Rolex Needs a New Business Model

[Kevin of Larchmont]

Originally Posted by Gab27

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.

There are a lot of what-ifs and attribution going on here.

[Parapraxis]

You're forgetting one thing. Rolex doesn't want you as a client. They want millionaires who buy multiple watches a year. Not tourists.

[saxo3]

Originally Posted by Parapraxis

You're forgetting one thing. Rolex doesn't want you as a client. They want millionaires who buy multiple watches a year. Not tourists.

I would add celebreties and influencer with high visibility in social media, they amplify the hype. One key word is "influencer marketing" in order to create brand awareness in international markets.

[GoingPlaces]

Rolex efficiencies are in the manufacturing and distributing of luxury watches. Not to be a retailer and no interest in becoming one.

[rolex16]

Originally Posted by Kevin of Larchmont

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.

I was simply countering the fallacy that somehow luxury and lack of availability are inextricably linked. Sure, some companies play that game, but many luxury items are not like this. The watch industry now has blatant hoarding and profiteering. Look at the sneaker industry. Not exactly luxury but the same thing happens. Watch some grey market videos and look at what’s out there and tell me I’m wrong.

[Stranger]

I think it would make sense for Rolex to control the lists and allocation but to let the ADs gather the names and do the final distribution. A potential customer would have to go to an AD to give their name & info (incl. email). The AD would enter that into the system. A few weeks / months / years later, Rolex would email the customer & the AD that there watch will be available for pick up at the AD at a given date. They could even send the watch 2 weeks early to the AD to "fill the cases".

The advantage of such a system is that it keeps the AD happy, it's (more) transparent & fair for the customer, and the list management is quite simple to manage. There's still a question of whether to limit the number of entries per person on the overall list, but that's a small problem compared to the current situation.

[rmwill]

The ADs are extremely happy. Small AD's that don't meet Rolex standards are being eliminated, and the remaining AD's have gotten more watches than ever. Last pickup I did, there were 3 of us taking delivery of watches.

Originally Posted by JDelage

I think it would make sense for Rolex to control the lists and allocation but to let the ADs gather the names and do the final distribution. A potential customer would have to go to an AD to give their name & info (incl. email). The AD would enter that into the system. A few weeks / months / years later, Rolex would email the customer & the AD that there watch will be available for pick up at the AD at a given date. They could even send the watch 2 weeks early to the AD to "fill the cases".

The advantage of such a system is that it keeps the AD happy, it's (more) transparent & fair for the customer, and the list management is quite simple to manage. There's still a question of whether to limit the number of entries per person on the overall list, but that's a small problem compared to the current situation.

[TswaneNguni]

Been saying this for a loooong time ...Rolex needs to increase their MRSP .
Current market just proves it more and more .

Let the Rolex and the ADs make more money .Currrently flippers and third party "entrepreneurs" are making the money .

This is going to lead to more and more lewd practices !!

I would rather support Rolex causes than a Ferrari for Mr X the dealer .

[TswaneNguni]

Also...a Rolex wearer is getting more and more of a target .
The value of the heist is getting more and more lucrative .

Unfortunate fact .

[Coronette]

Originally Posted by JDelage

I think it would make sense for Rolex to control the lists and allocation but to let the ADs gather the names and do the final distribution. A potential customer would have to go to an AD to give their name & info (incl. email). The AD would enter that into the system. A few weeks / months / years later, Rolex would email the customer & the AD that there watch will be available for pick up at the AD at a given date. They could even send the watch 2 weeks early to the AD to "fill the cases".

The advantage of such a system is that it keeps the AD happy, it's (more) transparent & fair for the customer, and the list management is quite simple to manage. There's still a question of whether to limit the number of entries per person on the overall list, but that's a small problem compared to the current situation.

Exactly

[GoingPlaces]

Originally Posted by TswaneNguni

Been saying this for a loooong time ...Rolex needs to increase their MRSP .
Current market just proves it more and more .

Let the Rolex and the ADs make more money .Currrently flippers and third party "entrepreneurs" are making the money .

This is going to lead to more and more lewd practices !!

I would rather support Rolex causes than a Ferrari for Mr X the dealer .

100%, the last price increase was laughable. Crazy when greys make more money than the manufacturer/distributor. Higher prices will squeeze out many grey and flippers. It's not a one size fits all solution but will certainly help.

[donq]

Originally Posted by rolex16

I was simply countering the fallacy that somehow luxury and lack of availability are inextricably linked. Sure, some companies play that game, but many luxury items are not like this. The watch industry now has blatant hoarding and profiteering. Look at the sneaker industry. Not exactly luxury but the same thing happens. Watch some grey market videos and look at what’s out there and tell me I’m wrong.

