Quote:
Originally Posted by SMD
It's not just about buying in bulk. Trusted sellers factor inventory for retailers. Anyone who knows how that works for other businesses know how expensive that money can be. Not all retailers can afford to continue to bring in their quotas if their inventory is not turning. At some point that dead money needs to be liquid to pay the bills. That is how Trf sellers help. Not all ADs have years of working capital sitting around to ride out slow moving inventory. