ARIEL’S ESSAYS: Watch brands are failing at retailing online in just the same ways they flounder with physical boutiques

Ariel Adams.

A lot of my time is spent trying to decipher what strategies and assumptions European luxury brands make when building out their e-commerce platforms and presentations. “E-commerce” is probably the most important topic in the luxury watch industry given the context of the COVID-19 pandemic, and yet little has actually changed since the beginning of 2020.

The status quo provides that much of the in-person shopping experience previously associated with the purchase of a luxury timepiece is moving more and more online. This fact alone does not give watch brands too many hints and tips on how to actually make this move – and for the last few years I’ve noticed watch brands invest in e-commerce platforms, only to concurrently see them doubling down on in-person retail and distribution. Why? Because very few of them have gotten e-commerce right and they fall back on the comfort of wholesale distribution. What are they doing wrong and what lessons should the watch industry learn from this?


The first thing anyone will notice when they carefully examine a given brand’s e-commerce strategy is that those strategies materially fail to consider two key facts about selling luxury watches. The first fact is that wrist watch sales often require a hands-on human touch, and second, that retail locations are not ATM machines. A fancy brand website will not typically sell watches unless a consumer is motived by outside motivations. Thus, watch brands seem to have an unrealistic expectation that they can invest a bit of money into a website, and then people will stumble upon it and shop there.

While e-commerce performance is up since the pandemic, most of the winners are the digital native, newer watch brands and mostly not the existing pantheon of luxury timepiece names. Prior to the pandemic, even proud watch brands admitted that their direct-to-consumer e-commerce platforms rarely exceeded 10% of their total sales. The strategy and form of these websites has changed little during the pandemic, and I don’t think there will be any revolutionary changes to watch brand e-commerce platforms on the horizon.

The implication is that if watch brands are serious about selling to consumers online, they have yet to come up with sustainable practices and strategies for how to do that. My suggestion is that maybe they should stop trying and to further consider alternative solutions to selling their watches direct via e-commerce.

I’ve written several times in the past that I think a direct-to-consumer e-commerce solution is a bad idea for as much as 80% of the established luxury watch brands. In theory it makes sense, but in practice doing so ignores a lot of the wisdom the watch industry should have learned a few years ago. Let me pivot the concept and reframe the discussion of e-commerce away from being an alternative to brick & mortar store sales. Most of the time when this topic is discussed, the context seems to be around the failure of tourism and high-street shopping as why e-commerce is necessary. Unfortunately, that isn’t the real issue. If that was the real issue then all watch brands would have done is allow their existing third-party retailers to easily sell online with some territorial protections. That isn’t what is happening.

What is happening is that luxury watch brands are seeing direct-to-consumer e-commerce as yet another push for “margin recapture,” a concept that corporate-owned watch brands have been utterly obsessed with since the 1990s.

The context is this: if a watch brand sells a timepiece directly to a consumer they can charge full retail and keep more of the profit margin for themselves as opposed to sharing it with a third-party sales agent. Watch brands went wildly on the offensive starting in the 1990s and into the 2000s to end third-party distributors around the world and bypass third-party retailers by setting up their own brand boutiques. The idea was part of a massive push to cut out profits to middlemen and capture as much revenue as possible from global markets. It was greedy and it didn’t make watch brands many friends.

Many of the brands had to backpedal. That meant shifting focus away from brand boutiques as well as having to reconsider working with third-party distributors and retail partners. The last 25 years in the watch industry should have been an important lesson that most European luxury watch brands do not have what it takes to both produce watches and also sell/distribute them. They have first-hand seen the problems that arise by cutting out traditional sales agents, and continue to flail in searching for that perfect strategy which will turn their e-commerce platforms into un-manned sales machines. It hasn’t happened and it won’t happen.

Flashforward to day and we see a trend of watch brand-operated e-commerce boutiques following suit in the “cut out the middleman” approach which didn’t work very well over the last 25 years. Watch brands now feel that with their own e-mail address lists, Instagram channels, and digital store fronts, they can brave online business themselves and consistently sell to consumers without help from third-parties. This again is proving to be a failure for most brands.

The most common question brands ask me on the topic is “who is doing e-commerce right?” The response I now give is “the brands who trust the right professionals to sell for them on their own third-party platforms.” In other words, the digital equivalent of authorized dealers.

This means that watch brands need to share margin again – but I make this suggestion for their own good.

Going it alone in the internet jungle is only possible for brands with the largest marketing and sales teams, and who are truly interested in investing in marketing, human resources, and ongoing relationship building.

