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The Omega Speedy Tuesday and the Reseller’s Conundrum

by Chester Lau on September 29, 2018

Omega was highly successful in what is essentially the luxury watch industry’s first foray into timed sales on a new direct to customer channel. For those who may have missed out on the not so new news, the Speedy Tuesday limited edition alludes to the first time the Omega Speedmaster was given its own trending hashtag #SpeedyTuesday which first came about in 2012, and explains the limited edition of 2012 pieces. 

First started in 2017, this model featured in this article is the first Speedy Tuesday Omega to be sold directly online. Following its success, we have seen the new Ultraman in 2018 and a lesser talked about 500 piece limited edition sold through Hodinkee.

 

 

While the watches in and of themselves are highly collectible and meaningful pieces for fans of the Speedmaster, these new releases have brought to light, and arguably exacerbated the less glamorous side of market forces, inviting a new horde of arbitrageurs. While there may be a tone of negativity perceived by the community with the people described, we will maintain a more objective and neutral observational stance for the purposes of the article.

 

The Arbitrage

Striking a good bargain is the most primitive set of instincts for almost anyone with a business acumen. While some collectors claim a high moral pedestal in their watch collecting hobby, it is almost impossible to prevent free market forces from happening. In recent years, the grey market for watches have been ‘given a major boost’ as brands struggle to keep highly demanded pieces from falling into the hands of grey dealers. In particular, brands like Patek Philippe, Rolex, Audemars Piguet are well-known to have some of their watches selling at 1.5 times to 2 times the list price on the grey market.

 

 

Unlike Omega, which numbers and publishes the limited edition numbers, i.e. 2012 pieces, the above brands face an ‘underpriced’ situation even for regular production models. Today, it is almost impossible to purchase or even see a sports model Rolex in a Rolex boutique. Considering that authorised dealers are unable to sell above list prices, most of the sought after models tend to end up first with their ‘best’ customers. A vicious cycle thus occurs when among the best customers are flippers or hoarders that put the pieces on the grey market for a quick profit.

 

Harmful, harmless or even beneficial?

As a multi-facet benefit for reigning in the retailer’s ‘best customer’ conundrum, Omega cleverly uses a more level playing field with an all accessible pre-order system for the purchase of the SpeedyTuesday models. No doubt, among these buyers around the world are arbitrageurs, who seek to make a quick buck, it is more likely that those who are willing to pay a premium for the Speedmaster limited edition would have already been waiting at their computers for the launch. The problem of hoarding is also reduced given that a billing address and an individual email address is required at pre-order.

 

 

While there will still be an arbitrage situation with Omega Speedy Tuesday limited editions, this method of sales helps reduce arbitrage margin and prolonged arbitrage opportunity. The sale at premium will see a dip as more arbitrageurs start to flood the market with their Speedy Tuesday watches.

 

 

How much is a SpeedyTuesday worth today?

1 year since the launch of the first SpeedyTuesday, the watch on the grey market is still priced at an average premium of $1000 for a LNIB (like new in box) condition. This decline in margin from the earlier days of 3000 to 5000 is likely also due to the after effects of the 2nd SpeedyTuesday launched this year and perhaps market concern that Omega might turn a Panerai corner with its multiple Bronzos.

That said, as with the Ultraman, we have seen prices on the grey market fall from the initial US$10,000 from 1-2 months ago, to today’s US$8,000. The watch retails at US$7,100.

 

Avoiding the bubble

Ultimately, watches while a good way to diversify investments, especially for those more financially inclined than romantic, it is a commodity. Commodities alter in prices as a result of market demand and conditions. The propped up grey market and the recent increases in margins in grey market watches can be attributed to a bigger access to online marketplaces, crypto affluents and relatively good macroeconomic conditions. That said, in any recession, personal goods and luxury products like watches will be the first on the chopping board, and a mad rush of luxury watches flooding the market while wild in dreams, may become a reality at the right moment. (For now, perhaps only Rolex is almost recession-proof, but at retail prices nonetheless.)

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