[jamesralph8555]

This model is not unique to Hermes. Watch and car brands work the same way. Early on in these markets, you can get one of the desirable items without spending too much on undesirable items.

Some examples:

Rolex - stainless steel models are desirable and appreciate, gold models go for below msrp

Porche - Bucking the trend a bit, Porche gives you the option of paying an additional dealer markup rather than making you buy a Macan to get a GT3 RS.

Over time, this arbitrage goes to equilibrium and resellers can’t make money. It is relatively easy to get into this market so naturally it gets flooded. Profit goes to 0. Resellers also carry a risk that the item loses market value while they hold it. The only real winner here is the brand.

[blantonl]

On the watch side, there is some nuance here.

Rolex stainless steel models are highly desirable, but they really don't appreciate in value. They simply sell on the secondary market for a >50% markup because they are still less expensive than a lot of the precious metal versions. So a rolex authorized dealer will typically have a huge ratio of buyers to watches available for steel watches. Precious metal rolexes - it's a big "depends." Any of the platinum watches are highly desirable as well as the meteorite dial watches - they sell well above msrp on the secondary market. Note that rolex authorized dealers are not allowed to mark up new watches at all. The price is the price set by the brand. Most authorized distributors are also jewelers so they allocate steel sport watches to people who buy a lot of jewelry.

Pateks are a different beast. The sport watches are highly desirable, and generally not available to the average buyer under any circumstances unless they have > $100K Patek spend, which means you're going to have to buy what is typically more of an art piece type watch (complication, calatrava, etc) before you'll get a shot at a $20K Patek sport watch. This means you can very easily get a beautiful brand new Patek dress watch for 20% off on the secondary market, since buyers will simply purchase that watch to get the spend history, immediately dump it on the secondary market at a big discount, just so they can get the opportunity to purchase a $20K watch and sell it for a >100% markup. There's no shame for some of these people.

[rayiner]

> There's no shame for some of these people.

It sounds like the market just fixing a stupid sales model.

[samatman]

Doesn't look too stupid for Patek Philippe. These shenanigans are why they can charge $20k for a stainless steel automatic watch with a simple date complication, which is only slightly better (at best) than a $300 Seiko.

[OnACoffeeBreak]

When I think of "sport" I think of "fitness" watches from Garmin and Apple Watch. Patek sport watch is definitely not that. What is meant by "sport" in case of the Patek sport watch?

[eadmund]

A sport watch is not a dress watch, not a dive watch and not a field watch. It’s typically water-resistant, but not hugely water-resistant (swimming, rather than diving). It typically has a metal bracelet or a tropical rubber strap.

A dress watch is thin, almost always with polished rather than brushed surfaces, rarely with a date complication, rarely with lume, sometimes without a second hand, with a leather strap. It’s meant to slide underneath a shirt cuff and be both elegant & discrete. It is probably not water-resistant. It may not have a minute track.

A dive watch is meant for scuba diving. It will have one-way bezel marked with minutes for tracking dive time. It will be heavily lumed. It will typically have a metal bracelet.

A field watch is based off of a WWI officer’s watch. It should be reasonably water-resistant (weirdly, many are not!). It will always have three hands, and must be hacking (means that the second hand will stop when you set the time, so that it can be set to the exact second). It probably has 13–24 in an inner circle. It definitely has a minute track.

A Garmin or Apple Watch is … not really a watch, but is a wearable computer.

[nradov]

Note that hardly anyone has actually used those "dive" watches for diving in decades. A wealthy, fashion-conscious diver might wear a dive watch while traveling to the dive site, but for actual diving they'll take it off (don't want it lost or scratched!) and bring a cheaper modern digital dive computer (which might come in wristwatch format for certain models, thus further confusing the terminology). In diving circles, if you mention "dive watch" then most people will assume you're talking about a Shearwater or Garmin rather than some Swiss toy.

[eadmund]

> Note that hardly anyone has actually used those "dive" watches for diving in decades.

Yeah, the line about them is that they are ‘desk divers’!

I have the idea that plenty of folks do still use them for diving, but of course I could be wrong — it’s not a community I am much around.

[criddell]

Sports is really just the traditional name of the category.

They are more casual watches. They will have a seconds hand and glow in the dark hands and markers. They will be able to tolerate getting wet (ie no leather).

[vundercind]

It’s like how Oxford cloth button down shirts or cotton knit polos are sportswear, or a sport coat (it’s in the name!) or how jodhpur boots are “equestrian”, et c.

They started that way, but not so much now. Still, that’s the lineage they fall under in certain contexts.

[theluketaylor]

In the watch world sports watch means a tool watch, something designed for a specific purpose like supporting an occupation, military use, or while participating in a sport (mainly uppercrusty sports). Sports watches have taken over, and can really be thought of as everyday watches since people are wearing rolex submariners with tuxedos now.

Sport watches started with things like the JLC Reverso, which was designed to meet a challenge of a watch that could survive a polo match. The case includes a swivel that lets the dial flip around to keep it protected while playing.

Quartz watches upended watch makers across every price point, totally destroying the bottom of the market. The survivors moved towards mechanical watches as luxury items, and even the holy trinity of Audemars Piguet, Patek Philippe, and Vacheron Constantin had to respond. Audemars Piguet revealed the luxury sport watch Royal Oak in 1972 and there wasn't any going back. PP designed Nautilus in 1976 and Vacheron brought out the Overseas in 77. These 3 lines make up a huge chunk of the holy trintiy business now.

[quickthrowman]

Nautilus and Aquanaut are what I think of as Patek ‘sport’ watches.

[havefunbesafe]

I like that Walmart "sells" them https://www.walmart.com/ip/Patek-Philippe-Patek-Philippe-Nau...

[NoLinkToMe]

Really interesting, answered some of the questions I had on watch market economics and seller and buyer incentives. Is there a place where I can learn more (e.g. a youtube channel that explains how all of this works, the roles and incentives for the various parties in the watch market)?

Thanks

[roncesvalles]

Ah, the games people play when they have too much money.

[mamonster]

In the watch market, a lot of the resellers who got in during COVID are still underwater.

Know a guy from the alternatives space who bought an 8 figure portfolio of Richard Milles, Pateks and some smaller brands and is still sitting on it. Bidders are coming at 15-20% below his ask at least.

[pc86]

At some point you have to think you'd be better off selling at a loss and reallocating the funds, especially if there are tax implications of being able to show a loss in business inventory (which you may not be able to if it's just some guy buying a box of watches and not an actual business venture).

[fbdab103]

If you hold the inventory, there is still hope of a rebound. Eating the loss and taking a bath has got to be painful.

Given how unpredictable the collector's market is, investing for short-term swing collecting seems a high variance strategy. Only winning move would be to pick up the goods, stack them in the attic for 20 years, and see what got lucky. Anything else would be too much mental stress trying to monitor the present value.

[htrp]

Not a loss til you sell??

[meowster]

Yep! I know a ton of people who never lost money on Beanie Babies because they haven't sold yet and are waiting for the market to rebound! /s

[BeFlatXIII]

What's the conversion rate from Beanie Babies to $GME?

[tempsy]

I think you're missing a key point here and that is you have no chance of buying a Hermes bag unless you have a relationship with a specific sales associate and buy a lot of other stuff there. Very few other categories of goods can get away with something like this.

In some ways Rolex is like this but Rolex is relatively high production volume and there are many situations where you can get lucky and buy one relatively easily, especially now that the hype has died down a bit from 2021-2022.