How do watch prices rise? A seller's perspective

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In this article, we will look at how the prices of used watches rise.

I will explain this from a seller's perspective.

I will also talk about last year when I was still immature and it took me three months to understand the market rise that is unique to inflation.

I think that understanding the system from the seller's perspective will give you a slightly different perspective on how to buy a watch, so please read to the end.

The price of watches rose last year

When most people think of the price of watches rising, they are probably thinking of Rolex watches going up in value.

That's not what I'm talking about today.

I usually mainly sell used Cartier watches, and especially last year there was a clear increase in the purchase price.

Prices vary greatly depending on the model, so those that have not increased will remain the same, but for some larger items, the purchase price in January 2023 can differ by 100,000 yen from the purchase price in December.

And it doesn't seem like it's going to go down any further.

With purchase prices rising this much, isn't it going to be difficult to sell them all?

There was a time in the past when I was unable to act because of this way of thinking, but I think I need to change my thinking to that of the era of inflation.

Due to inflation, purchasing prices are also rising, but as a business owner, if you don't purchase goods, you can't sell them and you won't make a profit.

That's why we are doing our best to procure watches.

So, this may seem obvious, but let's think about why there are people who buy watches even though the price of the watches themselves has gone up.

The first reason why the market price of used watches is rising: The rising price of new watches

This is partly due to the price of a new product.

For example, the list price of a new Santos de Cartier LM size stainless steel model is 1.18 million yen, and this price will change depending on your age, but when you feel like you want to buy it, you can work hard to save up money and buy it!

Even if I decide to do so, it's not a price I can afford.

At this point, I'll try a different model. Let's look at used ones. Let's look at discontinued ones.

I think that if the number of people who think this way is small, the prices of used items will not rise.

After all, a certain number of people feel that new or new used watches are expensive, which is why used watches become an option for them.

The second reason why the market price of used watches is rising: The longing for it

This is a purchase pattern made by people who were unable to buy something they wanted at the time, but are able to buy it now.

When you were younger, there were things you wanted but couldn't buy, but now you can get them, and it's actually cheaper than buying them new, so it's actually a good thing.

The average age of Japanese men is currently said to be 48, which means they have a certain level of understanding of how the world works, they have a certain amount of financial security, and they are finally starting to have more money to spend on themselves.

The things we longed for back then make us feel nostalgic, and because we have such strong attachment to them, we want to get our hands on them.

I feel like the number of people who think like this is increasing.

The third reason why the price of used watches is rising: Aging

This ties back to what I said earlier, but I believe the aging population is also a factor.

Even for me, who is 34 years old, a 42mm watch is quite heavy, although this depends on the model.

(Of course I like wearing big watches.)

But it would be a bit tough to continue this way forever.

It probably differs from person to person, but I think that at some point it will be around 36mm or 30mm, and in Japan, where this percentage is high, I feel that second-hand vintage watches are more in demand because they are made smaller than current models.

There are probably many other reasons why buyers consider used watches as an option, but I think they can be broadly categorized into the above categories.

Of course, if there are 100 people, there will be 100 different ways of thinking.

I understand the feelings of those who only buy new watches, and I also understand that it is because of people like that that watch shops like mine that deal in second-hand watches can continue to exist.

So, I can only thank all of you who love watches.

Now, from here on, I'll explain why second-hand market prices are rising from a seller's perspective.

Purchasing from the seller's perspective

When purchasing a watch, we check how much that model is currently selling for.

This model is being sold for this much, and it's being sold for this price, so I guess my purchase price has to be around this price.

And that's usually what it feels like.

However, when we look at what happened during the inflation that began last year, the idea that because things are selling at this price, we have to purchase them at this price is no longer valid.

Normally, we purchase goods from a certain place. For example, if a mast tank sells for around 260,000 yen, the ideal price to purchase that mast tank would be 180,000 yen.

There will be a difference of 80,000 yen.

However, we also know that the watch was actually purchased by someone else for around 200,000 yen!

So that was the problem.

If the market price at the time was around 260,000 yen, if you purchase it for 180,000 yen, then including the overhaul, it will come to 220,000 yen, so you would still be able to make a profit even if you sold it for 260,000 yen.

However, if you purchase this for 200,000 yen, the total including overhaul will be 240,000 yen, and it will be quite difficult to sell it for 250,000 yen.

The profit would be 10,000 yen, so it's not really worth it.

It is that.

This was the case until about the first half of last year.

This continued for about three months, but then I realized something.

The second-hand market for this is gradually rising.

And that's it.

So, I was purchasing at the market price at that moment, but other people were purchasing at the higher price, thinking that the price would probably still be higher the following month.

