A Blog by Jonathan Low


Mar 24, 2017

Time To Sell Online?

Time waits for no one... Follow the money. JL

Victoria Gomelsky reports in the New York Times:

As luxury retailers large and small grew to accept embrace e-commerce, Swiss watchmakers struck a tone of defiance, vowing to protect their timepieces from the perils of the internet. (Now) half of  watch executives said they would emphasize online resellers more than any other sales channel this year, compared with only 19 percent in 2015. “It’s clearly a move the brands need to make to reach this younger audience.”
Over the last decade, as luxury retailers large and small grew to accept — then embrace — e-commerce, most Swiss watchmakers struck a tone of defiance, vowing to protect their timepieces from the perils of the internet.
This week, with the Baselworld luxury watch and jewelry fair drawing industry executives and watch fans from around the world, many brands, chastened by declining sales, would have to acknowledge they were wrong. They have joined an ever-growing number of high-end companies now convinced that selling online is crucial to capturing the next generation of buyers.
Jules Boudrand, a Geneva-based director at the consulting firm Deloitte, said, “We did a consumer survey in six different countries, and for people between 18 and 30 years old, social media is clearly becoming the most important marketing channel, and they have a high intention of buying watches online.”
He said that half of the watch executives surveyed as part of the 2016 study said they would emphasize online resellers more than any other sales channel this year, compared with only 19 percent in 2015.
“It’s clearly a move the brands need to make to reach this younger audience,” Mr. Boudrand said.Luxury houses overall were slow to adopt online selling, sure that the experience of a beautifully appointed boutique and white-glove service were fundamental parts of their allure. And Swiss watch brands, highly traditional businesses steeped in European heritage and selling ultra-exclusive merchandise, were all but destined to hold out even longer.IWC Schaffhausen, for example, held out until November, when it became the first luxury watch brand selling online at Mr Porter and Net-a-Porter. (IWC’s owner, Compagnie Financière Richemont, is an investor in the Yoox Net-a-Porter Group.)
“At the end of the day, we want to help our clients buy where and when they want,” said Christoph Grainger-Herr, who will become IWC’s chief executive on April 1.
Although more watchmakers are coming around to e-commerce, a number of high-end brands added shopping carts to their websites years ago (albeit with rollouts staggered across markets). Cartier, for example, has been on the internet since 2008, Montblanc since 2011 and Jaeger-LeCoultre since 2012. For the most part, they added e-commerce without fanfare.
Online sales have challenged the watch industry’s traditional distribution network, built on longstanding partnerships with multibrand retailers, and managing that conflict has proved tricky. Some watchmakers, like Panerai, have chosen to sell through their own e-boutiques. Others, like the British brand Bremont, have eschewed direct online sales to sell through their retail partners’ sites. “We’re completely indebted to our retailers, who’ve helped build us as a brand, and we want to try and involve them in some way,” said Nick English, a Bremont founder.
Another reason brands have downplayed their online operations is that it’s taken a long time for them to shake the idea of the web as a discount emporium ruled by illegitimate dealers and counterfeits.
“If you Google ‘Rolex Submariner,’ likely the first five sites you see might not even be Rolex,” said Benjamin Clymer, founder of the influential watch site Hodinkee. “For a long time, it was the gray market dealers without any authorization to sell the watch or any warranty.”
At Govberg Jewelers, a machine spins pre-owned Rolexes to maintain their power charge. Credit Mark Makela for The New York Times
So instead, luxury timepiece brands highlighted the importance of the brick-and-mortar experience and the deluxe service and education that buyers would find there.
Wilhelm Schmid, chief executive of the prestige German watchmaker A. Lange & Söhne said, “I don’t think the internet could be a proper substitute for a nice one-on-one conversation, where you speak to someone, you feel the weight of our watches and the turn of the crown, you hear the click of one of our push buttons.”There’s just one problem with that rationale: Today’s buyers aren’t buying it.
“Luxury isn’t about champagne and caviar and the experience in the boutique,” Mr. Clymer said. “It’s about time. I’d love to be able to buy a Rolex, a Vacheron or a Patek online and have it delivered to my door the next day instead of going to a boutique. I do think every brand should be online, and in two years probably will be.”
Of the three brands Mr. Clymer cited, Patek Philippe and Rolex remain conspicuously averse to e-commerce, though there are signs the latter may be warming to the idea: The company recently began to publish prices on its United States website, and will soon make that information available in other markets, a spokesman said.
For its part, Vacheron Constantin dipped a toe into web sales in February, when it collaborated with Hodinkee on the design and release of a limited edition of its Historiques Cornes De Vache 1955 model. Some of the 36 $45,000 stainless steel timepieces, which Mr. Clymer described as his “dream watch,” sold at invitation-only introduction parties. But the entire edition was gone in less than an hour of its introduction online.
“We were blown away,” said Vincent Brun, president of Vacheron Constantin in North America. “We wanted to increase our exposure, to speak to a clientele we didn’t necessarily speak to until now.”
Jon Callahan inspects a pre-owned Patek Philippe watch at Govberg Jewelers in Philadelphia. Credit Mark Makela for The New York Times
Beyond connecting with a new demographic, e-commerce can also be an important way for watch manufacturers to compete with online resellers of pre-owned timepieces.
“There’s so much secondhand product on the market. We wanted to be there as a direct connection to the consumer,” said Karl-Friedrich Scheufele, co-president of Chopard, whose United States e-boutique opened three years ago. (Chopard’s online operation has since expanded to Britain.)
Indeed, the proliferation of pre-owned watches online — on sites like Crown & Caliber and Bob’s Watches — can be traced to the 1980s, when men began accumulating timepieces, said Danny Govberg, owner of Govberg Jewelers in Philadelphia, a company established in 1916.
Two years ago, the watch retailing company introduced an app, Govberg OnTime, for iOS and Android devices, designed for people who want to buy, trade and sell new and pre-owned watches.
“In 2009 — one generation later — when gold hit $1,800, women stood in line to sell their gold jewelry, but men did not liquidate their timepieces because the knowledge of what to pay for them wasn’t there,” he said.
“So the men just kept the watches in their drawers. It’s been a 25-year accumulation.”
By offering clients click-to-buy capability, transparent pricing, on-demand education, videos, phone support and, last but not least, a brick-and-mortar showroom complete with a touch-screen TV to explore the store’s online inventory, Mr. Govberg represents a handful of online upstarts showing the primary watch market how omnichannel retailing is done.
It’s only a matter of time before the rest of the Swiss follow suit.


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