Rolex Needs a New Business Model

[Gab27]

It would make more sense to eliminate ADs entirely and go to a direct sales model. And that doesn't make a ton of sense either.

I don't think Rolex has much issue with ADs choosing who they sell to and under what financial situations the AD sells, provided they sell a specific watch for MSRP. If they hold all of their stock in the back and sell only to specific customers, they seem to be fine with this.

The only question they are probably grappling with is how much the current situation will tarnish their brand image in the long run and if this justifies any further action. Thus far, we have not seen any indication that they feel that it does.

[Kevin of Larchmont]

How can exclusivity tarnish a luxury brand’s image? If everyone can get one then it’s not a luxury. And the OP said that CUSTOMERS ARE PISSED. No they’re not, the customers are enjoying their Rolexes, it’s those that can’t seem to find one that are clamoring for Rolex to change their profoundly successful business model. The OP wants luxury goods distributed fairly. Gimme a break. If the world was fair luxury goods wouldn’t exist because none of us could afford them.

[Gab27]

Originally Posted by TimeAZ

The solution is to be more transparent about the purchase process and also more equitable in how models are distributed.

This would be much less financially advantageous to ADs and potentially reduce a dealer's willingness to abide by Rolex's terms in order to carry their products.

A major benefit from an AD's perspective in selling these watches is that they can use them to sell other things to their customers and they can prioritize them for the customers that give them the best business. They do not have enough supply to meet demand, but they can use these watches in a fashion to increase their returns.

[Gab27]

Originally Posted by Kevin of Larchmont

How can exclusivity tarnish a luxury brand’s image?

If a lot of people have the impression that your company is enabling unfair selling practices (which I am not saying Rolex is, because they are not, nor am I saying ADs are), that impression can tarnish your brand image if you get enough pissed off consumers who take a vendetta with your organization.

Have you ever looked at Twitter? People go absolutely ballistic over impressions.

A question I would personally think Rolex is considering is how younger persons view the brand, and if the current situation is having any systematic impact on how they view Rolex. It might very well not, but it seems logical that Rolex is probably thinking about their sales both today and in the decades ahead.

[rolex16]

Originally Posted by Kevin of Larchmont

How can exclusivity tarnish a luxury brand’s image? If everyone can get one then it’s not a luxury. And the OP said that CUSTOMERS ARE PISSED. No they’re not, the customers are enjoying their Rolexes, it’s those that can’t seem to find one that are clamoring for Rolex to change their profoundly successful business model. The OP wants luxury goods distributed fairly. Gimme a break. If the world was fair luxury goods wouldn’t exist because none of us could afford them.

And yet, they used to be available just a few years ago. And Rolex was luxury back then and for decades before that. The problem is a change where now customers with $ are treated like crap. Not exactly a luxury experience…

[mquarter]

Sadly, Rolex don't care enough to want to manage their own distribution.

[Polar Bear]

People who dont own a Rolex but dont have one yet:
The Grey Dealers and Flippers are Ruining this Hobby!!!

Those same people after they buy a Rolex:
Wow, my watch listed on Chrono24 for double what i paid for it! Great Investment. Never been happier to own a Rolex, its like money in the bank

[Kevin of Larchmont]

Originally Posted by rolex16

And yet, they used to be available just a few years ago. And Rolex was luxury back then and for decades before that. The problem is a change where now customers with $ are treated like crap. Not exactly a luxury experience…

If we are talking just a few years ago then they were just as available, the consensus being that Rolex makes roughly a million watches a year. The only difference is that there is now vastly more demand. Is your argument that Rolex needs to increase and decrease production to maintain some arbitrary level of availability relative to demand? I’m pretty sure you’re not saying that because I’m pretty sure you know it’s not remotely possible. Rolex makes a certain number of watches per year and the demand fluctuates around them. You’re mad at Rolex who have been relatively consistent during all of this. Your anger is misplaced.

[LJubel328]

Sounds like you haven't been a Rolex boutique. Try going to the NYC boutique and see what they say. Favoritism is played even at the corporate level.

[sj24k]

Rolex is one of the most successful and highly regarded global brands in the world. A sales and marketing powerhouse with unprecedented strength and reach.