I’ve yet to encounter a brand who is set up to do this. And frankly, how could they be? Human resource problems in the watch industry right now make it so that most brands are basically set up to design, produce, and ship watches only.

Things like customer service or marketing efforts are treated like an annoying afterthought. Little money is invested in this area by brand. But you know who does invest in this area? Specialist watch retailers – so why not leverage that?

I’ve always said that the watch industry is at its best when there are people who produce watches (brands), people who talk about watches (media), and people who sell watches (retailers). For a sustainable, long-term market to evolve online, each of these parties must be separate. Consolidate them and either you run into conflicts of interest or a simple lack of proper investment which itself has been the bane of the recently watch industry’s ability to innovate and expand.

In summary, most watch brand e-commerce strategies are little more than a newly invigorated effort to cut out the retailer and thus capture more profit.

Little is being done to authentically grow a market online, which requires spending money, allies, and a lot of human attention. That greed was poison to growth in the watch industry over the last 25 years, and not it rears its ugly head again under the guise of being a “natural and reasonable response to COVID-19.”

It isn’t a reasonable response because it once again ignores the crucial role that motivated third-parties play in the ability to sell luxury watches to consumers. If the watch industry does not learn from its past – then not only is that ironic – but it will further cause problems to business community that is desperate to find new market normalcy.

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  1. Ariel is “spot-on” in his evaluation of the “Opportunity”, to re-capture and successfully drive the Watch Business over the Counter in the 21st Century. Again History is our Teacher, as the Product took astronomical leaps in pricing and Brands looked for their Market position, Price became an arbitrary tool to positioning, when married with Marketing Imaging, look no further then SWATCH Grp and their strata, that keeps an inventory of old names in the queue as need would be to begin filling from below, see Tissot, to Hamilton to Mido to the Certina of the Kurth family in the 1950’s, all as Norma Desmond “waiting for their Close-up” as the Brand in front up them is pushed north and a vacuum is created below. This, the same House, who missed the “Smart Watch” revolution and a generation of wrists,, see ‘Hayek-the-Younger’!
    Greed no doubt is the catalyst, and the adventures of the 1990’s Luxury and the totally false concept of “Aspirational Luxury”, began the schism as creative minds in the U.S. for one were stifled by ego’s of Franco-Teutonic single-minded thought, and those who understood their Market treated as Serf’s to the Lord’s view of they as but Colonists incapable of cogent thought. First there was the culling of Agents who represented Brands, profited as the Brands themselves saw no reason to Market the Product, the failing was the Agent’s goal was short term profits, not long term positioning! Marketing that had been born of Madison Avenue, was more then Advertising, but a generation of Europeans had travelled to the U.S. in the ’50’s and ’60’s and been exposed to the creation of Brands, as Manufacture left our shores, in this case predominantly Switzerland became the beneficiary, and Ego turned to Hubris, Partners at Retail who shared in the Profit of Price-positioned Product, began to see the insatiable appetite and limited grasp of CH as to consumption, resulting in first the “Grey Market”, then expansion to Department Stores, then selectively Boutiques that began to erode the natural and loyal Partners share of the business, not enough e-Commerce was born, still as we approached the new Millennia the concept of Outlet Stores that cannibalized both Name and Imaging. These were mistakes made at the highest Level of Management and again the immediate result of Greed and an unwillingness to look inward to Product, Manufacture, created Availability issues as few were prescient enough to recognize from the path taken by both Rolex and Patek-Philippe. There are few in the game today that recognize the opportunity, certainly the aforementioned from the previous sentence, myself George Kern of Breitling who spent his formative years at TAG-Heuer with Christian Viros and Luc Perramond, but there are few others that understand their Brand, their Position, their Path. Just as Richemont squandered IWC, Panarai potential, exhausted LeCoultre as a Reverso,, so too, Brands like MONT Blanc have been stagnant in the Timepiece arena lost in whether they are MONT-Blanc or Minerva, recreating Logo’s from the Iconic Snow caped Peak positioned on the Crown to a crude imaging that get’s lost with the name above the Center Post!
    It will be interesting when they awake, post Pandemic, to a year that has been stunted with no Q-1 and as we approach Prime-time and Q-4 with seemingly no plan, post their “Rip Van Winkle Nap!”

  2. This is very true. The on-line business is another animal but which can be very well trained by them who know this area. Moreover, a lot of people are looking these days on-line their watches. They compare prices, complications, delivery times, services, etc. All manufacturers should consider choosing online retailers and share their margin with. An independent retailer puts more passion and hard work into their online business and this what almost every customer wants.


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