sing technology, we aim to create the best customer experience in the industry,” states WatchBox’s co-founder and CEO Justin Reis. The Philadelphia-based e-commerce platform recently secured new funding to feed its global ambitions. These include scaling its digital platform, expand- ing into new markets, and enhancing what is touted as “the world’s most valuable and extensive inventory selection”, with more than $150 million worth of watches.
Last November, WatchBox announced it had raised $165 million of equity capital from lead investors The Radcliff Companies and The Spruce House Partnership, as well as CMIA Capital Partners and other existing investors, including a roster of household names such as basketball legends Giannis Antetokounmpo, Devin Booker and Michael Jordan. “Our investors and partners hail from a wide range of industries, from consumer to technology, finance and professional sports, yet we are all bound by our love of watches,” says Reis.
- WatchBox co-founder and CEO Justin Reis
This news came at the end of a successful year for WatchBox, which reached over $300 million in net revenue for 2021 and crossed the one billion threshold for cumulative revenue since its creation five years ago. Digital retail seems to be booming; according to McKinsey & Co., the primary and secondary watch markets are expected to grow from $66 billion to $97 billion by 2025.
By the end of 2022, WatchBox plans to open offices across the United States and internationally, beginning with locations in New York, Los Angeles, Miami, Zurich, and Riyadh. The new WatchBox destinations will join the existing company footprint which includes properties in Dubai, Hong Kong, Neuchâtel, Singapore, and its US headquarters in Philadelphia.
Last, but certainly not least, the American company acquired independent Swiss watchmaker De Bethune last year, signaling a move from the secondary to the primary market. We met Justin Reis to discuss these developments.
By the end of 2022, WatchBox plans to open offices across the United States and internationally, beginning with locations in New York, Los Angeles, Miami, Zurich, and Riyadh.
Europa Star: You have just raised $165 million in funding for the development of WatchBox. What are your strategic priorities for 2022?
Justin Reis: Our strategy is a continuation of last year: open new offices, build an unparalleled inventory, hire new talent and continue to invest in cutting-edge technology. When the pandemic hit, we were very cautious. But we’re actually coming out of it stronger in capital and liquidity, because ultimately our business was accelerated during the pandemic.
How is your strategy playing out?
In the US, we’re opening new offices to strengthen our local footprint and will hire at least 30 new client advisors. Outside the US market, we’re opening a presence in Saudi Arabia in partnership with Ahmed Seddiqi & Sons. And we are continuing to invest in Switzerland, to strengthen our presence in the “horological Silicon Valley”. In addition to our presence in Neuchâtel, we are opening new offices in Zurich and Geneva.
- The WatchBox lounge in Hong Kong
What about your online presence?
Content production is a central pillar of our strategy, and we’ll be distributing our content more widely, notably through our mobile app and our TV App which you can download on any Smart TV to access thousands of our videos. Through our content, we want to bring watchmakers closer to our customers. But above all, we’re continuing to invest in the best possible inventory. Our ambition is to move from the idea of “pre-owned” to “collectible”. Today, people are used to buying pre-owned. The determining factor is not so much the year of production as the quality of the products offered.
How do you differ from your rivals?
The larger platforms are more suited to mass selling of more entry-level products. Our average price is well over $20,000, and we make a significant investment in our personal relationships with our customers.
“Today, there’s no one dominant player in our field. That’s why we’re expanding our international activity. In the next three years, we want to have at least 40 offices around the world.”
Your investors include household names like Michael Jordan. Will you use their celebrity to convert new customers to collecting watches, or indeed, to buying watches at all?
We have been very lucky, because our relationship and friendship with these investors is organic: before they invested, they were WatchBox customers. When we offered them the opportunity to invest, there were no preconditions and they invested alongside our other institutional investors. Of course, we know that their names resonate with a wider audience. But we are not going to formalise the relationship. You won’t see us going down the paid ambassador route.
What has been your most dynamic market worldwide in the last year?
We’ve seen consistent activity. In fact, we’ve seen almost equal growth across all the major markets. This shows that there is much more uniformity between the different markets than in the past. The highest average selling price is still in Asia, at around 50,000 dollars. But two-thirds of our business is in the US, which accounts for the vast majority of our volume. And there’s still a lot of territory to cover within the US itself.
- The average price at WatchBox is over $20,000. Rare models from independent brands are particularly sought-after today.
What are your longer-term ambitions?
We remain very focused on our goal of bringing more customers into collectible watches. Today, there’s no one player dominating the global watch market. That’s why we’re expanding our international activity. For example, with the exception of Switzerland, we don’t yet have a presence in Europe. In the next three years, we want to have at least 40 offices around the world. But none of them will be traditional ground-floor boutiques: they will be private lounges for collectors. But alongside this expansion of our physical network, we want to invest in media and content.
