EXCLUSIVE DISTRIBUTION AND COMMUNITY POWER

Distribution networks are saturated, and have not kept up with modern purchasing behaviors. In relation to this we will be fostering community power by giving a commission of 10% to anyone who helps to generate a sale.

EXCLUSIVE DISTRIBUTION

Today the distribution of a particular watch brand is predominantly regulated by the traditional model. The brand invents and manufactures the product; the distributor (or a subsidiary of the brand) develops sales in the territory in which they have exclusivity; and the retailer displays the product in their store and helps to inform the customer.

Traditional distribution does have some clear advantages: a watch aficionado can see, touch and try his timepiece before buying; he can also receive advice from the retailer, and is then able to wear his new watch immediately.

But the distribution networks are saturated. Moreover, in recent years, retailers are under pressure from major companies:

  • Setting minimum quantities much too high, immobilizing significant amounts of money
  • Requesting large window displays at the expense of smaller brands
  • Threatening the withdrawal of one of their flagship brands if they also stock a particular competing brand

In this environment, it is very difficult for a young brand to fight for a place on the shelves. In addition, inventories have built up among retailers who find themselves in a very difficult position. This situation, aggravated by the global crisis, is stimulating the development of the gray marker.

Distribution networks are saturated and retailers are under pressure from major companies

PARALLEL MARKETS

There are two types of parallel market which remain within the legal framework.

The secondary market, generally controlled by the brand, allows the latter to sell past collections that have not had the success that was anticipated in its key markets. They are sold at lower prices in other countries where the brand has less visibility.

The gray market, even where it is legal, is not authorized by the brand. It consists of independent dealers whose strategy is to sell in volume rather than with high margins. They usually buy overstocks from official retailers and sell them at a discount of around 30 to 50%.

Of course normally brands try to combat the gray market, but in critical situations they often turn a blind eye, because this parallel network helps them to clear overstocks and avoid explosion.

Here are some factors which can stimulate the gray market:

  • Excessive variance between the cost price of a watch and its intrinsic value.
  • Excessive production which creates overstocks among brands and retailers.
  • Price differences which occur among territories when the retail price is adapted to the country’s purchasing power.

The gray market is the gangrene of distribution.

SO WHAT ARE WE PROPOSING?

The significant growth of the gray market in recent years is one of many indicators that purchasing behaviors are changing. Today the internet has shattered the notion of exclusive distribution by territory. In addition, social networks have given rise to a consumer who stays informed, shares, and comments.

In this environment we have decided to use the distribution channels listed below in an effort to be closer to our customers, thereby removing the margins of some middlemen:

Direct sales to end consumers through our website

Sales through Dropshipping
Dropshipping is a tripartite system wherein the customer places an order on the website of an e-commerce partner. The order is then sent to the brand, which provides delivery and manages inventory. The partner doesn’t bare any risks regarding immobilized stock, and earns a commission of 20 to 40%.

Sales through pop-up stores
The pop-up store is a concept which emerged in the early 2000s. A store is set up for a few days, sometimes for a few weeks. This is an interesting concept for two reasons: firstly the fact that these stores are instant and fleeting arouses the curiosity of the consumer, and stimulates the act of purchase; secondly these “unusual” events attract media interest.

distriben

The internet has shattered the notion of exclusive distribution by territory.

BUT WHAT’S REALLY SPECIAL ABOUT OUR MODEL IS…YOU!

Online sales are growing fast but still have some downsides; most notably the inability to touch the watch before buying. Pop-up stores are a good alternative, but they are not suited to all locations.

The internet has given rise to veritable communities who like to share their passions. Therefore as the person who can best represent our timepieces, we have decided to involve the customer in the selling process. We will encourage him to discuss his watch with his “community” by involving him in development, and by giving him a commission of 10% on any sale he generates.

But that’s not all; a potential customer interested in buying one of our models, but yet to see it, will be able to contact a nearby owner. Using a mobile application, they will be able to discuss and arrange a meeting. The buyer will be able to order his watch with confidence, and the sponsor will receive his commission of 10%.

The best ambassador is a satisfied customer. That’s why we’ll give him 10% on each sale he generates

An application will allow a potential customer to meet a watch owner so that they can see the product before buying.

NEXT CHAPTER, NOV. 29TH 2017: NEW SWISS MADE LAW; THE FARCE CONTINUES

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23 thoughts on “EXCLUSIVE DISTRIBUTION AND COMMUNITY POWER

  1. davisc02 says:

    Un système qui offre la possibilité à tout un chacun de recevoir une somme pour son aide à la vente? Pourquoi pas. Je suis impatient de voir si un système comme celui-là fonctionne. Très bonne initiative

    • Claudio says:

      Merci 😉 Comme nous l’avons expliqué au début, nous allons expérimenter des idées diverses mais bien sûr le succès n’est jamais garanti. Remettre en question les règles établies nous a paru la seule façon de créer (encore) une nouvelle marque horlogère. Voyons ou cela nous mènera 🙂

  2. tommastis6 says:

    Entièrement d’accord avec vous sur le sujet de la pression des grands groupes! Bon concept et des idées efficaces, mais vivement le volet 4. Nous avons envie de voir le design!

    • Claudio says:

      Oui je comprends, beaucoup de théorie pour le moment mais ça nous a paru indispensable d’établir de nouvelles bases avant d’arriver avec un produit, aussi beau soit-il 🙂

  3. Enrique Galeano says:

    Moi, je suis de nationalité paraguayenne, passionnée pour l’horlogerie. Et même que je n’ai pas de diplôme pour être horloger en France, je me met à le faire en tant que hobby. J’adore votre planning de travail pour le mettre en vente.

