It says something about the scale of the challenges retailers are facing when trying to profit from ecommerce that 24 of the America’s finest independent businesses have given up some of their sovereignty to work together on a coordinated online platform. Troverie was born out of frustration that ecommerce wasn’t working for too many store owners, and has the potential to become an omnichannel solution that helps authorised dealers and luxury watchmakers reach an untapped pool of customers. The solution is far from simple, but it just might work, as Rob Corder discovered in conversation with Troverie’s chief operating officer Peter Kramer, and the solution may appeal to retailers of similar size and stature in the UK.
(*This article first appeared in the American edition of WatchPro.)
Even the very best bricks and mortar watch retailers are struggling to replicate their success online. Time and money has been poured into developing ecommerce businesses, but much of it has failed to attract enough new customers or generate fresh sales. For most, a large proportion of the cost is attributed to marketing because it is not turning into sufficient profits to justify the continuing expense. Sound familiar?
This a story that Fred Levin, who at the time was head of luxury at American retail analyst NPD, was hearing constantly from retailers a few years ago. Jewellers knew that customers were becoming increasingly comfortable buying expensive fashion and other goods online, and were using the internet to research top end timepieces as well. The problem was they were not necessarily completing purchases online, or making the link to buy in store.
Luxury watch platform Troverie was created to solve this problem. Its aim is to put the consumer at the centre of a process where they can browse and research fine watches online at a site that is authorised by big brand watchmakers, and then help them buy those watches either in store or have them delivered.
“The idea to build this platform did not come from me or Fred Levin, our founder and CEO, it came from the industry. Mark Udell [CEO of London Jewelers], Michael Pollak [CEO of Hyde Park Jewelers], and a bunch of other retailers were speaking to Fred about issues that were plaguing the industry such as the grey market, the inability to sell online, inability to talk to the next generation of consumers,” recalls Peter Kramer, who joined Mr Levin as chief operating officer as the Troverie concept came closer to launch. He brings with him the experience of a year as brand president for Breguet in North America, five years as head of sales at Chanel’s timekeeping division in the United States and 12 years at Cartier managing merchandising and supply chains.
The retailers speaking to Mr Levin went further than speaking about the challenges facing the industry, they were open to radical ideas that Fred proposed as solutions and prepared to back his thinking with their own money.
“Long story short, Fred wound up, while he was still working at NPD, raising a bunch of capital from the retailers that would be used to pay for a due diligence study looking at the market, the proposition of the brands, the proposition of the retailers, and asking consumers what they wanted to see from an ecommerce site,” Mr Kramer describes.
Findings of that research, and solutions that sprung from it, were presented back to the retailers a few months later, and the retailers were sufficiently encouraged that they persuaded Mr Levin to quit his job at NPD so he could put his vision into action. He was able to raise more capital from the retailers, plus additional funding from angel investors, and got to work on what would become Troverie. Mr Kramer was among the company’s first hires.
Troverie did not spring to life immediately It look 16 months to come up with just the name, Mr Kramer reveals, but the main work was going into understanding how consumer attitudes and behavior were changing and how to create a solution that would excite them and get them buying so that the retail backers of the project benefited. “We had to come up with a design language; how we were going to speak to consumers. We had to work out how we were going to give retailers the control they wanted, the trust in what we are doing. We spent a lot of effort thinking very carefully about how we would make sure we do not disappoint our retail partners or our end consumers,” Mr Kramer tells WatchPro when we meet in Geneva in January.
The solution, which launched as Troverie.com in the late summer of 2018, has a unique business model. It insists on being 100% authorized by watch brands to sell the timepieces it lists. Nothing is from the grey market and it follows the same rules on pricing and discounting as all brick and mortar authorized dealers. “We will never sell a watch on Troverie that the brands haven’t certified us to sell,” the company states.
The customer experience on the site and the way they buy and take ownership of watches is also different, and a little difficult to describe. It springs from the pioneering partnership model developed between Troverie and its retail partners. Consumers browse and select watches on Troverie.com. They are then given the option of picking it up at a convenient jeweler to them, where experts can adjust it and talk through its features and functions before the watch leaves the store. Or they can choose to have the product delivered. Again, this will be done by a retail partner, not by Troverie, so that the Troverie business never has to invest in stock or sophisticated logistics and fulfillment systems.
“We’re pioneering a new way to discover fine watches. We are committed to giving our clients the benefits of a multi-channel shopping experience that combines the speed and convenience of online shopping with the attentive service and expert guidance of independent jewelers,” the company promises.
Wrapping this service around the consumer is earlier said than done. In the planning stages, retailers liked the idea that Troverie would find customers and encourage them to buy watches, but they were stuck with the old mindset that they should effectively maintain territory-based monopolies for customers in their area.