But sure, fanboy forums should totally drive marketing strategy.

This sh!t cracks me up.


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[Kevin of Larchmont]

Originally Posted by Gab27

If a lot of people have the impression that your company is enabling unfair selling practices (which I am not saying Rolex is, because they are not, nor am I saying ADs are), that impression can tarnish your brand image if you get enough pissed off consumers who take a vendetta with your organization.

Have you ever looked at Twitter? People go absolutely ballistic over impressions.

A question I would personally think Rolex is considering is how younger persons view the brand, and if the current situation is having any systematic impact on how they view Rolex. It might very well not, but it seems logical that Rolex is probably thinking about their sales both today and in the decades ahead.

But a lot of people don’t have the impression, just a few on TRF. Rolex’s brand is burnished through greater demand not tarnished. Rolex continues to make excellent watches, that’s what their brand is built on. Where is this impending landslide of pushback against the brand? This doomsaying has been repeated for years here.

[noshake]

Selling direct to consumer online would be a disater, sneakers, cpu chips, graphics cards, PS5 etc... Bots would eat them alive. The in-store purchase experience eliminates this risk. Luxury Brands want to maintain exclusivity. It's no need to even go into a mall, online is crushing. Highend luxury that don't sell online Rolex, AP, Goyard, and dining out will be the only brick and mortar stores you need.

[Edb5020]

Originally Posted by huncho

i'm sure rolex who are selling more watches than ever want to listen to the internet for advice lol

They’ve been selling every watch they make for many years - to their AD network.

[Gab27]

Originally Posted by Kevin of Larchmont

But a lot of people don’t have the impression, just a few on TRF. Rolex’s brand is burnished through greater demand not tarnished. Rolex continues to make excellent watches, that’s what their brand is built on. Where is this impending landslide of pushback against the brand? This doomsaying has been repeated for years here.

You don't need a landslide of pushback to negatively impact a brand image. A relatively limited number of people can cause harm if they feel so strongly about something that they are motivated to take action. Rolex has a history of managing their brand extremely well. I would bet the family farm that they have and are continuing to research this. If they feel it will be an issue in the future, I would expect them to take some form of action.

An organization like Rolex is almost certainly constantly assessing any situation that has the potential to tarnish their brand image. This is no exception. They would be crazy not to. (And maybe it is indeed very small like you have stated, but it seems very likely they would want to know more about this.)


And I agree with you about them continuing to make excellent watches.

[ArtNouveau]

Originally Posted by rolex16

Please educate us on what being capable of buying from an AD entails. Is there some sort of training class?

My training class was buying my first Rolex in 1984 and having bought 10 others plus a slew of other brands since, many of them from the same salesperson. Sure that’s “spend history” but it’s also consistency and being a decent person. My SA and his manager like me. It’s not easy being a new customer these days but not impossible.

[donq]

It’s funny that folks think that they are Rolex customers.

The ADs are Rolex’s customers.

You guys are the AD’s customers.

If you have a problem with how the watches are distributed you should talk to the dealer.

The parent company is doing fine with their current distribution model.

And complaining that their reputation will be tarnished because they are seen as
being seen as “unfair”, a big part of the appeal for items like this is that they are hard to get.

If I can get one and you can’t, then I’m better than you.

That’s how Veblen goods work. It’s a way to prove you have more money and influence than the next guy.

I can complain that Jay-Z can buy a pair of sneakers that I can’t, but it’s not going to hurt the sneaker company in the least because Jay-Z is still wearing their sneakers.

[Coronette]

Originally Posted by VegasBaby

Genius idea!!! Probably would shake Rolex from its prolonged business slump and inability to sell their watches. After, reading this, I'm sure they'll be looking to hire you for their/global strategy department........bravo!!

It works for Tesla. They have no middle dealer networks at all. It’s direct to consumer sales.

[Gab27]

Originally Posted by donq

It’s funny that folks think that they are Rolex customers.

The ADs are Rolex’s customers.

You guys are the AD’s customers.

If you have a problem with how the watches are distributed you should talk to the dealer.

You don't think anger with a distributor gets routinely generalized to the manufacturer? (regardless if that anger is misplaced.)