In other words, in the example I mentioned earlier, I thought that if I didn't purchase the item for 180,000 yen, I wouldn't be able to sell it for 260,000 yen, but by the time we went to sell it, the market price was already 280,000 yen.

From there, I realized that I had to decide the purchase price of watches with an eye to the future, and I was able to purchase them, but I realized that this is the kind of thing you have to think about in times of inflation.

Looking back, it seems like a stupid thing to say, but if you don't understand how it works, it's hard to take decisive action.

So far, I have explained how purchase prices rise, but now I will explain the buying situation when market prices rise.

Now, from here on, I would like to focus a little more on the "looking ahead" part I mentioned earlier.

Having to look ahead when purchasing means that you have to think about what the future holds.

For example, if you can purchase a watch today and sell it tomorrow or within a week, there's no need to think too far ahead.

Therefore, if you are dealing in accessories such as necklaces and rings, I think it is quite realistic to purchase them on the same day and sell them within a week.

However, when it comes to a wristwatch, the first thing to do is to have it overhauled, which takes six to eight weeks for me when that process is included.

This is the point where you need to read ahead.

Up until 2022, the market had hardly changed even after six weeks, but last year it was so fast that it changed in just six weeks.

Because they were unable to foresee six weeks into the future, they were unable to make effective purchases.

On the other hand, having inventory can be advantageous in the current situation.

I'm sure you've heard at least once in the past year that "Even if you have cash, your assets have effectively decreased, so it would be better to convert it into something else."

In short, this is the same situation I'm in now: if I don't buy goods today, the price will go up six weeks from now.

This means that they have to pass that cost on to the price, which means that prices go up again six weeks later.

But if it's cash, say 10,000 yen, it will still be the same 10,000 yen six weeks later.

I mean, that's what the news is saying.

The difference between a pawn shop and a watch shop

Now, I would like to explain the relationship between watch shops and pawn shops, which are indispensable in terms of rising market prices.

Styles vary greatly depending on the pawn shop, but generally they do not do overhauls (repairs).

Like necklaces and rings, watches purchased will be sold as is.

This is a big difference, and how buyers perceive it will be the deciding factor.

The advantage of buying from a pawn shop is the low prices.

It is true that they can offer them cheaper because they have not been overhauled, but since they buy from the general public, the selling price is also low.

When searching for a certain model, you will often find that there is a significant difference in price even for the same model. This is because pawn shops sell them for less than the market price, while watch shops list them at roughly the market price, resulting in a price difference.

This is the case for second-hand watches.

Even if it's the same watch, the price differs depending on the circumstances. Just knowing this will change the way you buy watches.

Now, let's move on to the part that everyone is most concerned about: how stocks are bought when the market rises.

How to buy when the market is rising

This is how pawn shops and watch shops sell watches, and if, for example, Mast Tanks are selling for between 280,000 and 300,000 yen, then they are basically purchased starting from the 280,000 yen price range, so I guess that's about the range.

I think you can understand that.

So why can't we keep the price at 280,000 yen? Because the seller would end up in the same situation as I was in earlier.

If the original purchase price is low, you can set the selling price at 280,000 yen, but if the original purchase price is high, you cannot go below that price.

That means that when I sell it myself, 300,000 yen will be the bare minimum.

This is how the 280,000 yen range watches that other people are selling run out, then the 290,000 yen range, and only the 300,000 yen range remains, and once it reaches the 300,000 yen range, your watch will be purchased.

This is because watch shops have no choice but to do so, and if pawn shops were serious they could buy and sell at a lower price, but they will not buy at a price that is far off the mark.

This is because pawn shops cannot make a turnover unless they purchase items, and it is more important for them to make a turnover at a fixed interest rate than to offer a low purchase price and then have the customer say, "Then I'll stop selling."

With this background, the market price of second-hand watches is gradually increasing.

summary

How will the price of watches rise?

I had previously attributed this to supply and demand alone, but by looking at the background of the sellers as well, I think I have been able to understand it a little better.

This is just my prediction, so please take it with a grain of salt, but I think that prices of everything will continue to rise this year as well, although not as much as last year.

They say they will lift the negative interest rate around April, so the yen will likely appreciate slightly and the rate of price increases will likely slow down a bit, but it is still thought that the yen will continue to weaken.

Ideally, everyone's wages would rise proportionately, but in reality, this is only just starting to happen now.

I've lived for 34 years and thought I had experienced everything the world had to offer, but this was my first time experiencing this kind of inflation, and it made me realize that I still have a lot to learn.

We will continue to provide various explanations about watches, so if you have any requests for videos you would like us to make, please feel free to let us know.