While unavailability might not be tied to luxury, luxury is definitely tied to unavailability.

If it’s readily available to anyone, even if it’s really nice and labeled as “luxury”, it really isn’t. Kia makes what it calls a luxury car, but if you ask people to make a list of 5 luxury car makers, Kia isn’t going to be on any of them.

Conversely, something can be scarce and expensive, and not considered luxury.
A Supreme T-Shirt for example.

True luxury items are exclusive, as in to exclude.
More specifically, to exclude most of the people on this forum.

As the old saying goes, if you have to ask you can’t afford it.
Rolex has ready made customers in the form of a dealer network.
The dealer want to sell to rich people who will buy several watches at a time without wanting champagne, swag and some nice hand holding (gray market dealers, oil sheiks, NBA players buying one for each team member etc.)

It’s a game and we are about to be relegated to the sidelines, buying from the grays and used watch sellers.

[Mystro]

Other much free business models like Omega are allowing plenty of inventory without the cloak and dagger shortages. You can even try on most models before buying and negotiate a discount. Why not buy a Omega and support such transparent and fairer business practices to their customers??

[rolex16]

I still disagree about the luxury part, used to be that high cost of the item you were purchasing was the differentiator, even if available on a walk in. Not many people could afford, which is what kept it exclusive. Now, that is not enough. You have to be part of some elite VIP club as well. When there is an economic downturn, will be interesting to see what happens.

[donq]

Originally Posted by Mystro

Other much free business models like Omega are allowing plenty of inventory without the cloak and dagger shortages. You can even try on most models before buying and negotiate a discount. Why not buy a Omega and support such transparent and fairer business practices to their customers??

Good point!
But do you really think that Omega wouldn’t trade places with Rolex if they could?

[VogelPhoenix]

Originally Posted by JDelage

I think it would make sense for Rolex to control the lists and allocation but to let the ADs gather the names and do the final distribution. A potential customer would have to go to an AD to give their name & info (incl. email). The AD would enter that into the system. A few weeks / months / years later, Rolex would email the customer & the AD that there watch will be available for pick up at the AD at a given date. They could even send the watch 2 weeks early to the AD to "fill the cases".

The advantage of such a system is that it keeps the AD happy, it's (more) transparent & fair for the customer, and the list management is quite simple to manage. There's still a question of whether to limit the number of entries per person on the overall list, but that's a small problem compared to the current situation.

This would obviously solve nothing. The waitlists for hot models would immediately stretch to many years. Conversely, really slow sellers which are no longer part of "relationship building" would languish. The same ADs who now sell to flippers and do backdoor deals would continue to facilitate access for the grey market.

So, Rolex buys themselves another headache, the ADs have to find new ways of selling diamond encrusted 31mm date justs, and as you have the same number of watches for the same or more people, on balance no-one wins. Would-be flippers who now have no access right now might come out ahead slightly.

[Krash]

Originally Posted by JDelage

I think it would make sense for Rolex to control the lists and allocation but to let the ADs gather the names and do the final distribution.

I don't think that would solve anything. Could make things worse. Might be better for us if local ADs in our communities control the lists.

[ugoblue]

You can't buy a Rolex at an AD for MSRP.
Resale prices are between 2X and 10X MSRP.
As long as this is true, people are going to be lured in by Rolex marketing only to find they really are priced out of the market.
Regrettably, also as long as this true, forums are going to be dominated by threads with complaints of grey market rent seeking and feeling lured into desiring a phantom watch you can't buy. Since only a few new people can own the watches now, new excited Rolex owners and prospective owners will not be posting as many happy threads compared to complaints. So, yes this is all getting tedious. Prices may not go down, but the composition of Rolex fans and forum participants will change to those who care little about horology and those only in it for speculation.

[Fleetlord]

Originally Posted by Mystro

Other much free business models like Omega are allowing plenty of inventory without the cloak and dagger shortages. You can even try on most models before buying and negotiate a discount. Why not buy a Omega and support such transparent and fairer business practices to their customers??

Because Omega isn't ROLEX and that's where the conversation ends.

