hrono24’s premises in Karlsruhe, in southern Germany, are a labyrinth in a post-industrial setting: a castle that used to house a brewery, and has now been converted into offices.
More than 200 people are working there, in premises that could hold their own against tech giants like Google: game rooms and eco-friendly cafeterias, alongside glass-walled offices that embody the spirit of transparency so highly valued by the high-tech industry.
Founded in 2003, Chrono24 lies at the junction of e-commerce and watchmaking. It has established itself as a leader in online watch sales. You just have to type the name of a watch into a search engine to see the site appear – very quickly. Today, it is a de facto digital benchmark, with more than 15 million visits recorded each month. The platform is used on average by 3,000 professional sellers and 20,000 private sellers at any given time.
Game rooms, eco-friendly cafeterias, alongside glass-walled offices embodying the spirit of transparency so highly valued by the high-tech industry.
- The headquarters of Chrono24 in Karlsruhe, Germany
While watch brands are looking to make up for lost time by investing online to promote their second-hand market via takeovers, partnerships or the launch of their own dedicated services, we met Chrono24’s co-CEO, Tim Stracke.
How big is the secondary watch market worldwide?
It is around €15 billion per year, in terms of trade volumes. This market is growing at an annual rate of around 10%. In comparison, the value of the world market for new watches, at retail prices, is approximately €37 billion per year. We estimate the total market value of all second-hand watches in the world (the majority of which are obviously not for sale) at €250-300 billion. More and more observers are referring to the second-hand market as a “new China” for the watch industry.
“We estimate the total market value of all second-hand watches in the world at €250-300 billion.”
Of these €15 billion, what is Chrono24’s share?
In 2018, we recorded transactions of around €1.3 billion on our platform. Second-hand watches represent around 60% of Chrono24’s business, compared with 40% for new watches. The second-hand market is growing faster. The overall growth rate of transactions on our platform is around +30% per year. We are a profitable company.
- Tim Stracke, co-CEO of the German e-commerce giant
The second-hand market seems to be much more developed in the United States and Europe than it is in the emerging countries such as China, which is now supporting the global growth in sales of new watches.
Absolutely. Numerous studies attest to this distinction. However, while the second-hand market is already strong in Europe and the US, it is now growing faster in Asia. Chinese consumers are buying new watches now, but in a few years’ time we believe pre-owned watches could reach the importance that this segment enjoys in Europe today.
“Chinese consumers are buying new watches now, but in a few years’ time we believe pre-owned watches could reach the importance that this segment enjoys in Europe today.”
The brands’ attitude to pre-owned watches is changing. Up to now, they have been mainly associated with grey and parallel markets, fed by oversupply. We have seen buyouts, and more and more brands are launching their own services in the second-hand segment. Do you have direct contact with brands?
This is one of the great changes of our time: watch brands are now embracing the pre-owned market. At the same time, they intend to fight the grey market, while opening their own online stores. Where our own relationship with brands is concerned, we can play a role in each of these areas. Unlike when Chrono24 started, we are now in direct dialogue with most CEOs of established brands. We have an extensive database and plenty of information on consumers: our goal is to identify and know all the watch enthusiasts in the world. We estimate that one in three aficionados currently uses Chrono24 on a regular basis. And through this data we have a precise picture of their specific desires and needs.
“We have an extensive database and plenty of information on consumers: our goal is to identify and know all the watch enthusiasts in the world.”
- Top 10 best-selling brands on Chrono24
How exactly are you working with watch brands? By supplying data? The only visible collaboration on your site is the merchant platform you have set up.
We never sell personal data. We help brands build relationships with the groups they target. If a brand wants to invite collectors for a dinner in Dubai, we probably know the people who might be interested. If a brand wants to organise an event in Tokyo with aficionados who can spend more than 50,000 euros on a watch, then we are certainly a good partner to talk to.
“We never sell personal data. We help brands build relationships with the groups they target.”
How do you ensure that these aficionados are also interested in the brands’ contemporary productions?
On average, before acquiring a watch, a Chrono24 customer will have many dozens of different “points of contact” with our platform. So, we know a lot about their interests, their favourite brands and their general preferences. We undoubtedly have one of the most comprehensive databases on the current global watchmaking landscape. Our data shows us that users have a strong interest in pre-owned pieces, but also in contemporary products, especially when they are limited and from a premium brand.
What general trends do these data suggest?
