Danny Toffel started selling watches through sites like Amazon and Ebay from his garden shed and now the business, Watches2U is heading for sales in excess of £10 million this year, he tells WatchPro in an interview that will be published in full in September.
It has not all been plain sailing. The company opened three brick and mortar stores in an effort to attract support from the best-selling brands, but found them unsustainable.
The last of the three stores closed in March, leaving Watches2U as a pure ecommerce player.
By then the business model had already changed. Rather than courting brands to stock their new season collections, Mr Toffel was instead focusing on off-price watches, an industry term that refers to stock from previous seasons that had not sold at full price through authorised dealer networks.
“The fashion watch market is still really tough. If I had not changed my business model last year by moving away from core collections, I do not know if I would still be in business today,” he says.
The UK market for watches priced at under £500 at retail has been declining by double digit percentages every year since 2014 and is down another 10% for the year to date, according to GfK.
Mr Toffel (pictured above) believes that Amazon now accounts for 40-50% of watches sold at that price point, with heavy discounting driving competitors out of the market.
And, having concluded that Watches2U could not beat Amazon, Mr Toffel went back to working with the company as a third party trader.
“The business started on Ebay and we understand that channel and Amazon well. We work through Amazon and Ebay with most of our brands. Some do not allow you to work through certain channels, and we respect that,” he says.
The switch to off-price watches has stabilised Watches2U, according to Mr Toffel, and the business is now on a footing to be sold in a few years time.
“In two or three years’ time I want to sell the business so I have to ensure it is trading at its maximum potential. This is a nice company, even in tough times like we are in now. Margins are tight, overheads are high, there is a recession going on and we do not know what Brexit is going to do to us,” he states.