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Wristcheck wants to make used luxury watches more affordable • TechCrunch

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. Pulse checka Hong Kong startup is trying to digitize the industry.

Traditional pre-owned watch trading is a “buy low sell high” business that often puts the buyer and seller in a “predatory” position, said Austen Chu, co-founder and CEO of Wristcheck, in an interview. For example, an auction house typically charges the buyer up to 26% and up to 12% for sellers 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 is a super-knowledge-based hobby,” notes the founder.

By comparison, Wristcheck takes 8% from the seller and 4% from the buyer. Instead of pre-purchasing watches from sellers, Wristcheck acts as a consignment platform and eliminates 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 was bootstrapped for the past three years until it recently closed its first outside investment. It raised $5 million in a funding round led by Gobi Partners, a leading 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.

Pulse consciousness

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 audience.

Wristcheck attracts a different target group. Forty-three percent of customers are under the age of 30, according to Chu. While he can’t reveal the size of the company’s revenue, he says the platform has “sold multiple watches that have traded more than a million dollars.” All told, Wristcheck has amassed 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 out of retail,” says Chu. More young consumers are getting into watches, he adds, thanks in part to Apple. Contrary to popular belief that Apple Watch spelled the end of the luxury watch industry, Chu argues that it actually helps increase “wrist awareness” among Gen Z who grew up with smartwatches.

Apple Watch is the best thing to happen to the watch industry.

Location matters

The company is strategically located in Hong Kong, also known as the capital of watches thanks to the friendly tax policy. During COVID, most of Wristcheck’s customers are local, but with Hong Kong reopening the border, the city is gradually welcoming back international travelers. At the same time, overseas senders and buyers of the Wristcheck are growing, seeing a major upswing.

As of today, more than 15% of Wristcheck’s shipments come from foreign customers. Many of her customers prefer to pick up their purchases in Hong Kong, taking advantage of the city’s duty-free scheme.

The city’s proximity to the Shenzhen tech hub, which is just across the border in mainland China, will also make it easier for Wristwatch to hire engineers, a common strategy for tech companies headquartered in Hong Kong. As of today, the startup is actively seeking a CTO to build out its AI infrastructure.

Powered by AI

With the new capital raise, Wristcheck aims to develop its own image recognition tool that can authenticate watches in photos uploaded by sellers. Pre-owned watches, Chu says, are one of the most counterfeited categories across the board.

“The more zoomed in [a photo] is, the more clear whether the watch is genuine. So we just have to train a collection of real and fake watches,” he explains. In addition, the platform performs cross-checks on stolen watches registered at police stations around the world.

Applying image recognition to e-commerce is nothing new. Alibaba’s Taobao marketplace has long allowed people to search for products by uploading photos. But timing is key to digitizing the luxury watch trade. During COVID, much of the research and shopping for luxury watches took place online. At the same time, the multimillion-dollar NFT sales have made consumers, particularly Gen Z, more comfortable spending large amounts of money online, Chu suggests.

Ultimately, the startup aims to be the “watch price benchmark.” To that end, it plans to spend some of its new funding building an engine that collects both real-time and historical pricing data, which should bring more transparency to the used watch industry.

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