Hodinkee founder Ben Clymer has addressed speculation about the future of the world’s most-read watch title with the announcement that it is all-but exiting the retail business.
https://www.hodinkee.com/articles/a-note-on-the-future-of-hodinkee
The New York-based company has faced criticism for straying from its original mission “to create the world’s most detailed, engaging and entertaining watch content” after it evolved into an online authorised dealer for over 30 brands with the launch of Hodinkee Shop in 2017.
The Shop was launched following a series of sell-out successes for Hodinkee with exclusive limited editions from the likes of Vacheron Constantin, Laurent Ferrier, MB&F and Ressence.
However, as the shop grew, Hodinkee devotees took out their frustration through the site’s comments section at the perceived conflict of interest to editorial independence.
Even Mr Clymer acknowledges in this week’s open letter that retail had become too intrusive. “You’re gonna have to live with fewer emails offering $300 off your next pre-owned Rolex hitting your inbox,” he jokes.
The move into retail was never plain sailing and there were were other early setbacks.
First, it might have been hoped that the brand list would improve, but online-only retailers find it impossible to work with the biggest and hottest brands: Rolex, Audemars Piguet, Richard Mille and Patek Philippe, because they only sell through their brick and mortar ADs.
Omega briefly flirted with Hodinkee, and the companies even opened a pop-up physical store together in New York in 2019, but the partnership did not last. Early backers including Tudor and even Apple also walked away.
Today, the top brands selling at Hodinkee Shop are, perhaps, TAG Heuer and Grand Seiko, and even these brands will not supply hot boutique-only and other limited pieces.
Far more suited to online sales is pre-owned, and Hodinkee raised $40 million in late 2020 in a funding round led by TCG, a Chernin Group company specializing in building fast-growing consumer-facing businesses, and supported by LVMH Luxury Ventures, True Ventures, Future Shape, Google Ventures.
Even celebrities including Grammy-winning artist and uber-watch collector John Mayer and equally horologically-obsessed Super Bowl champion Tom Brady got in on the deal.
Two months after that funding round, which valued Hodinkee at $100 million, according to Forbes, the company announced it had bought Crown & Caliber, one of the biggest second hand luxury watch traders at the time, for an undisclosed sum.
That looked like a sound investment as prices for luxury watches soared on the secondary market. Pre-owned specialists cashed in as a Rolex bought at any time between 2020 and 2022 could be turned for an instant profit.
But those days were not normal, and when prices peaked and began to fall sharply after the spring of 2022, stock-holding traders like Hodinkee / Crown & Caliber were suddenly hit with the double whammy of a virtual freeze in sales coupled with the value of their inventory plummeting.
Indexes tracking the most traded watches show prices from the peak in 2022 to today falling by well over 40%, and still nudging lower even today.
Meanwhile, the broader market for luxury goods, including watches, has cooled following a post-pandemic boom. Authorised dealers for the likes of Rolex and Patek Philippe have been largely immune to the downturn, but demand for less desirable brands has withered this year, as financial results from the likes of LVMH, Swatch Group and Richemont have shown.
Hodinkee’s accounts are a closed book, but there has been mounting evidence that the business was losing money, not least in several rounds of redundancies across its editorial, retail and administration that shrank the team from around 160 in 2020 to under 50 today.
In May this year, Hodinkee CEO Jeff Fowler told WatchPro that the company was becoming leaner and more focused on profits.
That was work in progress at the time, and the outcome of a root and branch review of the company has concluded this week in the news that Hodinkee is all-but exiting the retail business.
In an article titled A Note On The Future Of Hodinkee, its founder Mr Clymer explains: “As of today, we aren’t going to be adding any more pre-owned watches to Hodinkee or Crown & Caliber. Nor will we add any new models to our modern watch business. Instead, we’ll be dedicating our efforts to evolving our editorial into something truly special and industry-leading.”
The future for Crown & Caliber, as a potentially independent company, is not clear.
The decision to stop buying pre-owned stock for Hodinkee Shop had, it appears, been made months ago when Hodinkee started co-listing watches from a number of trusted specialists, among them Swiss Watch Expo in Atlanta. When one of these watches sells, it is the consignor who handles the fulfilment of that order, and pays Hodinkee a commission.
While Hodinkee has said it will stop buying watches, it is unclear whether this consignment business will continue.
It may have to.
The media landscape has changed dramatically since Hodinkee’s heyday in the early 2020s. Instagram and its influencers are taking a bigger slice of brands’ marketing budgets; sports sponsorships are soaring in price (LVMH is rumoured to be ready to pay $150 million to take over Official Timekeeper duties from Rolex in Formula 1); and Silicon Valley giants Alphabet and Meta continue to command half of all digital advertising revenue, and rising.
Mr Clymer promises this week to “make the new Hodinkee look a lot like — well — the old Hodinkee”, but it will have to be a great deal most ambitious than that.
Hodinkee has 1 million followers on Instagram, 413,000 subscribers to its YouTube channel and welcomes over 1.5 million visitors to its website every month, according to its advertising pitch, so its audience is large and — largely — loyal.
But that audience has shown resistance to the sort of advertising that would usually sustain a site like Hodinkee, either through banners or sponsored content. It is unsightly, intrusive and could be seen as coming with strings attached, its readers suggest.
These are the slings and arrows faced by any major title in the internet era, but Hodinkee has more at stake than most because it has to quickly replace revenue from retail and put the business on a sustainable, profitable footing.
Thoughts of generating revenue of $141, a target discussed in a board meeting at Hodinkee in 2021, according to the Wall Street Journal, needs to be set aside as the company strives for profitability as a much smaller entity.
Hodinkee’s masthead, or online staff list page, has just 12 people, including its CEO and chief financial officer. This does not include operations, sales and admin staff, but it is a far cry from the peak payroll of around 160, according to reports, and a far smaller editorial team than the 21 working at Dutch rival Fratello (now owned by Chrono24’s parent company MPN Marketplace Network).
Mr Clymer insists Hodinkee can get back to its best. In his open letter this week, he says that, moving forward, Hodinkee’s primary focus will once again be on creating the world’s best watch content.
He also acknowledges that the shift into retail was a distraction from this mission. “I’d like to say that our focus never wavered from delivering the best content, but the truth is, things did change. And the last few years have been challenging because of it. But, suffice to say, we’ve learned a lot. And now it is time to get back to basics,” he outlines.
Mr Clymer stops short of saying Hodinkee will never sell watches again. “I wouldn’t say that,” he notes, hinting that he may put more energy into developing limited editions with brands.
The infamous reader comments that follow most articles on Hodinkee have been mostly supportive of the return to the old Hodinkee mission. Some suggest Hodinkee should consider a paywall, others were more personal.
Reader WestinOOP, in a comment following this week’s announcement by Mr Clymer, captured the broader sweep of sentiment, saying: “Ben, I’ve been reading Hodinkee since around 2012. You and your team have done an amazing job and I’ll be forever grateful for the memories. Writing a vulnerable piece like this solidifies, in my mind, anyway, you’re a genuine dude and doing a great job. As you know, that’s a rare trait. No one bats 1.000. I bet it’s a lift off your shoulders, brother. Keep going!”