In a time when the watch industry has finally admitted to itself that doing serious business on the internet is an inevitability it can no longer delay, we continue to see interesting new flavors of online watch retail. The launch of a new online watch store is not typically news we would cover, except when the application of interesting technology or business models offers the promise of something truly disruptive (in a space that really needs it). Famed for its incredibly clever marketplace for selling trendy sneakers, Detroit-based StockX is getting into the luxury watch market by offering a stock market-style buying and selling platform for timepieces. Its distinguishing factor is the promise of making pricing both transparent and related to actual market demand.
I met with StockX co-founder Josh Luber in Los Angeles to discuss the expansion of StockX into watches as well as handbags. Today, StockX officially breaks out of being just about shoes and into these two new areas. It is a step towards the company’s larger goal to be “the stock market of things.” A collector and data guy at heart, Luber’s vision of a demand-based way to buy and sell collectible sport shoes has proven to be not only popular with consumers, but also a fascinating lesson in consumer economics.
The problem a company like StockX is looking to solve is that collectible or high-demand commodities typically thrive on consumer ignorance to make money. This reduces consumer trust, and can also create numerous roadblocks to facilitating smooth transactions. In other words, a non-transparent and disconnected market fails to be as active and robust as possible.
StockX was founded by both Josh Luber as well as successful Detroit businessman Dan Gilbert – who, among other things, is known as the founder of Quicken Loans. Backed with enormous resources, the StockX platform can thank attention to detail as well as a refined and slick interface for being friendly, as well as fun to use.
The basic premise of how StockX works is simple, but not obvious to most people since the platform is still a novel concept to many. StockX does not directly buy or sell anything, but works more like a middle-entity in the same way eBay is the facilitator of privately-run auctions that are run on its platform. StockX connects people who are set on buying watches (and, of course, shoes and now handbags) with people who have a specific item that they want. StockX personally handles all the products through their facility and checks everything for condition as well as authenticity. That alone is a major differentiation between them and a site such as eBay.
The real interesting part of StockX is how they handle product listings. Inspired by the equity trading market, StockX attempts to commoditize the items on its platform as fungible objects. The idea being that you can assess a value to a single unit of the commodity, as opposed to separate values for each particular unit. Once you have successfully commoditized an item, you can then easily track the fluctuation of its value, and transactions can occur exclusively on market demand – at least the market demand that StockX observes on its platform.
This article was written prior to StockX actually launching their watch platform, and I’m basing some of this discussion on their shoe listing pages. That means the details of watch listings might vary slightly from how StockX handles shoe listings. The basic premise will remain the same, and here are some more specifics on how it works.
Each watch model has its own listing page on StockX. On that page, people who have those watches to sell (dealers or private individuals) will mention their “Ask” (the price they are willing to sell the unit at), and buyers will indicate their “Bid” (a price that they are willing to purchase it at). The StockX platform makes it clear how many units are available, as well as the variety in the Bid and Ask prices from the various parties using the platform.
When you want to start buying something, you’ll try to buy it for the lowest Ask, and all of this information is tracked and recorded by StockX in order to use the data to track the demand of a particular product as a function of both the prices it has been selling at as well as the number of units available and the frequency of transactions. Assuming there are enough data to work with, the StockX platform offers an extremely compelling view into how supply and demand, as well as consumer and seller behavior, interact. This ultimately results in a welcome level of transparency to what a product’s actual market value is.
The ultimate goal of StockX is to both discover the true and current market value of an item (as a commodity), as well as to allow buyers and sellers to transact at current market prices. Given that StockX.com is a buying and selling platform, it’s a natural competitor to places such as eBay.com, as well as the watch listing specialist website Chrono24.com. However, it is important to mention again that what StockX brings to the table isn’t just an authentication and logistics solution, but also an entirely different approach to conducting the transaction based on the platform helping to set the price versus purely the seller (or buyer, for that matter).