What is Rolex doing About Flippers?
The topic of Rolex flippers is a hot one. In particular at this time when many Rolex watches have waiting lists and getting a hot model is extremely difficult, if not impossible. The most popular Rolex watches have waiting lists that are several years, even decades, so the fact that some customers immediately go on and sell the watch they have been allocated is extremely controversial by Rolex and the AD.
To answer this question, we need to distinguish between what Rolex is doing about flippers and what the Rolex authorized retailers are doing about flippers because they are not the same.
About flipping Rolex watches
The term “flipping” can be interpreted in many different ways. But in this context, it primarily alludes to when people sell their Rolex watch shortly after they have purchased it from an official Rolex retailer. This is something that has become more and more common in recent years. The reason for this is that the prices for many Rolex are higher on the secondhand market than the recommended retail price. As such, you can, if you get the opportunity to buy a “hot” or sought-after model from a retailer at the retail price, go on and sell it for a profit as soon as you walk out the door. For some extremely hot models, you can sell them for as much as 100% more than the retail price, and in some cases even more than that.
When we talk about flipping, we’re not talking about people who buy a Rolex and own it for multiple years and then decide to sell it when they want to change it for something new.
And it is primarily this immediate flipping that is a concern to Rolex and retailers. It’s also a concern for “true enthusiasts” who want to buy their dream watch and enjoy it for many years. When “flippers” buy a watch, they’re essentially taking watches from the true collectors and increasing the waiting time for the people who want to buy them to truly enjoy them.
It’s important to note that the vast majority of Rolex watches are not sold directly to professional dealers or resellers. Instead, it goes to regular private persons. And some of them just see an opportunity to make some quick money. And if you consider the immediate profit that some Rolex watches can give, it’s quite easy to see how it’s a very attractive thing for a lot of people to do when they get the chance to buy a popular Rolex watch.
In the retailer agreement between Rolex and the authorized retailers in the US, Rolex states the below. But the terms naturally apply worldwide as well:
“Jewelers will sell Rolex products only to ultimate consumers, at the retail level, in transactions that originate over-the-counter at its authorized location(s). All other methods of the sale (except for Rolex-approved corporate/presentation sales) are considered transshipping. Rolex is the sole distributor of Rolex watches in the United States. Rolex has not authorized any ORJ or any other person to act as a wholesaler or subdistributor; therefore, any transshipment of Rolex watches, even if unintentional, is prohibited. ORJs may not sell watches to customers referred from outside their local market area (unless the sale is transacted in person at an authorized location), nor may they pay a feel for any referrals.”
This text indicates that Rolex very clearly wants its watches to be sold to final customers and not to resellers. But unlike what many people believe, the vast majority of “flippers” are just regular customers who see an opportunity and take it. They may also be true enthusiasts but then get a chance to buy a watch that they don’t really like, but still buy it because they see that they can make some money. Most of the watches they buy, they may actually keep.
It’s much more difficult for a Rolex retailer to identify private flippers who, in turn, sell the watches to professional dealers, than wholesale professional dealers.
The point is that there are all kinds of different flippers, but most of them are not “professional dealers”, and unlike what most people think, most Rolex retailers do not sell Rolex watches in bulk to them, which may have been the case back in the day when the market looked a lot different when selling a Rolex watch was a lot harder, and all watches sold for less than the recommended retail price on the secondhand market.
Now that we’ve got some context, let’s look at the key question: what is Rolex doing about flippers?
What is Rolex doing about flippers?
It’s clear that Rolex sees flippers as an issue. They increase the waiting time for regular customers who want to wear and enjoy watches, and they also drive up the scarcity and thus also the prices on the secondhand market. At the same time, it’s easy to see why it is so attractive for people to flip a watch when they get the opportunity to buy one due to the easy money that can be made by simply swiping the card and then reselling it.