[TswaneNguni]

Originally Posted by ugoblue

You can't buy a Rolex at an AD for MSRP.
Resale prices are between 2X and 10X MSRP.
As long as this is true, people are going to be lured in by Rolex marketing only to find they really are priced out of the market.
Regrettably, also as long as this true, forums are going to be dominated by threads with complaints of grey market rent seeking and feeling lured into desiring a phantom watch you can't buy. Since only a few new people can own the watches now, new excited Rolex owners and prospective owners will not be posting as many happy threads compared to complaints. So, yes this is all getting tedious. Prices may not go down, but the composition of Rolex fans and forum participants will change to those who care little about horology and those only in it for speculation.

The wonderful news is that you can pick up bargains ...

Wearing my JLC Extreme World Chronograph . Beautiful reference ,top quality brand ..and you can pick them up for 40% the grey price of a Sub/Date .. ? and you get a brown leather on JLC deployant and JLC rubber on tang buckle with a fast change system I have the JLC steel bracelet too.

Ask any watchmakers opinion on a JLC .Clue: They get all teary eyed .

Many examples like this .

Getting so pissed off with this crazy wannahave Rolex market that I pulled a JLC and PAM 425 from storage to wear this week .

[fsprow]

The reality here is that both Rolex and the AD's benefit from sales increasingly going to wealthy, repeat customers. I don't believe the target now is the man/woman "on the street" who purchases expensive items relatively infrequently.

Seems to work just fine.

[Mystro]

Originally Posted by Fleetlord

Because Omega isn't ROLEX and that's where the conversation ends.

^^Bingo, and thats why any questioning the “king” on how they do their business or even any suggestions you might know better on any level would be naive. Like giving Jack Nicklaus golf tips from the bleachers. There is Rolex and then there is all the others way down the mountain in a race for a distant second place.

[904VT]

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.

Without the grey market and AD waitlists, Rolex watches would be just like Omega. Rolex prefers it this way, extremely profitable driving demand up range towards TT and PM. If the market ever takes a turn the other way, they just release more approachable SS releases like they did last big recession and demand comes right back. The cycles are plenty predictable. And while Rolex doesn't care as much about quarterly profits to meet analyst projections, they do very much care about profit. That is how they fund R&D.

[Dougiebaby]

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.

And this would benefit Rolex how?

Rolex LOVES what is going on ... EVERY company WISHES they were in a similar situation.

Your new business model (supposedly) would (maybe) benefit you, but not Rolex. If I were on the board at Rolex and this was proposed, I would fire the guy/girl who proposed it on the spot.

[RamyAshour]

Tough crowd for OP! So many unnecessarily condescending comments from people to OP’s post, making me think that it is no longer enthusiasts on this forum.
Anyway, although OP wrote Rolex “needs to…”, which they obv don’t, so many people are so confident that Rolex will “never” change. What time horizon is “never”? Of course they absolutely don’t need to do anything now or in the foreseeable future, but could things change in 5 years? In 10 years? In 20 years? Of course. Would a different business model fit better with market conditions in 15 years? Who knows

I do think many people (not just TRF’s) are tired of the games and the difficulty to buy anything, which really polarizes the brand perception. Maybe some people who are not able to buy from AD’s and who wants them to change for the sake of availability are just entitled, but so are the people who got their watches in the current model and who doesn’t want to lose the exclusivity.

Again, Rolex obviously don’t need to change anything, but I don’t think the idea of selling directly to consumer is that terrible. So a few thoughts on how it could work:

- You would need to have a verified profile. Eg., when you sign on to an investment platform you need to upload a picture of your passport, take a live picture of yourself to verify the passport etc etc, and validation can take a few days. Perhaps some blockchain technology could be used as well, so I think the argument that bots/flippers would just crush the lists and make it worse is wrong.

- There would at least be some type of limit to what you can buy, so no one buys the same watch multiple times (having the Pepsi with both bracelets are apparently not excessive to some). Limits would of course be changing according the market conditions.

- You get an estimated wait time, and you make a non refundable down payment of 10%. Or perhaps a bigger down payment depending on the model. These three points should to an extent discourage flippers as it will be difficult to acquire significant stock and with potentially a few years wait time, it will be risky to buy in bulk as you cannot predict the price of a given model 2 years down the line. And that is assuming that you can even create enough profiles in your mom and dads names.

- The AD’s would go. As en example, in Denmark there are 7 AD’s in this tiny country, and for trying on a watch and delivery pick-up, 1-2 locations would be enough.

The benefits for Rolex would primarily be increased margins by eliminating the middleman, and forecasting/production efficiency would be optimal (although obv not hard atm). Also something could happen in the next 5-10 years, where it could be beneficial for Rolex to increase its customer base. Imagine how many people who now wants to buy at retail, but don’t want to or can’t afford going grey. Some of them are turned off the brand forever, but maybe some of these customers would be nice to have in 2035. Maybe those additional customers are completely unnecessary at that point (as they are now), but would Rolex really lose such a massive amount of buyers if their watches were less “exclusive” than they are today by going to a B2C model? I have no idea.