“There was a lot of discussion with retailers in those early days where the retailers said: OK, great, I am going to take the entire East Coast. Another retailer wanted the Midwest, another wanted the West Coast. We decided that was not putting the consumer at the heart of the experience and was not giving Troverie the protection that we need. So, when we allocate a sale to a retailer, the retailer has two hours to confirm the order back to us so we know for certain they have the watch. If he does not come back within those two hours, he gets a ding on future order allocations. That is one fail stop that we put in to protect us, protect the retailer and protect the end consumer,” explains Mr Kramer.
In other words, the retailer has to meet the expectations of highly discerning customers and meet its obligations to Troverie or it could be cut out of future sales. “If we create regional monopolies where retailers have a lock on all the customers in that territory, it does not necessarily incentivise the retailer to give a great experience to the end consumer on a day-to-day basis,” Mr Kramer suggests.
Troverie can only offer watches that are available and in stock at retail partners that are authorized dealers of the brands. The ecommerce business also has a second layer of authorisation directly from the brands, and this is important because it gives them access to the same images, videos, technical information and other merchandising material that traditional partners have. There are currently 17 brands sold on the site including Breitling, Bulgari, TAG Heuer, Omega, Breguet, Girard Perregaux and Zenith.
Across the brands, there are around 1300 unique SKUs on the site, which are all verified as available because the Troverie system is integrated into the inventory management systems of each retailer. This is another significant benefit to customers, who know that what they see is what they can get. “When you look at other platforms, there is a lot of bait and switching going on. They work on a model of attracting people to the site, they place an order and then they figure out how to find the watch. We work the other way round. We have built a business that already knows what is available and where it is coming from,” Mr Kramer explains.
On the retailer side, Troverie works with 24 partners that have a total of around 70 doors across the United States, so it is a highly technical process ensuring the site knows everything about inventory across the network.
Troverie works in partnership with 24 retailers that give the business a countrywide physical network of stores its customers can visit.
Unlike normal retailers, which have millions of dollars tied up in stock, Troverie effectively has virtual inventory so its overheads are considerably lower. It will not undercut its retail partners on price, but it still competes for sales with its partners, which make more profit on every sale if they acquire a customer and close a deal directly through their own stores or ecommerce sites.
So what is in it for the retailers?
Mr Kramer replies: “First, we are giving our retailers the ability to acquire new customers that they might not have reached before, and turning them into repeat customers. Secondly, is what I would describe as increasing the return on already invested capital, namely their inventory. These watches are already sitting in the retailers’ cases. Some are turning quickly, some of it is not turning as fast. We give retailers the potential to turn that inventory more quickly.
“The third factor is that there are a lot of retailers out there that are really smart about ecommerce, but there are some that have a lot still to learn. What we bring to those retailers is expertise and dedication of resources around acquiring consumers and operating their ecommerce channel for them. Ecommerce is expensive, complicated and difficult for retailers and a lot of them don’t have or are not willing to build out the operations that will acquire and service those online customers. When we presented this to retailers they saw that there was tremendous potential upside and very limited downside for them.”
London Jewelers was an early investor in Troverie, and the group’s owner Mark Udell is in learning mode. “For us, that is like going to class, it is like being part of a live case study that we can learn from every day,” he tells WatchPro. “Rather than watch from the sidelines, we feel it is best to be part of that and watch the ebbs and flows; see what works and what does not work, and then take those lessons and work out ways to apply them to our business. ”
Mr Udell also likes the founding team, particularly Mr Levin. “Beyond Troverie as a concept, we as a family are also big believers in Fred [Levin], who put it together. We can debate whether we believe in every aspect of the Troverie business model, but we can all say that we believe in Fred. He is a special guy, an amazing guy. Sometimes in life and in business you buy into something because of who the people are. If anybody can pull it off in this country, Fred will be the one,” he suggests.
The Troverie solution is also popular with brands, which see that a large, well-resourced, expert ecommerce site is much easier to work with than dozens of smaller, less professional sites. “Brands are saying to some of our retail partners that, if they want to do ecommerce, they should work with a platform like Troverie. We give brands an easy, low risk, solution,” Mr Kramer suggests.
24 retail partners with 70 doors; authorization to sell watches from 17 brands and 1300 unique models for sale on Troverie is a pretty good start, but Mr Kramer insists they are really still at ground zero. “From a strategic objective standpoint, there are other brands we are talking to — not many, because it was never about just having the most brands for us. It is about having the right brands that consumers want from us. We are also looking at other opportunities in the marketplace such as certified preowned (CPO), where we think there is a real opportunity to offer brand-authorized CPO watches,” he describes.
There is also a clear understanding that simply building Troverie will not mean people come to it. There will need to be a massive marketing push, which is ultimately going to be paid for by investors, many of which are the company’s retail partners (thankfully, some are also shareholders so have skin in the game). Mr Kramer will not divulge his promotional plans for 2019 beyond stating that, because Troverie is a technology company without the overheads of inventory, fulfillment and logistics, it can divert a much greater proportion of its investment into marketing.