[Kevin of Larchmont]

Originally Posted by Coronette

It works for Tesla. They have no middle dealer networks at all. It’s direct to consumer sales.

Tesla didn’t have to blow up an established dealer network and completely reconfigure their existing distribution, did they.

[donq]

Originally Posted by Gab27

You don't think anger with a distributor gets routinely generalized to the manufacturer? (regardless if that anger is misplaced.)

Of course it does, but in this case it is irrelevant.

The value of a Veblen good is based on its expensive nature combined with limited accessibility. The more difficult it is to get, and the more expensive, the more it becomes a signifier that the owner is a person of wealth and influence.

If anything, the situation is helping Rolex, not hurting them.

[Polar Bear]

Originally Posted by Coronette

It works for Tesla. They have no middle dealer networks at all. It’s direct to consumer sales.

The opposite works for Ferrari and Porsche

Also, Tesla dont make luxury goods, they make iPhones with wheels and their distribution model reflects this

[Gab27]

Originally Posted by donq

Of course it does, but in this case it is irrelevant.

The value of a Veblen good is based on its expensive nature combined with limited accessibility. The more difficult it is to get, and the more expensive, the more it becomes a signifier that the owner is a person of wealth and influence.

If anything, the situation is helping Rolex, not hurting them.

That is a fair point.

I was thinking about this from the perspective of:
person has a bad experience with distributor (for example, if someone cannot get a watch and believes that ADs are selling that to secondary dealers)-->generalizes this to the overall values of the brand-->personally loses affinity for the brand-->encourages others to avoid the brand as well.

I guess perhaps luxury goods are a little different in that regard.

[OG1982]

Rolex doesn't need to do anything different, the people who need to change their approach is the consumers that can't get the watches they desire.

[omx5o]

At the moment ADs at least have some capacity to make sure watches are going to interested customers. It would be impossible to do that online. You would never be able to compete with the bots.

[Krash]

This is silly.

If Rolex sold directly to customers the situation could actually be a lot worse. Nothing would be different in terms of supply and demand. When you go to their website and click on a Daytona or a GMT II Pepsi, you’ll get a message that says, “Currently unavailable” or “ Notify me when available.”

At least now it’s possible to have some interaction with a live human being at an authorized dealer.

Setting up Rolex boutiques on a global scale is a possibility, but do you have any idea how much that would cost them?

It’s all a moot point anyway because the underlying thesis that Rolex should change it’s business model is utterly ridiculous to begin with.

Companies that must change their business model are at the opposite end of the spectrum. These are companies that are confronted with legitimate existential problems. They can’t sell product, aren’t making money, aren’t competitive in the marketplace and even bankruptcy is a possibility.


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[shaunylw]

The world isn’t a fair place. Not everyone gets their turn, it’s not 4th grade kickball. If everyone that wants one get one, Rolex loses. They are in their sweet spot, zero reason to make changes.

[saxo3]

The very title of this thread is nonsense.

[Rocket_Man]

Anyone can buy any Rolex they want today, online, and have it tomorrow. You just have to pay the market price. If you want to wait to buy one at MSRP, then you need to find a way to work the AD game. When you play that game you will either be required to buy other merchandise from the AD you don't want (increasing the MSRP of the watch) or wait, sometimes quite a long time, for your chance to come up. It is a choice. People choose both routes. Some watches may have a fairly reasonable wait. Before I bought my DJ41, I took over a year just deciding what color, bezel, bracelet I wanted. After that it only took 7 months for my AD to get it. So from that perspective it wasn't that long.

[johnwigan]

Originally Posted by Coronette

Rolex needs to sell direct to consumer. That would completely eliminate the unfair lists the jewelers manipulate. Once the watch is purchased from Rolex its sent to an authorized jeweler that has all the fakes in the case to try on and they set the watch up once it arrives at the AD of your choice. This would eliminate all the AD grey market and waiting list shenanigans. I wouldn't hesitate to go on a Rolex corporate wait list because you know its going to be handled fairly and you wont get smoke blown up your A$$ as the ADs are doing now.

The present situation is temporary.

Rolex is interested in maximising profits, rather than 'unfairness'.

[Cambo]

Any comment that starts with “Rolex needs to…”