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Omega v. COSTCO
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Author:  sharkman [ Fri Jan 14, 2011 6:52 am ]
Post subject:  Omega v. COSTCO
I "heard" yesterday that the US Supreme Cout upheld the lower Court's ruling against COSTCO in the gray market case. Evidently Omega's next move is to sue the online gray market sites, starting with Jomashop.

Whether the court was right or wrong, I don't think this is a good thing.
Author:  Time Bandit [ Fri Jan 14, 2011 7:13 am ]
Post subject:  Re: Omega v. COSTCO
How does that make sense when the problem starts with ADs selling off stock. Go after the gray market, but continue to turn a blind eye to the fake sites?
Author:  anez [ Fri Jan 14, 2011 7:28 am ]
Post subject:  Re: Omega v. COSTCO
Time Bandit wrote:
How does that make sense when the problem starts with ADs selling off stock. Go after the gray market, but continue to turn a blind eye to the fake sites?


Easier targets.

I'm guessing the grey market dealers are legit companies and have proper registrations with real people's names attached. Fakesters are generally criminals, and much harder to catch since there's no legitimacy behind the scenes of the sites. ...Basically, like the dudes selling fake bags and watches in Manhattan, when they see the cops coming, they gather up their wares in a big blanket and make a break for it.
Author:  Roffensian [ Fri Jan 14, 2011 7:30 am ]
Post subject:  Re: Omega v. COSTCO
I actually think that this might be a good thing in the long run.

Consumers want to buy online, and the success of places like Jomashop, Prestige Time, Authentic Watches, etc proves that watches can be sold online just as easily as books. The major Swiss brands need to embrace this and figure out how to have an 'official' online presence to complement their bricks and mortar outlets. It needs to be done carefully - they need the physical ADs to help get the watches in front of consumers, but it's needed.

We have seen already that coverage isn't always great - I have some brands that I can't access in one of the major cities in North America (Toronto) - and even that is 2 hours from my home. There was a discussion recently about only one AD in Oregon and Delaware.

I'm not sure whether all of the brands will be thanking Omega for taking this stand - as we know Breitling clearly isn't too bothered about the grey market, they make ludicrous statements on their website about 99% of watches being fake but then don't take action against ADs that sell to the grey market.

If this leads to better access to official watches with warranty etc then it's a good thing, if it simply leads to less consumer choice then it's a bad thing.
Author:  Iantheklutz [ Fri Jan 14, 2011 8:32 am ]
Post subject:  Re: Omega v. COSTCO
Roffensian wrote:
I actually think that this might be a good thing in the long run.

Consumers want to buy online, and the success of places like Jomashop, Prestige Time, Authentic Watches, etc proves that watches can be sold online just as easily as books. The major Swiss brands need to embrace this and figure out how to have an 'official' online presence to complement their bricks and mortar outlets. It needs to be done carefully - they need the physical ADs to help get the watches in front of consumers, but it's needed.



I'd agree but I find it hard to imagine that high end watch brands will be willing to sell online officially any time soon - there will have to be some one-on-one interaction wherein negotiation/pricing are discussed. Official watch sites don't even list prices let alone hint at potential for online transactions. If you go to an AD's website, they won't even place basic information online for several brands. Instead you get the message "Authorized Dealers are not permitted to showcase product on the web".

I think what makes online watch shops a success is the explicit pricing and how the price often reflects the real "value" of the watch (aka pre-discounted). Until watch companies are willing to allow this level of trasnparency they'll be unable to successfully sell online. It's a long row to hoe.
Author:  RJRJRJ [ Fri Jan 14, 2011 9:44 am ]
Post subject:  Re: Omega v. COSTCO
I think online sales would be a bad thing for B&M stores. Its already expensive and difficult enough to move enough product to stay afloat as it is. Giving consumers a new avenue seems like it would only eat into B&M business more and dissuade stores from carrying a certain brand.
Author:  mfserge [ Fri Jan 14, 2011 10:08 am ]
Post subject:  Re: Omega v. COSTCO
RJRJRJ wrote:
I think online sales would be a bad thing for B&M stores. Its already expensive and difficult enough to move enough product to stay afloat as it is. Giving consumers a new avenue seems like it would only eat into B&M business more and dissuade stores from carrying a certain brand.


I don't entirely agree with that. I think a watch rookie may buy their first 'real' watch online but once they get hooked and get the watch bug they will turn to B&M stores to try on different pieces. This will lead to developing an AD relationship and if they can score a good enough deal it will detract the consumer from purchasing from an online site.

Here is what Breitling should do, set up an authorized online distributor and for every purchase made on the site, the consumer gets a coupon for a free Breitling Leather Strap redeemable at their nearest authorized dealer...Breitling would subsidize the cost obviously. Here's a way to drive customers into the B&M stores to potentially upsell them or show them other pieces which may lead to the beginning of a consumer/AD relationship.
Author:  Montexn [ Fri Jan 14, 2011 10:57 am ]
Post subject:  Re: Omega v. COSTCO
Personally I agree with Roff that this could be the catalyst to get the makers off of high center on the internet issue. This could be a boon for the AD's as well, they would be able to finally advertise and compete transparently. There are many AD's online for many brands, but what good does their internet presence really do them if they are not permitted to provide detailed information and pricing on an item of interest. If the AD's sold more product directly via the internet, it would take away the amount of inventory available to the GM dealers.

