Are you are a lover of finely crafted timepieces, looking for a way to convert your love of watches into a source of income? Or are you just seeking out a source of passive income? Owning and renting out luxury watches could be it.
Read on to gain an outlook of the luxury market, insights into how the watch rental business works and ideas on how to get started.
Why Watch Rental Makes Sense
Unlike typical watches, luxury watches are not designed to just tell the time. They serve as fashion accessories and as symbols of achievement, personality, style and status. Even more exotic brands are built to serve as heirloom between generations. However, the high prices of luxury watches make it hard for most people to own them.
By renting them instead, one gets to wear high-end timepieces without the expense of having to buy them. Watch rentals allows users to experience the watch on special events, weddings, meetings, or just to try out different styles. Moreover, they provide potential buyers a way to experiment with different brands and styles in lieu of eventually making a purchase.
Market Outlook
Market analysts, Mordor Intelligence estimates the luxury watch market to be worth $51.31 Billion in 2024. According to their report, Rolex SA, The Swatch Group Ltd, Compagnie Financiere Richemont SA, Patek Philippe A and Audemars Piguet are the major brands operating in the Luxury Watch Market. Asia Pacific, including India, China, North Korea, Australia and Indonesia account for the largest market share.
They project the value to reach up to $68.17 Billion in 2029. The market, they conclude will continue to grow with the global desire for high-quality luxury products crafted with advanced technologies and premium materials like steel, precious metals.
According to the New York Times, brands are increasingly looking at rental and subscription models to cater to younger consumers and to ‘decouple growth from volume.’ Furthermore, they cite the research of Bain & Company which found that a watch rented 20 times could generate a 41% profit margin.
How It Works – In Four Steps
Step one
The potential renter choose from a selection on the marketplace (website, social media, etc.) and signs a rental agreement that clearly outlines the terms, conditions, rental periods, fees, and liabilities.
step two
They pay the full listed value of the watch in full, often mostly in cash or transfers.
step three
Either they pick up the watch in person or they request to have it shipped to their homes. Additional cost of shipping will be applied.
step four
After they return the watches after the rental period, they get all of their money back minus the rental fee. If they love watch and want to keep it, the rental fee will be applied towards the purchase.
A Guide to the Business of Watch Rental
1. Research Your Market
Just like in every business, the first step is to understand the demands of your target market. This requires you to learn all you can about your market demographics, the income levels of your target market, and your competition.
The best demographic for watch rental might be younger customers. According to the New York Times, major brands are increasingly looking at rental and subscription models to cater to younger consumers who value experiences over ownership.
2. Research the Best Brands
The first step in building an inventory is to research watch brands thoroughly. Identify the brands that offer the best value proposition by comparing quality, brand prestige, and pricing. Look at both well-known brands as well as newer names that may be more affordable but still hold the same appeal. If you have any pre-owned pieces, throw them into the business.
To cater to customers across the spectrum of rental budgets, it’s important to have an inventory range from aspirational to ultra-premium. In addition, identify the types of watches that are most in demand, as well as potential rental price points.
3. Build Your Collection
The foundation of the business will be your inventory of timepieces. Start by focusing on acquiring a diverse selection of high-quality, sought-after luxury watch brands. You can also consider purchasing pre-owned watches from reputable sources or working with authorized dealers to purchase new watches at wholesale prices.
The market itself is segmented into type (quartz/mechanical/digital), end-user (women, men, and unisex) sex and geography. Take all this into consideration when building your inventory.
4. Secure Insurance for Your Watches
Valuable assets like luxury watches requires insurance protection. Research insurance policies specifically designed for rental businesses, and ensure you have adequate coverage for theft, damage, and liability. Additionally, familiarize yourself with any necessary business licenses or permits required in your area.
5. Craft A Rental Agreement
This legally binding contract protects both you and your customers. It should cover key aspects like security deposits and late return charges. It should place restrictions on unauthorized repairs or modifications, as well penalties for negligence or damage.
Make sure to have the agreement reviewed by a legal professional. An unambiguous rental policy ensures a smooth and protected rental experience.
6. Build Your Own Online Marketplace
It should go without saying that having an online presence is essential. So create for your business a website, social media accounts where customers can browse your watch collection, make reservations, and securely process payments.
The eyes eats the food first so invest in high-quality product photos and detailed product descriptions to showcase your inventory.
7. Reach Out to Your Target Market
Leverage social media platforms. Collaborate with influencers and fashion bloggers. Use targeted advertising on social media platforms to reach potential customers. Attend watch events and other networking opportunities to connect with enthusiasts and build brand awareness. If possible, do free rentals for people with a huge base in return for spreading the word about your business.
8. Your Customers Are Your Best Advertisers
As always, providing an exceptional customer experience is key to retaining your clients and their loyalty. This is important especially in a business that depends on repeat customers. You should be prompt and professional in communication. Moreover, your rental processes should be seamless and easy to navigate.
9. Consider Securing Your Inventory
Protecting your valuable inventory is paramount. You should consider running background checks for customers and tracking mechanisms for rented watches. You might also consider incorporating technology like GPS tracking or RFID tags to remotely monitor your timepieces. Anything to help protect your assets is always necessary.
10. Monetize Your Experience and Knowledge
The experience and knowledge and experience you accumulate can become additional services, like watch cleaning, repairs, or personalized styling consultations. You can earn additional passive income as well as expand your reach from, for instance, starting a YouTube channel where you share this knowledge.
11. Scale, Expand and Diversify
At the early stages, be mindful to reinvest profits into expanding and diversifying your collection. Also, you should endeavor to stay up-to-date with the latest trends and tastes, and continuously adapt your inventory to meet evolving customer demands.
At the end of the day, starting a luxury watch rental business can be a surefire way to turn your passion for fancy timepieces into some serious cash flow. Sure, it’ll take some hustle to get it off the ground. But once you’ve got the machine humming, you can just sit back and watch the rental fees roll in while other folks live out their watch fantasies for a hot minute.
Also, you get to be around superb watches all day. If you’ve got an eye for luxury and don’t mind putting in some early elbow grease, this could definitely be the play to get that passive income streaming in.
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