Richemont will “transform watch economy” with Ecommerce
Last month, global luxury powerhouse Richemont, the company behind brands like Cartier and Van Cleef & Arpels, made two important moves: first, it took control of fashion Ecommerce platform Yoox Net-a-Porter (YNAP); and second, it acquired Watchfinder, a specialist in pre-owned luxury watches. According to Swiss Watch industry expert, and industry publication Watchpro’s editor, Rob Corder, those two moves signify something massive: that Richemont is on the cusp of transforming the “watch economy” with its “Ecommerce empire.”
Mr. Corder wrote, in an editorial for Watchpro: “Entering July, Richemont is now the outright owner of Yoox, Net-A-Porter, Mr Porter and Watchfinder; a portfolio of ecommerce giants that could transform the global watch industry. In the parlance of the space industry, the business has reached escape velocity, the speed required to escape earth’s gravitational pull and start cruising in an almost effortless orbit. The next steps will not be effortless, but the opportunities that Richemont’s ecommerce portfolio present are considerable.”
He noted that Net-a-Porter and Mr Porter are “two of the most trusted sites for men’s and women’s fashion,” and praised managing director Toby Bateman’s understanding of content creation, social media, and digital operations. Between them, these platforms already sell a number of watches, and Bateman says “the line-up will continue to grow at pace.”
Watchfinder, according to Corder, is “not on that scale,” but is nonetheless a “crucial piece in the ecommerce jigsaw”. He said that the company had not only surprised analysts with its profitability, but occupied a unique place in the watch economy, thanks to a business model that means it is “prepared to invest in stock, service repair and restore watches, and sell them with a fresh guarantee.” Why does all this matter? Because, Corder says, Richemont has “acquired control of a global, direct-to-consumer channel for new and used watches. In so doing, it has created the opportunity to follow its watches from cradle to grave,” in just a few months.
Corder explains how this could work through the use of a hypothetical example: a brand new Cartier watch launched at SIHH in 2015 was bought by an authorized retailer in Shanghai. That retailer had over-estimated demand, and only managed to sell 50% of the watches it ordered that year. With SIHH 2016 looming, it needed to unload as much stock as possible to generate cash for the new collections.
“Richemont generously said it would buy them back. The Cartier is now a year old, but still brand new, so selling it on Net-A-Porter is an option, where it can be sold at full price, or it can go on Yoox at a considerable discount. A customer in California buys it, and is delighted to wear it for a year but then wants to trade it in for something new."
“Watchfinder provides an immediate offer to buy, and it ends up at the company’s service centre in Kent where it is checked, cleaned, photographed and put back on sale. When Watchfinder sells the watch, it even builds up a profile of the customer, so might suggest other watches over the following months and years or offer to buy back the Cartier to put cash back in the customer’s hand.”
This gives Richemont the ability to profit multiple times from resales of its watches, and will let the company create valuable data about customers and markets. The investment of time and money that it will take to build an infrastructure that can support this business will be considerable. But, says Corder “the rewards should be transformative.”
Dominion holds Richemont in its Global Trends Luxury Fund.
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