Why are there Rolex Shortages?

Over the last five years, Rolex watches seem to have gone from available to unicorn status. It really doesn't even matter the model. A Datejust 41 in steel - not available. A Submariner with a black bezel and black dial - nope not here. A Rolex Daytona - the wait list is so long that you might as well have asked for a kiss from Elle McPherson. With these shortages of watches, where have they all gone? We will try and answer this question.

Image from timeandtidewatches.com

As of today, Rolex is closed (not forever), but due to the COVID-19 virus, the operation itself is dormant until May 2020. We talk about that HERE. This will of course cause issues with delivery and fulfilling orders from Rolex Authorized retailers, but that is not the focus of this article. We want to look back in time before the Coronavirus outbreak and especially over the last thirty-six months.

The first and main reason why Rolex watches are not available is the sheer demand. The demand for these watches, especially steel Rolex sports models, is far more than the production Rolex can supply. The average person was making more money than ever, and they were spending it as fast as they could. Rolex models like the GMT Master II and Daytona have become impossible to acquire, and when the opportunity to have this, or really any Rolex sports model, presents itself, it is sold even before it enters the display. The disposable income in the hands of many is so high that we are actually willing to significantly over pay for these models.

That brings us to the second reason why these watches are not available - the grey market. We talk about purchasing a watch from the grey market here. The grey market is the second hand market for watches. It is made up of hundreds, if not thousands, of second hand watch stores and online dealers that sell used watches, specifically Rolex watches. However, these second hand watches are usually not even worn. As a matter of fact, most come directly from those who were lucky enough to get the call from their Rolex Authorized Dealer and simply want to make a quick buck. That is right - the price of a Rolex watch on the second hand market is actually higher than the MSRP. What is somewhat surprising is that these grey dealers are actually creating a higher price for the watches since many of them are hoarding the watches, creating a supply issue in the market. This artificial inflation in the Rolex watch world has created a multi-billion dollar market for these watches.

The last reason that we see for this drought in Rolex steel sports models is that Rolex does not produce what the market wants it to produce; they produce what they want to. This is not a bad thing; it is just a fact. Rolex aims to create many different references to fulfill the wants of many different likings. For example it is quite easy to acquire a Lady's Datejust in two-tone (gold and steel). This is because Rolex produces the amount that they feel will fulfill the demand of women looking for this model. They do not cut the production and move that team of watch makers, case makers and movement assemblers to make the Explorer II because they also know that the woman who wants a Lady's two-tone Datejust must also get what she wants. They are smart enough to recognize that tastes change, but they have a proven business model that has been working for a hundred years. We talk about Rolex's timeless designs and how they have adapted over time here.

Image from bobswatches.com

In conclusion, these three unique black swan reasons in the Rolex sports watch market have caused for an incredible price increase in the second hand market while depleting the stock of watches at Rolex Authorized Dealers. Some have debated that the Rolex second hand market will fall apart with the Coronavirus Pandemic. We feel that this is simply wrong. Check our our article why here if you would like to know more about the value of your Rolex in the COVID-19 world. For now, enjoy and be safe (plus if you are lucky enough to own a Rolex sports model, congrats on getting a wearable investment that will only grow in value :-))