I am not saying this is the way to go for Rolex, just trying to bring a little more nuanced perspective to this topic, which is quite interesting. The model Rolex use obviously works and don’t need to change, but it is also basically a century old and with all the disruption going on in the world, it is not unfathomable that even Rolex will eventually change.

[greywolf617]

Originally Posted by MilgaussPE

Lol go ask sneakerheads how well this model works.

This

[rmwill]

Edited for you:

Originally Posted by 904VT

Without insatiable consumer demand, Rolex watches would be just like Omega. Rolex prefers it this way, extremely profitable driving demand up range towards TT and PM. If the market ever takes a turn the other way, they just release more approachable SS releases like they did last big recession and demand comes right back. The cycles are plenty predictable. And while Rolex doesn't care as much about quarterly profits to meet analyst projections, they do very much care about profit. That is how they fund R&D.

[zengineer]

Originally Posted by RamyAshour

Tough crowd for OP! So many unnecessarily condescending comments from people to OP’s post, making me think that it is no longer enthusiasts on this forum.

Anyway, although OP wrote Rolex “needs to…”, which they obv don’t, so many people are so confident that Rolex will “never” change. What time horizon is “never”? Of course they absolutely don’t need to do anything now or in the foreseeable future, but could things change in 5 years? In 10 years? In 20 years? Of course. Would a different business model fit better with market conditions in 15 years? Who knows



I do think many people (not just TRF’s) are tired of the games and the difficulty to buy anything, which really polarizes the brand perception. Maybe some people who are not able to buy from AD’s and who wants them to change for the sake of availability are just entitled, but so are the people who got their watches in the current model and who doesn’t want to lose the exclusivity.



Again, Rolex obviously don’t need to change anything, but I don’t think the idea of selling directly to consumer is that terrible. So a few thoughts on how it could work:



- You would need to have a verified profile. Eg., when you sign on to an investment platform you need to upload a picture of your passport, take a live picture of yourself to verify the passport etc etc, and validation can take a few days. Perhaps some blockchain technology could be used as well, so I think the argument that bots/flippers would just crush the lists and make it worse is wrong.



- There would at least be some type of limit to what you can buy, so no one buys the same watch multiple times (having the Pepsi with both bracelets are apparently not excessive to some). Limits would of course be changing according the market conditions.



- You get an estimated wait time, and you make a non refundable down payment of 10%. Or perhaps a bigger down payment depending on the model. These three points should to an extent discourage flippers as it will be difficult to acquire significant stock and with potentially a few years wait time, it will be risky to buy in bulk as you cannot predict the price of a given model 2 years down the line. And that is assuming that you can even create enough profiles in your mom and dads names.



- The AD’s would go. As en example, in Denmark there are 7 AD’s in this tiny country, and for trying on a watch and delivery pick-up, 1-2 locations would be enough.



The benefits for Rolex would primarily be increased margins by eliminating the middleman, and forecasting/production efficiency would be optimal (although obv not hard atm). Also something could happen in the next 5-10 years, where it could be beneficial for Rolex to increase its customer base. Imagine how many people who now wants to buy at retail, but don’t want to or can’t afford going grey. Some of them are turned off the brand forever, but maybe some of these customers would be nice to have in 2035. Maybe those additional customers are completely unnecessary at that point (as they are now), but would Rolex really lose such a massive amount of buyers if their watches were less “exclusive” than they are today by going to a B2C model? I have no idea.



I am not saying this is the way to go for Rolex, just trying to bring a little more nuanced perspective to this topic, which is quite interesting. The model Rolex use obviously works and don’t need to change, but it is also basically a century old and with all the disruption going on in the world, it is not unfathomable that even Rolex will eventually change.

Don't take my brevity as a sign that I am being dismissive...I just don't have the thumbs for long replies on my phone.

I think Rolex would be trading away the entire brand prestige they have build over decades for a few more margin points. I think it would be very short sighted. I don't know that it would even slow the flow of watches into the grey market. At least now you have to put on pants and drive to an AD to get on a list. Making it something anyone with an internet connection can do and it will just become the newest side hustle for tech savvy teenagers.

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[Feb_29]

This thread is exact evidence that the prices for Rolex watches will go up.

[Subguy48]

Theres nothing wrong with the current business model