In an age when almost everything can be bought online, watch resale is done in a surprisingly archaic way, namely, face-to-face with little price transparency. Wristcheck, a startup based out of Hong Kong, is taking a shot at digitizing the industry.
Traditional secondhand watch dealing is a "buy low, sell high" business that often puts the buyer and seller in a "predatory" position, says Austen Chu, co-founder and CEO at Wristcheck, in an interview. An auction house, for example, typically charges the buyer up to 26% and up to 12% for sellers in transaction fees, he says.
"There's no standardized way for buying and selling in the luxury watch space. Part of the reason is the high barrier to entry because it's a super knowledge-based hobby," the founder observes.
In comparison, Wristcheck takes 8% from the seller and 4% from the buyer. Rather than buying watches from sellers upfront, Wristcheck acts as a consignment platform and does away with inventory costs. The platform allows users to put in a bidding price for a watch they want -- buyers know what sellers net, and sellers know what buyers pay.
The startup had been bootstrapping for the last three years or so until closing its first outside investment recently. It raised $8 million in a funding round led by Gobi Partners, a prominent Chinese venture capital firm that has in recent years focused more on the Greater Bay Area, which encompasses megacities like Shenzhen and Hong Kong. Singapore-based K3 Ventures also participated in the round.
Ever since he was given his first watch -- a Flik Flak -- at the age of five, Chu has been obsessed with watches. But collecting fine watches, like artwork, is too expensive for most young people, so the hobby is normally associated with an older crowd.
Wristcheck is attracting a different demographic. Forty-three percent of its customers are under 30 years old, according to Chu. While he's not able to disclose the firm's revenue size, he says the platform has sold "multiple watches that transacted over a million USD." All told, Wristcheck has gathered a "community" of 80,000 members, meaning people it has interacted with online and at offline events.
"We see [Wristcheck] as the future for watch enthusiasts who can't really get anything from retail," Chu says. More young consumers are getting into watches, he adds, partly thanks to Apple. Contrary to the popular belief that Apple Watch spelled the end for the luxury watch industry, Chu argues that it actually helps raise "wrist awareness" among Gen Z who grew up with smartwatches.
"Apple Watch is the greatest thing that has happened to the watch industry," the founder asserts.
The company is strategically based in Hong Kong, known as the capital of watches thanks to its friendly tax policy. During COVID, the bulk of Wristcheck's customers have been local, but as Hong Kong reopens its border, the city is gradually welcoming back international travelers. Growing in tandem is the Wristcheck's overseas consignors and buyers, which are seeing a big uptick.
As of today, more than 15% of Wristcheck's consigned pieces are from overseas customers. Many of its customers prefer to pick up their purchases in Hong Kong, taking advantage of the city's tax-free scheme.
The city's vicinity to the tech hub Shenzhen, which is just across the border in mainland China, will also make it easier for Wristwatch to hire engineers, a common strategy for Hong Kong-headquartered tech firms. As of today, the startup is actively looking for a CTO to build out its AI infrastructure.
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With the fresh capital boost, Wristcheck aims to develop its proprietary image recognition tool that can authenticate watches in photos uploaded by sellers. Secondhand watches, says Chu, are one of the most counterfeited categories across the board.
"The more zoomed in [a photo] is, the more obvious whether the watch is genuine. So we just need to train a collection of real and fake watches," he explains. In addition, the platform cross-checks for stolen watches registered with police stations around the world.
Applying image recognition to e-commerce is nothing new. Alibaba's Taobao marketplace has long let people look up products by uploading photos. But timing is key for digitizing luxury watch trading. During COVID, much of the luxury watch research and shopping moved online. At the same time, multimillion-dollar NFT sales have made consumers, especially Gen Z, more comfortable about spending large amounts of money online, Chu suggests.
Eventually, the startup aims to be the "benchmark for watch prices." To that end, it plans to spend portions of its new funding on building an engine that gleans real-time as well as historical price data, which is supposed to bring more transparency to the used watch industry.
Jan 17, 2023: Corrected the funding amount to $8 million.