The watch brands are finally discovering the e-commerce

Luxury watches and e-commerce are not meant to be associated following the opinion of the two leading brands of the Swiss watch industry, Patek Philippe and Rolex. The president of Patek Philippe, Mr Thierry Stern, stated in a recent interview that "the internet is an excellent tool for selling milk or jeans", but is not adapted to sell a Patek Philippe watch. Rolex replied on a request to comment on the e-commerce with a short and revealing : "no comment !".

The potential of the chinese e-commerce is obvious : "The chinese consumer of luxury products is younger, more volatile and more confident buying online" says Oliver Müller, strategy consultant with LuxeConsult.

But then why are the luxury watch brands staying away from the e-commerce ? To answer this, Mr Müller has identified two main reasons : the Swiss watch industry is rather backwards oriented. The leitmotiv in the industry is that e-commerce is damaging for the brand equity and that selling a watch online depreciates the product. The brands are starting only very slowly to understand that a new generation of clients emerged and that their buying patterns are very different.

The second reason mentioned by Mr Müller is that high margins in the luxury watches market are not a positive factor for innovation. "The higher the margins, the lower the push to excellence !" says the industry's expert. This amounts to saying that when you're making a good living, you're less inclined to taking risks and even the less to challenge existing business models. And the belief that luxury watches are not to be sold online is still very strong within the industry.

Despite the positive attitude of the chinese consumers towards shopping online, a "brick & mortar" presence is still a necessity says Mr Müller. This is the irony of the chinese consumer. "No one can pretend to build up a luxury brand on the chinese market without having a shop somewhere where people can see and touch. The chinese client wants to be reassured that the brand really exists.

*the graphics (report by Morgan Stanley) above is showing the substantial move within the next ten years induced by a direct-to-consumer shift through the digital channel which will see the multi brands retailers reduced to 50% and the e-commerce increasing four-fold from 3 to 12%.

This is an excerpt of an article published 15.02.2019 by Handelszeitung, the leading Swiss business newspaper

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