watches in 1983 through his family business and created WatchBox in collaboration with Tay Liam-wee, the former owner of Sincere Watch.
Govberg Jewelers remains a separate business focused on the sale of new watches, while watch trade-ins are resold in the pre-owned market via Watchbox.
“The market for pre-owned [watches] has got so big. The consumer is driving this, not myself but the consumer with 15 watches who would like the opportunity to be able to sell them,” Govberg said.
Watchbox is the largest consumer platform for pre-owned watches in the US, selling a timepiece roughly every eight minutes at an average US$10,000. The business has been growing 50 per cent year annually, according to investor-entrepreneur Justin Reis, who helped lead the push to bring Watchbox to Hong Kong. He expects the company’s annual revenue to reach US$500 million within two years, up from US$200 million per year currently.
Watchbox’s Asia operations require watch owners to submit their timepieces to the company’s service centre in Hong Kong for reconditioning and authentication of provenance. Watches sold on the site come with a 12-month warranty from the date of purchase.
“The alternative ways of selling a pre-owned watch these days is through auction houses or eBay. These are very time consuming processes where you have to wait for the customer to buy and you’re not sure if there is credibility,” said Reis, the co-founder and director of Watchbox. “What we have designed solves the pain problem for the consumer. There are enormous volumes of watches sitting out there. People are looking for a platform where they can transfer from one person to another that is trusted.”
The “pre-owned space” took off in the US about 10 years ago, Govberg said, and with the help of technology has started to grow at “exponential rates”.
With US$100 million of investment from Singapore-headquartered private equity firm CMIA, Watchbox will continue its expansion into Southeast Asia, ahead of an expected push into Europe.
“Hong Kong is what I would call ground zero for our industry. It is the Silicon Valley of technology,” said Govberg.
Underscoring Hong Kong’s reputation as luxury watch hub, consultancy Deloitte labelled the city as Switzerland’s most important export market for watches.
The large number of luxury watch shops found throughout major shopping districts in the city are a reflection of the large volume of watch sales, even as a gradual change in buying behaviour and cultural perceptions has helped to fuel the rise of the pre-owned watch sector.
“In the old days when you wanted to sell a watch it was not a good omen: you went to the pawnshop and didn’t want to be seen. There were a lot of negative connotations,” said Tay, the co-founder and chairman of Watchbox. “But today, especially with millennials coming in, the old is becoming the new new. Recycling and selling old watches is cool, there is a change in mentality.”
However, among Chinese consumers new watches are generally preferred, although pre-owned models are sought after in some instances, according to Mariana Kou, head of China education and Hong Kong consumer research at brokerage CLSA.
“Second-hand [watch] models can still be popular for models that are hard to get,” she said.
Still, the lower price bracket of the secondary market has also broadened the appeal of luxury timepieces to a wider consumer base, particularly millennials, according to Tay.
Swiss watch exports to Hong Kong began picking up from March last year after 20 consecutive months of declining growth, according to Deloitte.
“It is important to bring the joy back into watch collecting and the culture of watch making. I think this is part of the industry ecosystem,” Tay said.
He said Watchbox compliments the primary market by providing existing watch owners with the option of a viable sales channel with high turnover.
“The whole point of this product is generational, multigenerational. You’re just passing it on to the next generation as an heirloom,” Tay said.
Samuel Lee, CEO of Elegant Watch & Jewellery is the fourth individual with a major stake in Watchbox’s Hong Kong operations.