Today’s customers have a new understanding of luxury – the free espresso at an exclusive authorised dealer downtown no longer matters to them. German market researcher BrandTrust just published a study on how the digital transformation will affect the luxury market. The major outcome was that e-commerce for luxury goods will increase strongly, while at the same time the POS experience will decrease. We are seeing a roughly 30% year-on-year increase in visits to Chrono24. Does this resonate with customer behaviour on other sales channels? I’d say yes.
- A view of Chrono24’s facilities in Karlsruhe
Nevertheless, the model for the future seems to be omnichannel, rather than strictly digital or strictly bricks-and-mortar.
We view Chrono24 as one example of the “new luxury”. Over past decades, luxury brands kept their customers at arms’ length. Today, mainly driven by millennials, users are looking for a close relationship with brands that matter to them. To us, the new luxury means having access to a brand over various touchpoints, any time we want. This might be by giving feedback via Instagram, looking up prices on the go, or even ordering a luxury watch on a Sunday afternoon with friends from the sofa.
What is your experience with millennials?
In 2025, approximately 40% of sales in the luxury segment will be to millennials. Their behaviour in gathering information, interacting and conducting purchases has been sharpened by the internet. We see that this generation has a strong desire to be closely connected to brands. They have a keen interest in the background and the stories of a brand. Values like sustainability matter a lot more to millennials than to previous generations. We regard Chrono24 as a gateway in terms of offering information, stories, background information and all kinds of services.
You appear very high up in search engine results, especially when looking for the price of a watch. Many brands still refuse to give this information online. Do you consider yourself a benchmark on the price of watches?
Google likes what the user likes. And many users want to know the price of watches, first and foremost. It’s not our decision, it’s the users’ decision, via Google. With more than 15 million visits per month, we certainly play a leading role in this respect. Much more revealing is that many users are interested in comparing prices, but they don’t purchase a watch based on this element alone. In 2015, when prices for luxury watches were incredibly low, we realised that people stopped buying when discounts got too big. Everybody loves a discount, but they want to be the only person to benefit from it. In our experience, dealing with oversupply, and creating scarcity, really works in terms of bringing price stability to the market and making a brand attractive.
“Google likes what the user likes. And many users want to know the price of watches, first and foremost.”
More and more brands are interested in the second-hand market. Many are probably thinking that they have lost a lot of time, and perhaps gave you a lot of power by doing so. As they increasingly master this segment, are they not likely to dry up your own market?
Not at all. We see it more as an opportunity for partnerships with brands. And we have already seen it in other industries. Most car manufacturers now trade pre-owned vehicles. This helped car trading platforms be successful and did not hurt them at all. An interesting observation is that watches from brands that have been very active in drying up the grey market are attracting more users than before.
“Watches from brands that have been very active in drying up the grey market are attracting more users than before.”
- A start-up spirit in a post-industrial setting
Brands are placing increasing demands on their partners, in terms of sales environment but also credibility. How do you control the “seriousness” of the professional operators using your platform?
We have been very strict from the beginning about who can and cannot use our platform. This has been a key factor in our growth: without credibility, we would not be in our current position. We have only trusted, vetted dealers, in terms of quality and authenticity of the timepieces. In addition, we allow our users to take advantage of our free Trusted Check-Out system: the transaction is not authorised until the watch has actually been validated by the customer. If it’s not, we transfer the money from our escrow account back to the customer and the watch is shipped back.
Where are your key markets?
Our position is very strong in Europe and the United States. We just launched a TV campaign in the US and we’ve noticed that American dealers are much more advanced than Europeans in terms of online marketing. In addition, the United States is by far our largest watch supply market. In terms of demand, Italy is in a leading position. We consider ourselves a truly global platform: in addition to Germany, we have an office in New York, and our Hong Kong office is helping to push our business in Japan and Asia even further. We support 9 currencies, our platform is available in 22 languages and our customer support can help users in 15 languages.
- Chrono24 employs more than 200 people at its headquarters in Karlsruhe
What are the most important growth drivers for you?
If I have to name just three: creating the best possible experience for our customers, building partnerships with the watch industry and expanding our activities in Asia.
What is the average selling price on Chrono24?
Around 8,000 euros.
What are the top selling brands?
The top three are Rolex, Omega and Breitling. We represent a true picture of brand desirability. I think our main advantage is that we are very close to the end customer, and the entire industry wants to know its aficionados better. They have been neglected for too long. We want to be as close to them as possible.