WatchBox says e-commerce has moved on
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Fabrice Eschmann
Freelance journalist
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Patrick Hoffmann, ex-CEO of Ulysse Nardin, is in charge of developing WatchBox in Switzerland and Europe.
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WatchBox's headquarters in Philadelphia are more Google than watch company. The app required major development resources.
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The three founders of WatchBox (left to right): Danny Govberg, owner of Govberg Jewelers in Philadelphia, Tay Liam Wee, who oversaw Sincere Watch's listing on the Hong Kong and Singapore stock exchanges, and Justin Reis, a specialist in private equity investing in Asia.
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WatchBox has opened lakeside offices in Neuchâtel, at the heart of watchmaking country. It's in the process of setting up a video studio where it will produce interviews and reports for its website.
The online marketplace for luxury pre-owned watches has opened a branch in Switzerland. We caught up with Executive Vice President Patrick Hoffmann, formerly CEO of Ulysse Nardin, in his Neuchâtel office to talk about the platform, which does a lot more than just sell watches online.
Cofounded in 2017 by Danny Govberg, owner of Philadelphia-based Govberg Jewelers – one of the world’s premier authorised dealers of new and pre-owned timepieces –, Tay Liam Wee, who engineered Sincere Watch’s listing on the Hong Kong and Singapore stock exchanges, and Justin Reis, an entrepreneur with vast experience in private equity investing in Asia, WatchBox has grown at a rapid rate and currently holds inventory worth $67 million. From a staff of 45, the company now employs 170 people worldwide, including some 30 sales consultants. WatchBox forecasts $200 million in revenue in 2018 and expects to increase this to $500 million in the near future. After the United States and Hong Kong, and just before South Africa, the American firm opened a branch in Switzerland this spring. We travelled to Neuchâtel to talk with the man at its head, former Ulysse Nardin CEO Patrick Hoffmann.
After 18 years selling new watches at Ulysse Nardin, what prompted this move to the pre-owned market?
My last day at Ulysse Nardin was a Monday. On Tuesday, I met up with Danny Govberg at the Palafitte [Hotel Palafitte in Neuchâtel]. He’s an extraordinary individual. His out-of-the-box thinking and family spirit remind me of Rolf [Rolf Schnyder, former owner of Ulysse Nardin who died in 2011]. After that, I travelled to Philadelphia to visit WatchBox’s offices. The technology side of the business is fascinating. It felt more like Google than a watch company! I said yes straight away.
You opened the Swiss branch of WatchBox in May, as Executive Vice President. How far have you got?
We just opened an office in Neuchâtel which employs six people including me. Obviously it’ll take longer for us to develop than in the United States. We have to build a reputation and earn consumers’ trust, otherwise it’s nothing doing. Switzerland has enormous potential and could well become a reservoir for the US market, as well as for our branches in Hong Kong and South Africa.
The more we grow in legitimacy, the faster the grey market will disappear. So we're not a threat for brands.
How have Swiss watch brands reacted?
François-Henri Bennahmias, Audemars Piguet’s CEO, is delighted. In a recent Forbes article, Breitling CEO Georges Kern says a platform such as ours, which guarantees the provenance and authenticity of its watches, is the best way to fight the grey market, which accounts for 80% of online sales of luxury pre-owned watches. The more we grow in legitimacy, the faster this grey market will disappear.
So WatchBox isn't a rival or a threat for brands and distributors?
The opposite. We bring added value to the pre-owned market which helps drive the market for new. Customers are reassured about the value of their collection, and are therefore more inclined to purchase new watches.
But this is e-commerce all the same?
E-commerce has moved on. “Click and buy” is already obsolete. When you’re planning to spend CHF 20,000, there comes a point when you want someone to advise you.
So how does WatchBox work?
WatchBox stands on four pillars: learning, e-commerce, personalised recommendations, and events. Our website features around 4,000 video tutorials on 2,000 watches, and we have plans to set up a studio inside our offices here in Neuchâtel where we will film interviews. The internet has done a lot to increase consumer knowledge, and learning is an important part of what we offer. Additionally, customers can get in touch with our consultants using every possible electronic means, whether it’s Skype, by phone, WhatsApp, email, etc. Then there are the events we plan to host, such as garden parties and trips to Manufactures, that will bring us closer to our customers. It’s a complete range of services for selling, buying and trading watches.
Will this be enough to earn the legitimacy you need?
We also have a secret weapon! As part of our app, we’ve developed a price guide that Forbes has called the Kelley Blue Book for luxury pre-owned watches. The algorithm calculates an immediate estimate of what your watch is worth based on listings across dozens of websites. It’s a live guide that fluctuates with supply and demand. It’s a popular tool and we’re the only ones to offer it.
So a customer can get a free estimate for his or her watch?
That’s right. A single watch or an entire collection. The core of the app is the Watch Box, a digital safe that stores each customer’s watch portfolio. We already have 20,000 registered users who have entered watches with a market value of $500 million.
A good way to know what's out there!
Theoretically yes, we could offer to manage portfolios with buy or sell recommendations, but we’re not there yet.
Do you think the Swiss will get on board?
We hear a lot about millennials, and how they aren’t into collecting or accumulating possessions. An incredible amount of vintage timepieces will resurface when they decide to get rid of watches that have been passed down through the family to buy something else. Our model eliminates the major misgivings people have about the pre-owned market, which are authentication, prices, services and delivery. That’s all the customer wants.
How much is the global luxury pre-owned watch market worth?
Jon Cox, an analyst at Kepler Cheuvreux in Zurich, estimates that the pre-owned watch market is currently worth $5 billion a year, but I think it’s more than that. Based on worldwide sales over the past 15 years, we estimate the value of non-worn watches at $500 billion. Potentially then, the pre-owned market could be bigger than the market for new watches.
