Defender James Collins saw red late on to compound the misery as the Hammers slipped to fifth in the table.
But what did we learn about West Ham from the game?
1) West Ham look very average with Andy Carroll as the lone striker
The main thing we learned about West Ham from this defeat was just how important Diafra Sakho is to their success.
The Senegal striker is instrumental in the way Bilic sets his side up running the channels, putting the defenders under constant pressure and threatening in behind with his pace.
What Ighalo does for Watford, Sakho does for the Hammers. Dimitri Payet and Manuel Lanzini were hardly in the game because it is Sakho's non-stop running which opens up the space for them to play and hurt teams particularly away from home.
With Carroll up front alone West Ham were predictable and easy to defend against. It also didn't help that the striker made a horrendous error which led to the first goal on his first Premier League start for more than eight months.
2) Tomkins and Collins have given Bilic an easy decision to make
James Tomkins and James Collins have been brilliant for West Ham of late, deputising for first choice pairing Winston Reid and Angelo Ogbonna in the centre of defence.
But against Watford they both turned in terrible performances culminating in Collins being sent off late on.
It was a comedy of errors for Watford's second and the pair looked on edge all game being exposed for their lack of pace by Troy Deeney and Ighalo.
They didn't get much protection from the midfield but come Everton on Saturday Collins will be replaced by Reid and it will be a surprise if Bilic does not bring Ogbonna back in for Tomkins based on this showing.
3) Noble should have come off at half-time not Lanzini
It was something of a surprise when Manuel Lanzini was withdrawn at half-time against Watford. Whether he had a knock is not clear but if it was purely tactical it was a mistake from Bilic.
Mark Noble may be the skipper but he has been the standout weakness in the Hammers side even during their fine recent run.
Against the Hornets he was again ineffectual and made very little impact on the game. Noble is a fine midfielder but he is struggling to adapt to West Ham's new style of fast paced attacking play.
He is a vital squad player and when on form plays a crucial role. But the fact is, Noble is struggling and with Alex Song nearing a return to first team duty his place is increasingly under threat with performances like this.
Noble was totally outclassed by Capoue and Abdi in midfield and was subbed late on. But in truth he should have come off sooner as the East Londoners chased the game.
4) Hammers players let complacency creep in again
Despite already having stark reminders from the beginning of the season and warnings from their manager and co-owner David Sullivan not to let complacency creep into their game, West Ham's players did exactly that.
After beating reigning champions Chelsea 2-1 last week, it was a case of 'After the Lord Mayor's Show' for Bilic's side who were not at the races from the start against hungry opposition.
It looked like a number of the West Ham players felt they only had to turn up to beat the Hornets.
That was despite being brought back down to earth with a bump twice already this season when they lost to Leicester City at home after beating Arsenal away and drawing with Norwich City at Upton Park after beating leaders Manchester City 2-1 at the Etihad.
The defeat also means West Ham have so far failed to beat all three newly-promoted sides, losing 4-3 to Bournemouth at home, drawing with the Canaries and now this defeat to Watford.
5) A reality check, talk of Champions League was far too premature
Whether any West Ham fans really believed it or not, there has been a lot of talk about the East Londoners challenging for a Champions League spot this season.
Their start - 20 points from the first 10 games - is title challenging form and they have earned respect from opponents and pundits.
On this evidence, though, West Ham lack the required mentality to get themselves up for the games against so-called lesser opposition and therefore hand the advantage to opponents like Watford who are motivated to play a bigger club.
Wins over Arsenal, Liverpool, Manchester City and Chelsea are fantastic. But if the Irons aren't picking up points in games they should realistically be winning they are more likely to end up midtable than challenging for Europe.
As the old saying about West Ham goes they tend to come down with the Christmas lights, and Bilic will be desperate to ensure the same doesn't happen again this season.