Besides being a fancy accessory on the wrist, a watch may also be a status symbol and an investment. For brothers Jarod and Joses Ng, watches are a hobby they’ve turned into a growing business.
They found an interest in watches under the influence of their father and around 2018, they began dealing with other watch enthusiasts over online platforms such as Carousell, making the transactions at their condominium’s lobby.
“Initially, we were just testing the market,” says Joses. “Our profits in the very beginning were not large — maybe $5,000–$10,000 per month, since the market at the time was not extremely promising.”
At first, the brothers invested $50,000– $60,000 of their own savings. Gradually, they gained a good reputation within the local community. But there was only so much their “home business” could grow, and Watch Capital was formally created. “We realised that we were making more and could move towards registering a company, so we took the step to take this more seriously,” Jarod says.
While most customers were happy to purchase through them via online means, others were asking them to set up a physical space. With $1.5 million from their father, the brothers set up a physical presence at 111 Somerset. “Several of our clients then mentioned to us that it would be great if we set up a showroom in order to offer better choices with a wider display,” Joses says, “and we took our clients’ advice.”
In the beginning, however, their father wasn’t fully convinced they run a viable business. The brothers were in their early 20s, and were studying in the UK at the time as well. Also, back then, second-hand market dealers did not have a great reputation, which is what their father was concerned about, they recall. After all, they were selling largely preowned pieces, which have some clear differences from pieces sold by the authorised dealers of the brands.
Nevertheless, with the physical shop, the brothers were able to ramp up their business. Sales have reached as high as $3.76 million per month — a far cry from their “lobby” days. Seeing the growth, their father invested another $1 million.
With growing interest in watches, the brothers see a lot more growth potential for their business. One key driver is the investment angle. “Watches offer a more stable market as compared to shares, which makes them come across as ‘safer’ investments to some,” explains Jarod. “There are also no additional fees when it comes to investing in watches, unlike properties, for example.” He also compares buying watches to investing in gold because “you can’t lose that much money on it”.
Moreover, some people like watches for their aesthetic values. “[People can enjoy their] watches on their wrists, as an accessory, while it is a little more difficult to carry, say, an art piece around,” says Joses.
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Pandemic drives up resale prices
To a certain extent, the Ngs can thank the pandemic for helping to drive their business. When the pandemic hit, many watch manufacturers cut back production. Motivated buyers were forced to turn to the resale market, which caused inflated pricing, and thereby, fuelling more speculative demand for watches. “Some people were panic-selling during Covid-19 as well, which created a booming market, resulting in high buying demand,” says Joses.
Some industry players observed that certain watches are now more expensive on the second-hand markets than brand new ones sold via the authorised dealers, as motivated collectors are willing to pay a hefty premium to get their hands on collectible pieces.
According to Jarod and Joses, the second-hand watch market is not necessarily more expensive. In fact, with lower barriers of entry for specific watch models that are both popular and still in production, the second-hand market can still attract its fair share of buyers.
Another barrier for first-time buyers is the wait to become a “VIP” when buying from a store. With most authorised dealers, much of the stock for popular models is reserved for returning customers, or the “VIPs” that have previously made several purchases to support the store and help the authorised dealer clear stock. This could be frustrating for first-time buyers, who are then offered other less popular models instead of a particular watch that they want, the brothers say.
“Nowadays, people are increasingly more impatient to get their hands on the [exact] product that they want, and do not want to wait in line or be offered 10 or more other [unpopular] pieces before getting the watch that they want,” Jarod say. This is where the second-hand market comes in, even if it means paying a premium for a watch.
Some risks when it comes to investing in the second-hand watch market include coming across stolen pieces or counterfeit items. Hence, as a second-hand dealer, Jarod clarifies that this responsibility falls on the company. “It’s really important that second-hand dealers like ourselves check [the product] and make sure it is legitimate,” says Jarod. “We won’t want to sell a fake watch and tarnish our reputation as well.”
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The rise in fake watches circulating in the second-hand market of late is worrying, say Jarod and Joses, as people nowadays are increasingly more aware of how high watches can be valued at.
According to the brothers, this is a key reason why many people are cautious and refusing to buy and sell on online platforms, where there have been several incidents of people almost getting robbed or harmed when meeting up to close a deal.
Eye on expansion
As business owners, the Ngs tend not to hold on to their watches and wait for prices to appreciate further. Rather, their goal is to let go of their watches as fast as possible. In contrast, individuals with a view to invest in watches can opt to hold on to their purchases for longer periods. Of course, just like any investment, “homework” or due diligence needs to be done to ensure sizeable profits when liquidating the investment, say the brothers.
Recognising that the demand is growing not just within Singapore but also across the region, the brothers are keen to explore markets elsewhere. Recently, they have been working on building relationships with dealers in the UK and have their sights on expanding their operations into Dubai and Hong Kong as well.
“As compared to Singapore, the overseas [watch] markets are definitely bigger,” Jarod shares. “One of the main reasons is that the majority of people overseas are much more willing to spend money on watches than those here in Singapore.”
In addition, larger overseas economies invariably bring about businesses and individuals with greater purchasing power, which means that selling watches overseas can help them maximise profits.
Jarod and Joses do intend to continue dealing in the local market as well, to keep a strong presence in their home country. “For the local market, what makes us stand out is the [amount of] stock that we have as compared to our competitors,” says Jarod. “Most other dealers usually have 30 to 40 watches in stock, whereas we have about a 100.”
However, Jarod and Joses are now more cautious about stocking up a large amount of watches, since it is safer to do so especially after the market most recently hit its peak after having a bull run. “We do keep more cash reserves just in case the market tumbles, so we can have more buying power [when prices are low],” Jarod says.
To Jarod and Joses, a strong local base is crucial to the survival of their business in the long-run. “We do want to focus on Singapore before expanding seriously,” Jarod says.
Photo: Albert Chua/The Edge Singapore