The catch is, as mentioned, that it’s much more difficult for Rolex to identify flippers when they’re sold to private individuals who flip their watches rather than wholesale to companies. In the retailer agreement, Rolex can ask to look at the financial records of a retailer. When a Rolex retailer sells in bulk to a professional dealer, they are able to identify this and can take the proper action against the retailer. But as the popularity of Rolex watches has increased, Rolex retailers don’t need to do this to be able to move their stock. The issue they face today is that they have more customers than watches due to the scarcity and huge demand for Rolex watches.
But Rolex cannot do this when we’re talking about a flipper, a private individual who decides to flip their watch.
The catch is that today, it is near impossible for the official Rolex retailer to know whether a private client has the intention of selling a watch.
However, there are some other methods that both Rolex official retailers and Rolex themselves use to identify flippers. And when a person has been identified flipping their new watch, they risk getting blacklisted by the retailer. Important to point out is that Rolex is a B2B company that sells watches to official Rolex retailers, hence why they have limited control over to whom the retailers sell watches.
But in general, if a Rolex retailer in one way or another finds out that a customer has flipped a watch, they will “blacklist” them and they will not be able to buy any more Rolex watches from that store. At the same time, this would only apply to that particular store, or chain, if it’s owned by a company that owns multiple stores. A flipper that has been blacklisted at one Rolex retailer can simply go to a different store as different Rolex retailers don’t work together nor have a unified system or customer register (for obvious reasons) so it’s quite a complex subject.
Browsing watch ads online
Since it is very difficult for retailers to know if a customer has flipped their watch, one of the key methods that both Rolex retailers and Rolex themselves use is to browse ads for watches that are being sold online. The fact is that Rolex’s ability to do something against flipping is extremely limited. Much more limited than when retailers sell directly to professional dealers and resellers.
Rolex has a team in-house that actively looks at watches being sold on platforms like eBay, watch forums, and Chrono24 to try to identify hot brand new watches being sold. And the way they identify these watches is via either the serial number on the rehaut of the watch or the warranty card. They may also be able to identify other information about the watch, for example, if the seller included a photo of the receipt in the store.
In recent years, there have also been reports that some Rolex retailers have hired people to do the same – actively browse the web to see if they can identify if their customers are selling watches that they have bought. The retailers may focus on watch forums or other platforms in their local area or country whilst Rolex looks worldwide. But whether or not a Rolex retailer does this is up to each individual retailer and it is not a requirement by Rolex. But still, Rolex still expects them to sell watches to customers who don’t flip or resell them, which is why they may implement this to protect themselves and to be able to say that they are doing everything they can to prevent it from happening.
When Rolex has identified a watch via its serial number, they will be able to look in their own database and see to which Rolex retailer the watch was delivered. They will then contact the Rolex retailer and inform them that one of their customers is selling a watch they bought from them. It is then up to the retailer to take the appropriate action. And in most cases, it is to blacklist the customer from buying more Rolex watches from them (or buying any watches). The action that the Rolex retailer takes varies and is up to each individual retailer.
Rolex’s abilities to prevent flipping are limited
As mentioned, Rolex’s ability to identify flippers is very limited. The primary thing that Rolex can do is to browse the web and try to identify the watches that are being sold there. However, many sellers are aware that the watches can be identified and therefore blur or hide the serial number in the photos and avoid providing information that can allow Rolex to track down the watch and connect it to a Rolex retailer.
As such, the greatest opportunities are at the Rolex retailer, even though they are quite limited as well.
However, another opportunity that Rolex retailers have is if a customer comes in with a watch to their store, for example for a service or an authenticity check. Let’s say that a customer has purchased a watch from a retailer and then flips the watch to a buyer in the same area. In turn, the buyer takes the watch to the same retailer that the watch was sold from for an authenticity check for peace of mind. The store will then be able to see that they have sold that watch and will know that the original buyer has sold it. This is why many flippers try to sell their watch to a different region or country to prevent the watch from ever showing up at that particular Rolex store again.
What Rolex can do, and does, is encourage their retailers to vet and get to know their customers to better understand if it’s a flipper or not before they sell watches to them. However, this is obviously easier said than done.
