From what I have heard, they pay 50% of MSRP when buying new directly from Breitling

It actually varies a lot from market to market, generally between 45% and 55%.

Wow – you’ve answered a question I’ve long had. I appreciate the range of 45%-55%, but for discussion sake, if we say 50%, that’s a key piece of information. I had guessed that AD’s pay around 60% - so they’re even more of a rip off than I had thought (when they don’t know what they’re talking about, which is often).

I just don’t think that game can last – honestly, to suggest the role of the AD is equivalent in value to the watch itself…no way. However, perhaps such margins are the norm in high end jewellery? I don’t know, but it seems excessive to me, from an economic point of view. I must admit that ADs are more important for first/second time watch buyers than more seasoned aficionados.

What I would be interested in is the extent to which the ADs contribute to Breitling’s marketing budget. Perhaps some of that 50% goes into catalogues, advertisements, events etc? If not, and the various marketing costs are all in addition to that 50%, then it seems you’re looking at items whose physical value (in terms of the materials, labour, capital costs, corporate overhead required for production, rudimentary distribution etc.) is maybe 25% of what you pay?

Hmmm – it’s tempting to be cynical about that. No doubt, there is true “brand value” in a Breitling, and the image is part of what attracted me, but I just can’t see half of that in the AD!

Interesting comment Dhalem... While the internet has been the answer for many industries and the death of many suppliers, it cannot be the lone source of direct distribution for many items.

As it relates to the Luxury watch business, if a consumer cannot look, touch, and feel the product they are spending thousands of their hard earned dollars on, they might not develop the required desire to purchase the watch.

Question... Where do the consumers go to see, touch, and feel the product? New product innovations and models are introduced each year.

Answer... Bricks and Mortar retailers.

The major watch brands know this and realize they must get the consumer to see, touch, and feel their product in order to develop the desire to purchase.

How do you think the B&M stores would feel if the brand by-passed their distribution channel and sold direct to the consumer?

As far as the brands not letting the B&M stores sell their product on the internet, this is to protect the investments of the local B&M stores by hopefully keeping the sales local to the store where the product was viewed. Good AD's do get referrals from people all over the world. At that point, they can sell their product to whoever they choose as long as it's the end user thus guaranteeing a valid warranty. The idea of not letting B&M sell luxury watches via the internet helps to maintain profit margins for the B&M stores, thus helping them keep their doors open and continue to purchasing the brands products.

Most folks on this board are savy enough at getting the best deals available.

As it relates to the Luxury watch business, if a consumer cannot look, touch, and feel the product they are spending thousands of their hard earned dollars on, they might not develop the required desire to purchase the watch.

Question... Where do the consumers go to see, touch, and feel the product? New product innovations and models are introduced each year.
Answer... Bricks and Mortar retailers.

The major watch brands know this and realize they must get the consumer to see, touch, and feel their product in order to develop the desire to purchase.

How do you think the B&M stores would feel if the brand by-passed their distribution channel and sold direct to the consumer?

As far as the brands not letting the B&M stores sell their product on the internet, this is to protect the investments of the local B&M stores by hopefully keeping the sales local to the store where the product was viewed. Good AD's do get referrals from people all over the world. At that point, they can sell their product to whoever they choose as long as it's the end user thus guaranteeing a valid warranty. The idea of not letting B&M sell luxury watches via the internet helps to maintain profit margins for the B&M stores, thus helping them keep their doors open and continue to purchasing the brands products.

Most folks on this board are savy enough at getting the best deals available.