You have partnered with Ahmed Seddiqi & Sons in the Middle East. Do you plan to develop similar partnerships with other retailers around the world?
Not in the first instance. It was a unique opportunity, because it’s the largest watch retailer in the United Arab Emirates and has an excellent reputation with global collectors and brands such as Rolex and Patek Philippe. They’re not just a traditional retailer; they also have a high cultural impact, through the organisation of Dubai Watch Week, for instance. But it’s not a model we’re looking to extend to other regions. We’re already present in Asia, and we want to develop our own brand.
- A space dedicated to WatchBox at Ahmed Seddiqi & Sons in Dubai
WatchBox is a spin-off of a historic American watch retailer, Govberg Jewelers in Philadelphia. How has this helped you, given that other platforms in your segment are still trying to find their feet with brands and collectors?
WatchBox was always designed to be completely separate from the primary market. But it gave us a very good head start in terms of how to build a business in the watch world. It was this horological DNA, with brand equity and customer experience, that differentiated us from our competitors. Many of them came in with a purely technological perspective.
How is your relationship with watch brands today?
This was one of the biggest question marks when we started. But our actions speak for us. We’re not looking for short-term returns through speculation, like some of our competitors. We are focused on educating our customers about collectible watches. We work with the brands to provide after-sales service and this relationship is supported by having continued open communication with the biggest brands. Our relationship with them has never been better. More recently, we have intensified our relationship with independent watchmakers. Through our collaborations, we provide them with business resources and allow them to focus on what they do best: creation.
“More recently, we have intensified our relationship with independent watchmakers. Through our collaborations, we provide them with business resources and allow them to focus on what they do best: creation.”
- The Swiss office of WatchBox in Neuchâtel
Do you see yourself more as a technology company or as a watch company?
We have tried not to lock ourselves into one category or another. We have invested a lot in technology and in people, because we are first and foremost a customer service-oriented company.
Are you going to add other items to your portfolio, besides watches?
Not in the foreseeable future, but nothing is impossible. We have to stay alert and focused. It would be risky to move away from our core business too soon. I have seen companies fail because they diversified too quickly.
- WatchBox during the Dubai Watch Week
Would you be interested in a direct alliance with a brand or group? We have seen Watchfinder join Richemont, Analog/Shift join Watches of Switzerland, Crown and Caliber join Hodinkee...
There’s an ongoing consolidation in our segment. But that’s not our ambition. There’s still so much we can do on our own! But we will certainly work more with groups in the future, because we add value by talking to the biggest collectors. In general, I see a greater openness; the culture is changing. There is less prejudice in the secondary market. Price transparency has also played a big role.
“In general, I see a greater openness; the culture is changing. There is less prejudice in the secondary market. Price transparency has also played a big role.”
Do you intend to eventually go public, as Chronext recently did?
At this stage we prefer to remain a private company as we see a lot of runway to continue to grow our platform globally and would not want the distraction of being public right now. In the end, going public is just another way to raise capital.
The supply of key models is becoming increasingly limited. Coupled with the recent price increases at Rolex and Patek Philippe, this could lead to even higher prices for the most popular watches.
New watch prices are rising because of inflation, not just supply and demand. Brands have not been able to keep up with customer demand, it’s not an elastic market and you have to invest in maintaining the value of the brand. So you will see prices rise and demand increase even more, in the years to come.
There has been an influx of an incredible new audience of customers during the pandemic, attracted not just by the increase in value of certain models, but more generally by greater watch knowledge, and a growing interest in collecting watches. This benefits our industry massively. And the surplus of customers who can’t get the watches they want are also turning to other brands, especially the independents. From Rolex and Patek Philippe, we have seen a move into independents such as H. Moser & Cie, MB&F and De Bethune.
- WatchBox acquired independent Swiss watchmaker De Bethune last year.
In 2021, you acquired the De Bethune brand. How did this transaction come about?
We had been an admirer of the brand since the early days of WatchBox. Often, independents are poorly capitalised. We built a good relationship over the years, with no particular end in mind. So when the opportunity to invest arose, we naturally stepped in to help them grow. Our role is purely supportive, we are not actively involved in the operations of the brand. In that sense, they remain independent. As with WatchBox, we know that we will be judged on our actions. The De Bethune brand is much better capitalised now and will be able to grow, but still with limited production. We will also continue to develop their pre-owned offering and promote direct sales by developing a closer relationship with the end customer.