Frankly I find it a bit frustrating as a consumer to visit an AD's web store, only to discover I can't purchase a product from them online. I either have to call them or go into their store, which for me and many others is totally unrealistic or inconvenient. When I want to purchase something, I want to know what it's going to cost me up front, plain and simple. While I enjoy a bit of negotiating, if there is nothing to entice me to step foot in the door in the first place, then I most likely will not do so.

The fact is, the internet is a proven market that grows in leaps and bounds each year and if the watch industry as a whole can not get on board with adapting to this medium, then they could be the instrument of their own demise. My vote is to open the doors for the AD's to compete toe to toe with these GM dealers transparently.

@mfserge...I agree sir, with the proper marketing strategy the AD's could turn the internet into a means of gaining a larger more loyal customer base.
Author:  jnelson3097 [ Fri Jan 14, 2011 11:11 am ]
Post subject:  Re: Omega v. COSTCO
I'd be curious to know how the Bell & Ross and Cartier e-boutiques do. I know with Cartier they do offer the incentive of free engraving but I'd still rather save 10-20% and make a call to an AD. Are there any other brands out there that has something like an e-boutique?
Author:  anez [ Fri Jan 14, 2011 11:17 am ]
Post subject:  Re: Omega v. COSTCO
mfserge wrote:
This will lead to developing an AD relationship and if they can score a good enough deal it will detract the consumer from purchasing from an online site.


But how could they possibly compete? If an AD has to cover their profit, plus the cost of maintaining a B&M presence (which for a high-end jewellers has to be pretty high), and Breitling et al are selling directly to the consumer, without a the need for the cost of physical retail presence, the difference in price could be... enormous. I mean, I know they want to stay above a particular price point to maintain their luxury/exclusivity brand position, but with the increased manufacturing costs from R&D of moving to all in-house movements, this might be a good way of retaining/"compensating" customers from their perspective. They could increase quality without having to pass the cost on to the consumer.

The companies may lose out on those I-tried-it-and-now-I-gotta-buy-it sales, but they're going to make up for it in overall revenue. If someone is going to pay €4000 for a watch today, it's very likely that they might be happy to pay €6000 for two watches of the same quality tomorrow, and maybe that would be possible in a direct online transaction with the manufacturer. At the end of the day, the watch company pockets more money.

Right now, very few true luxury products are available to purchase online, but as Montexn pointed out, it's a growing market-- I don't think that "stigma" is going to last for too long. Not watch-related, but "luxury" enough that I think it might be a relevant example is Hermes; when their website first came about, there was very little stock available for online purchase. Then they added one or two higher-priced products, then increased the product lines to include bags, something no one would have expected a couple of years ago. You can now buy a €3000 bag online without ever seeing it, which (while not involving the same degree of technical precision and work as a watch) is generally the sort of product a consumer would previously have expected to want to look and and get a feel for in person before committing to so much cash.

I would not be surprised if this extends to the watch industry sooner rather than later, although what it's going to do to the ADs, I really can't say.
Author:  sharkman [ Fri Jan 14, 2011 11:40 am ]
Post subject:  Re: Omega v. COSTCO
Quote:
Personally I agree with Roff that this could be the catalyst to get the makers off of high center on the internet issue. This could be a boon for the AD's as well, they would be able to finally advertise and compete transparently


Gosh the ADs would LOVE to adverstise discounts, reduced prices, etc... It's the hard ass manufacturer mentality that controls the ADs' ability to do this. I don't see that corporate mindset changing anytime soon. Have we forgotten it was just 2009 when Breitling axed a bunch of North america ADs for discounting too much. Omega spent a good part of 2010 inventing reasons to axe ADs or being so unreasonable with them that many ADs told Omega to take a hike. It can't be coincidence this is happening at the same time Omega is opening their OWN brick and mortar stores across the US.

Watch manufacturers love to control their ADs through their contract with the distributors. There seems to be some deeply held mystique that advertising discounts cheapens their brands. Isn't that the same psychology that induced the COSTCO suit? And any online gray market suits to follow?
Author:  Roffensian [ Fri Jan 14, 2011 11:58 am ]
Post subject:  Re: Omega v. COSTCO
Official online retailing doesn't mean the same as official in house retailing, they can still do it through an AD network, either with new or existing ADs.

Case in point - http://www.exquisitetimepieces.com/
Author:  anez [ Fri Jan 14, 2011 12:04 pm ]
Post subject:  Re: Omega v. COSTCO
Roffensian wrote:
Official online retailing doesn't mean the same as official in house retailing, they can still do it through an AD network, either with new or existing ADs.

Case in point - http://www.exquisitetimepieces.com/


Excellent point. Maybe in ten years' time, things will have completely flipped-- the B&M stores will be fewer in number and devoted to single brands, and the online retail points will be multi-brand ADs.
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