Timepiece reseller platform WatchBox raises US$165m for global expansion

Singapore

WITH US$50 million seed capital raised mainly out of Singapore, WatchBox - which provides a platform for people to buy, sell and trade luxury watches - has grown in the past 5 years to become the biggest player in the booming pre-owned watch business. And it is poised to advance its global ambitions following a new round of fundraising.

The US-based watch reseller, owned partly by Singaporeans and which has raked in revenues of US$1 billion since it started in 2017, has raised US$165 million of fresh capital, with most of the money coming from the United States, according to Tay Liam Wee, WatchBox's chairman for the Asia-Pacific region, in a Zoom interview with The Business Times (BT) recently.

Tay, a Singaporean currently based in Hong Kong, was the former boss of local watch retail chain Sincere Watch, which was founded by his father in 1954.

A "sizeable" chunk of the latest capital injection in WatchBox is provided by well-known athletes such as basketball greats Michael Jordan and Giannis Antetokounmpo, who are also watch fans. Interests from a wide range of industries from consumer to technology and finance also joined lead investors The Radcliff Companies and The Spruce House Partnership as well as existing minority owner CMIA Capital Partners, a Singapore-based private equity firm, to invest in the company.

With the recent funding, WatchBox also adds to its board of directors Jeff Saunders, chief technology officer of US online eyeglasses retailer Warby Parker; Eli Goldstein, co-founder of US investment house Radcliff; and David Berkman, managing partner of US private equity firm Associate Partners.

Co-founders Danny Govberg, the reseller's Philadelphia-based chairman; Justin Reis, its global chief executive from Singapore; and Tay will remain large but no longer majority shareholders of the company.

WatchBox, which is reported to be valued at nearly US$1 billion with profit margins approaching 15 per cent, has reeled in US$270 million in investments since its founding.

Annual revenues of the company have been growing at a compound rate of 25 to 30 per cent and are on track to hit US$300 million in 2021, said Tay who added that the company is "very profitable".

"After 5 years, we've built up the business we set out to do," he noted. "It's quite an important milestone... What we've learnt and achieved is the ability to do the luxury business online with this omni-channel, hybrid system where we use high-tech and high-touch."

Tay attributes WatchBox's success to its ability to win the trust of watch collectors with its transparent pricing practice and warranty policy as well as its helpful platform to help collectors unlock the value of their collections.

Based on a hybrid model of building long-term relationships with clients from trading offices, physical retail points of sale and e-commerce, WatchBox is seeking to expand its watch inventory - currently valued at US$150 million - and physical presence in the US, Europe, Middle East and Asia.

In 2022, the company is targeting to open watch lounges in New York City, Miami, Los Angeles, Dallas and Houston. Riyadh in Saudi Arabia, Zurich in Switzerland and Tokyo in Japan are also in its immediate expansion plans.

WatchBox presently has lounges in its headquarters in Philadelphia in the US, Neuchatel in Switzerland, Dubai in the Middle East as well as in Hong Kong and Singapore.

"The whole idea of opening the offices is to bring our services close to the local market where we think there are customers for luxury watches," Tay explained.

The focus on the US is due to its huge market size and more developed e-commerce "eco system", which will offer WatchBox plenty of opportunities to explore and to scale up faster.

"(So) right now, it's a question of priority and gravity of where the market is," noted Tay.

The US, which started as the reseller's sole market, still buys 75 per cent of WatchBox's watches, while 20 per cent of the sales goes to Asia. The Middle East and Europe account for the remaining 5 per cent.

While Covid 19 has stopped well-heeled mainland Chinese customers travelling to Hong Kong, Tay pointed out that there's still a critical mass of watch buyers in the region to keep its staff in Hong Kong and Singapore busy.

Swiss luxury watch exports are only recovering slowly from the pandemic, which has slashed shipments drastically. But according to Tay, WatchBox has managed to maintain "steady growth" through the lockdowns and restrictions - thanks to its digital platform.

The secondary luxury watch market is reported to be booming because top watchmakers avoid increasing supply to protect scarcity around collections. This has allowed luxury lines to hold their value in the secondary market, especially as demand escalates.

According to management consultant McKinsey's estimates, pre-owned watch sales could jump from US$18 billion in 2019 to US$32 billion by 2025, expanding the watch re-sales market to half the size of the market for new retail timepieces, up from one-third today.

Mercury Project's Hammertrack, which monitors the results of watch auctions, reports that the key auction players - Christie's, Philips, Sotheby's, Antiquorum, Bonhams and Poly Auction - posted a 49 per cent rise in sales to 241 million Swiss francs (S$359 million) in the first half of 2021, from mid-2019.

Swiss watch exports in the primary market rose only 12.5 per cent in the same period.