    Chapeau à l’équipe

  4. renebiget1 says:

    Très intéressant votre projet !

    Je donne des cours d’initiation à l’horlogerie pour des passionnés et de nombreux élèves me posent les questions que vous vous posez et que vous vous proposez de régler élégamment, je vous admire!

    Seriez-vous intéressés par un Pop-up store le dimanche 18 septembre 2016 pour la 3e bourse horlogère Lilloise, organisée par l’Association Montres & Mécaniques, dont je fais aussi partie.?

    Impatient de voir vos propositions de design et vos prochaines montres…

    René Biget

    • Claudio says:

      Merci René pour votre feedback.
      Ca aurait été avec plaisir mais, selon notre palnning, le 18 septembre 2016 nous serons en pleine campagne de crowd funding. Peut être l’année prochaine.

  5. Dennis says:

    Bonjour,

    Cela a l’air très intéressant de pouvoir devenir acteur d’un modèle économique.

    Je connais ce système de vente par réseau, ce n’est pas nouveau, dans un autre temps on appelait ça de la vente pyramidal.
    Ce qui il me semble est interdit en France non ?
    Pouvez me confirmer cela ?

  6. Emile Brami says:

    Je me suis inscrit mais le projet est très flou, on ne nous dit absolument rien de précis, montres? dates? fabrication? Garanties? Beaucoup de vent, je crains un hameçonnage de plus.

  7. Zebda says:

    Il y a un volet très important qui à mon humble avis est négligé dans votre concept, tout le monde parle des marges fait par tel ou tel acteur, celles-ci peuvent être discutées ou rediscutées voir être remises en question, cependant tout produit pour asseoir sa notoriété doit bénéficier d’un service après-vente, ce service à un coût très important et il n’en est jamais fait mention dans vos graphiques. Les gens qui constituent le réseau de vente dans une distribution de type “standard” assurent (dans la majorité des cas) la bonne prise en charge de l’objet nécessitant une intervention SAV. Il faut du stock de pièces de rechange, qui prend en charge le fret de la marchandise pour le SAV, le consommateur ou le fabricant? est-ce vos magasins éphémères qui s’en chargeront?
    Dans notre société on est toujours à la recherche du prix, internet est un bon outil pour comparer, mais nous oublions toujours de comparer ce qui est comparable pour ne retenir que l’aspect financier du départ. J’ai acheté moi même des produits sur le net dans des contrées lointaines, lorsque l’on doit retourner la marchandises les coûts depuis la suisse sont exorbitants, le temps passé aussi et au final avons nous réellement fait une bonne affaire?
    Le risque de panne sur une montre mécanique est 2 à 3 x plus important que sur une montre à quartz, les montres mécaniques sont plus compliquées et nécessitent plus de manipulation (remise à l’heure suite à un arrêt, changement de date, remontage etc…) donc vous aurez à devoir en assumer , sachant que le temps de couverture minimum de garantie est de 2 ans…

    • Claudio says:

      Merci pour votre commentaire. Le SAV est effectivement très important et c’est quelque chose que nous avons intégré dès le départ dans notre discussion avec les fabricants. En l’occurrence nous aurons des centres de SAV dans les principales régions du monde et quand la pièce est en garantie alors nous nous chargeons de la logistique avec nos transporteurs. Si la pièce n’est pas sous garantie, le client pourra envoyer sa pièce dans le centre le plus proche.

    • Paul Simons says:

      Although I admire the initiative of the Goldena Project and think it could well stir up some new developments within the (Swiss) watch environment, I also totally agree with the point made concerning After Sales service. Having owned myself a watch distribution company for many years, I am totally aware of the importance of providing excellent service. Not only at time of delivery but, at least as if not more importantly, when problems occur, be it under warranty or after warranty period. Moreover, mechanical watches will need servicing over the years. Hence all spare parts must be available for many years. There is indeed no mention of this aspect in your presentation. However, the lack of information (transparency :-)) as well as the lack of a viable solution on this matter, could well be the breaking point of the project. Even the best product is doomed if there is no (excellent) after sales service behind it. That would be a pity because the idea for the project is certainly refreshing.

  8. tomyqdance2 says:

    De très bonne idées sur le système de distribution, très intéressant le système de prime de 10% cela encouragera tout le monde à vendre vos montre. Vivement le 4e volet a très vite je vous suis de prêt.

  9. Jeff says:

    I really love your distribution ideas, it’s essentially a version of affiliate marketing and sales. Some companies find great success with this model. I wish you the best.

    • Claudio says:

      Hi Eve, it looks like you went into Wikipedia to find the definition of Pyramid Schemes. But just a bit higher in the same article they explain the difference between Pyramid and Multi-level Marketing:

      According to the U.S. Federal Trade Commission legitimate Multi-Level Marketing, unlike pyramid schemes:

      “have a real product to sell. More importantly, MLM’s actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM’s may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits.”

      And actually in our case there is no Multi-level since we simply pay a commision to any person that generates a sale, that’s it!

      Please be consistent before posting, thanks.

  10. saadbenzakour7@gmail.com says:

    Pourquoi payer 4 mois à l’avance et avec quelle garantie de recevoir la montre ?
    Et pour le service après vente ?
    Pour le maroc une possible livraison en hors taxe ?

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