Ecommerce has unarguably been disruptive, but has it been effective and, if so, for whom?
It is a complicated picture and I certainly do not have all the pieces of the jigsaw. We know that for the majority of high end Swiss watchmakers, around 90% of turnover is accrued through wholesale channels.
Within the 10% are sales through directly owned and operated stores and everything sold by the likes of Omega.com, Tissot.com and Breitling.com so it is safe to say direct to consumer ecommerce by the brands is not setting the world alight and is almost certainly loss-making.
Brands have an awful lot to learn about retailing online and in stores.
In the year to April, 2019, Watches of Switzerland reported ecommerce growth of 18%. This despite the figures no longer including Watchshop.com sales because the pure play ecommerce business for fashion and lifestyle watches was carved out of the Group figures in December 2018 along with UK-only The Watch Lab, a service and repair company.
“The combined revenue of these businesses was £25.4m and operating losses were £18.2m (including £16.9m of impairment) for the year prior to their sale,” WoS reports.
It is noteworthy that before it was acquired, Watch Shop sales in 2016 were were £45 million.
This means its higher end Watches of Switzerland mutibrand ecommerce site is doing far better, not surprising when Amazon is thought to control at least 40% of low end watch sales and is killing margins for competitors by discounting so much of the stock on sale.
Bucherer, which bought Tourneau in the United States and The Watch Gallery in the UK, thinks ecommerce growth has dramatically slowed.
“I think that the online impact in the watch industry, except for pre-owned, is more muted than expected. In an overall market that is growing in low single digits, it is now impossible to sustain massive online growth in the way it was five years ago,” says Bucherer UK chairman David Coleridge.
Independents are having the toughest time of all with ecommerce because they have no territorial advantage over multinational giants like Signet Jewelers, Watches of Switzerland and Bucherer but their sites have to be just as good in order to compete at all.
Most have conceded that ecommerce is an unavoidable cost of being in business — much like rents for prime locations — but not a profit center.
This is the correct conclusion, for now at least.
Every watch sold online chips away at the losses that running ecommerce generates. Or a retailer can say that a quality ecommerce site is contributing to every sale of a watch in store because the research part of a purchase will almost always have started online.
What ecommerce will not do is save a failing brick and mortar business.