by In an age where almost everything can be bought online, watch resale takes place in a surprisingly archaic way, namely face-to-face with little price transparency. Wristcheck, a startup based in Hong Kong, is trying to digitize the industry.
Traditional pre-owned watch trading is a “buy low sell high” business that often puts buyers and sellers in a “predatory mode,” Austen Chu, co-founder and CEO of Wristcheck, said in an interview. An auction house, for example, typically charges buyers up to 26% and sellers up to 12% in transaction fees, he says.
“There is no standardized way of 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,” observes the founder.
In comparison, Wristcheck takes 8% from the seller and 4% from the buyer. Instead of buying watches from sellers in advance, Wristcheck acts as a consignment platform and removes the inventory costs. The platform allows users to enter a bid price for a watch they want – buyers know what sellers net, and sellers know what buyers pay.
The startup had been bootstrapping for the past three years or so until it closed its first external investment recently. It raised $5 million in a funding round led by Gobi Partners, a prominent Chinese venture capital firm that in recent years has focused more on the Greater Bay Area, which includes megacities like Shenzhen and Hong Kong. Singapore-based K3 Ventures also participated in the round.
Wrist awareness
Ever since he got his first watch – a Flik Flak – at the age of five, Chu has been obsessed with watches. But collecting fine watches, like works of art, is too expensive for most young people, so the hobby is normally associated with an older, older crowd.
Wristcheck attracts a different demographic. 43 percent of customers are under 30, according to Chu. While he is unable to disclose the firm’s revenue size, he says the platform has sold “several watches that traded over a million USD.” All told, Wristcheck has amassed a “community” of 80,000 members, meaning people it has interacted with online and at offline events.
“We’ll see [Wristcheck] as the future for watch enthusiasts who can’t really get anything from retail, says Chu. More young consumers are getting into watches, he adds, thanks in part to Apple. Contrary to the popular belief that the Apple Watch was the end of the luxury watch industry, Chu argues that it is actually helping to increase “wrist consciousness” among Gen Z who grew up with smartwatches.
“Apple Watch is the biggest thing to happen to the watch industry,” claims the founder.
Location matters
The company is strategically based in Hong Kong, known as the watch capital thanks to its friendly tax policy. During COVID, the bulk of Wristcheck’s customers are local, but as Hong Kong reopens its border, the city is gradually welcoming back international travelers. Wristcheck’s foreign shippers and buyers are growing in pace, which is seeing a big increase.
As of today, over 15% of Wristcheck’s submitted parts are from foreign customers. Many of the customers prefer to pick up their purchases in Hong Kong, and take advantage of the city’s duty-free scheme.
The city’s proximity to tech hub Shenzhen, which is just across the border from mainland China, will also make it easier for Wristwatch to hire engineers, a common strategy for tech firms headquartered in Hong Kong. As of today, the startup is actively looking for a CTO to build out its AI infrastructure.
Powered by AI
With the fresh capital boost, Wristcheck aims to develop its proprietary image recognition tool that can authenticate watches in images uploaded by sellers. Pre-owned watches, says Chu, are one of the most counterfeited categories across the board.
“The more zoomed in [a photo] is, the more obvious if the watch is genuine. So we just need to train a collection of real and fake clocks,” he explains. In addition, the platform cross-checks for stolen watches registered at police stations around the world.
Using image recognition for e-commerce is nothing new. Alibaba’s Taobao marketplace has long allowed people to look up products by uploading photos. But timing is key for the digitization of the luxury watch trade. During COVID, much of the research on luxury watches and shopping moved online. At the same time, multimillion-dollar NFT sales have made consumers, especially Gen Z, more comfortable 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 use part of the new funding to build an engine that collects real-time as well as historical price data, which should bring more transparency to the used watch industry.
