Ross Crane and Christy Davis, co-founders of London based Subdial © Perry Gibson

The booming secondary market in watches is often seen as a Wild West, where speculators push prices through the roof in search of big profits. But the founders of Subdial, a British online watch-trading platform, aim to make buying and selling pre-owned watches more community focused.

Subdial chief executive Ross Crane, who founded the business with Christy Davis in 2018, says many of his competitors are like “less reputable estate agents”, who “promise the moon to get a transaction, but then can’t fulfil it”.

His company’s approach is to buy, sell and trade watches via its website, “dropping” a collection of pieces every Thursday. Each watch is examined by a watchmaker at the company’s base, in Hoxton, east London, and sold with a 12-month warranty. Any blemishes are included in the listing. Crane says Subdial sold 125 watches in July and had a projected annual revenue of £18mn, based on the last 60 days’ sales.

All watches sold are sourced in the UK and, post-Brexit, 85 per cent of sales are domestic. Subdial’s credentials were boosted last November when investors sank £4mn into it, adding to £400,000 from a previous funding round. Among its backers are John Ayton, founder of Links of London and Annoushka, as well as a former chair of Bremont Watch Company, and Nick Evans, managing partner of Active Partners and former chief executive of Watches of Switzerland and Mappin & Webb. Both are now Subdial directors. Bookmaker Paddy Power’s former chief marketing officer Christian Woolfenden has also invested.

watch being held and examined
Each watch is examined by a watchmaker at the company’s base in east London © Perry Gibson for the FT

Crane and Davis say Subdial offers a trustworthy, managed community to enthusiasts who once bought and sold watches on WhatsApp or social media. Typically, they say, buyers, sellers and collectors had to choose between low fees and low service levels on peer-to-peer ­platforms, or high fees and service levels via boutiques and dealers. They aim to sit in between: offering better service without scalping a sale, encouraging enthusiasts to trade more often.

As well as committing to open, regular dialogue during transactions, Crane and Davis say their prices are set “scientifically” through daily collecting of secondary market data from dealers and platforms around the world, particularly in the UK, EU, US and Japanese markets.

But the service still comes with a significant price tag. If it is selling a watch on consignment, fees range from 10 to 15 per cent, including VAT, falling as the value of the watch rises. The percentage drops further when a member sells two watches via the platform, and again when they sell four or more, to a minimum of 8 per cent for a “grail level” watch costing £75,000 and up. Chrono24, the powerful German-based peer-to-peer online marketplace, charges a 6.5 per cent commission fee.

Payments on watches they buy outright, say the founders, are paid into sellers’ accounts the next day, or after 14 days for consigned watches, the point at which the buyer’s return window closes. “People were shocked when money landed in their account,” says Davis, who adds he once waited three months for a watch to be posted on a secondary site.

Subdial arrives in a fast-growing market. A report produced by McKinsey and The Business of Fashion last year predicted sales of pre-owned watches will grow 8-10 per cent annually from 2019 to 2025, with values soaring from $18bn in 2019 to as much as $32bn in 2025 — a figure expected to be more than half the value of new-watch sales that year.

timepiece being examined
Consignment fees at Subdial range from 10 to 15 per cent © Perry Gibson

Secondary values have risen sharply in recent years, led by in-demand pieces by Swiss brands such as Rolex and Patek Philippe. Demand post-pandemic has surged, further inflating prices.

Analysts say Subdial’s digital approach will help. “The pre-owned market is much more digital than the first-hand market,” says Björn Timelin, senior partner at McKinsey and one of the 2021 report’s authors. “Thirty per cent of sales were digital in 2019. That’s expected to reach 45 per cent by 2025.”

But he strikes a note of caution. “Looking ahead, there are some signs that the market will be more difficult because of the challenging macroeconomic outlook,” he says, citing high inflation and Bank of England forecasts that point to a recession.

Subdial also remains a fledgling player in a competitive market dominated by the Richemont-owned Watchfinder, WatchBox of the US, and Chrono24, which, according to its chief executive, Tim Stracke, has annual revenues of “significantly north of €2bn” — dwarfing Subdial’s takings.

Jon Cox, head of Swiss equities at the financial services company Kepler Cheuvreux, argues the window is closing to newcomers. “There are competitors out there offering a similar service [to Subdial],” he says. “The market is expanding rapidly so there is room for all-comers but, eventually, [it] will consolidate around the larger players.”

Crane and Davis met at accounting firm EY in the mid-2010s. Crane had a degree in industrial economics from Nottingham University; Davis in psychology and philosophy from Oxford. “Christy was that guy at EY who everyone wanted to hate,” says Crane. “He came in as a graduate, managing managers, who said, ‘This guy’s really annoying, but he’s really good.’”

Before Subdial, they tried an online grocery business, Dynr. It flopped, but the experience was invaluable. Neither Crane nor Davis, who retain about 75 per cent of Subdial shares, had a background in watches beyond an “amateur” interest and a few bad experiences of selling watches online. The business grew slowly at first, run by the pair from a front room, with single-figure sales in each of the first six months. Now, it has 19 staff and has moved to new premises.

The company’s investors say its focus on plain speaking and consumer experience will prove critical. In the words of Ayton: “Subdial offers transparency and honest pricing in a market that is growing so fast and yet, for many collectors, is confusing and opaque.”

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