How The Market For Expensive Watches Works On The Internet

How The Market For Expensive Watches Works On The Internet
How The Market For Expensive Watches Works On The Internet

Video: How The Market For Expensive Watches Works On The Internet

Video: Why This Watch Costs Over $450,000 2022, December
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Why is online cheaper

Well-known and traditional luxury watch companies have once formed the opinion that online retail is a distribution channel for the sale of luxury goods in the low and medium price segment. Sales through multi-brand retail sites were not considered at all, since they were considered not consistent with the brand image and even harmful - however, as well as their own trading platforms, because the presence of these sales channels implies (horror!) The disclosure of the established / official price.

That is why gray dealers were the first to master the online market for expensive watches, betting on the general desire to pay less: here is the price in a company store, but ours is 30-40% better. It is no wonder that the "gray" business was - and still are - up the hill, since overproduction ensures a constant flow of goods. Brands are throwing off stale models with huge discounts, and buyers are unlikely to agree to pay full price for something that can be purchased much cheaper. True, some brands from among the advanced and with a large margin of safety were the first to publish official retail prices on the Web and even trade, but this concerned only a limited assortment - all the most expensive and the best were reserved for brand boutiques and salons.

This decision was based on the assumption that wealthy consumers would not want to pay large sums of money online, because they would be deprived of the usual personalized service, the luxury shopping experience that the Internet cannot offer - how to pay a large amount for a watch that they have not seen with their hands fumbled, did not try on and helpfully offered champagne did not drink for them?

Photo: mrporter.com
Photo: mrporter.com

© mrporter.com

Growth projections

E-commerce sites such as Net-A-Porter and Farfetch have successfully demonstrated that luxury consumers are willing to buy high-end goods online at a stated (non-discounted) price. Experts estimate online sales of high-end items, including watches and jewelry, at more than $ 300 billion, or 10% of the world's total (2017 data).

According to forecasts published by consultancy McKinsey, global online luxury goods trade will triple the current volume by 2025 at $ 91 billion, or about 20% of all luxury goods sales will be online. At the same time, already now at least 40% of such purchases to one degree or another depend on the online experience of consumers - before buying an expensive item, the smart of the wealthy study the quality of the goods and compare the offer on the Internet, and also read - if possible - reviews and recommendations.

But optimistic forecasts for the growth of online luxury retailing often do not resonate with company executives: consumers of luxury goods still spend less on the Internet than in their usual boutique or salon, and the average online check is still less than usual. Maybe this is why only 37% of watch executives believe that online sales will become the main distribution channel for their brands. “We are where our customers want to see us” - this is how the company's CEO Wilhelm Schmidt answers the question about the prospects for online sales of watches by A. Lange & Söhne, thus making it clear that the time has not yet come for e-commerce.

Wilhelm Schmidt
Wilhelm Schmidt

Wilhelm Schmidt © alange-soehne.com

On the website of the Saxon brand, prices for watches are not published, you can find them out only by contacting the brand boutique or by going to the Chrono24 website, where, in addition to A. Lange & Söhne, more than 300 thousand offers for the sale of new and used watches of various brands are posted. The total value of the presented goods exceeds 2.5 billion euros (for comparison, in 2017, more than 150 million euros worth of watches were imported from Switzerland to Russia).

The CEO of Audemars Piguet, François-Henri Bennamyas, does not deny the Network “closeness”, but is careful and circumspect: “Customers want as few intermediaries as possible between them and the manufacturer. But you can seriously engage in online sales only when you firmly know that you can deliver the watch anywhere. At the same time, you need to constantly think about what will happen next, in 5-10 years, when the next generation will enter the game. Will young people buy our products, and if so, how? If you don't take this into account now and start mastering online sales in advance, then there will be no time. We will be left behind, we will be considered an anachronism."

Francois-Henri Bennamyas
Francois-Henri Bennamyas

François-Henri Bennamyas © audemarspiguet.com

Who is already online

Yet more than half of CEOs say they are committed to focusing on building their own online direct selling platforms and improving online marketing, according to Research Now. Someone is mastering a brave new world himself, someone is buying ready-made solutions. For example, the American Movado Group (produces watches under the Movado, Ebel, Concord logos and is licensed to manufacture watches of the fashion brands Lacoste, Tommy Hilfiger and Hugo Boss) in the summer of 2018 entered into an agreement to acquire MVMT, a popular manufacturer of watches and accessories focused on the young generation. … The deal was worth $ 100 million. MVMT was founded in 2013 and reached around $ 71 million in revenues last year. All thanks to a business built on direct access to the end consumer - the very modelwithout which it will be difficult to survive and for which Movado forked out.

The question of developing intelligible digital solutions and offers for wealthy consumers of the "new model" is still open for most watch brands, and only a few manage to meet the demands of picky shoppers raised in the online trade and online media.

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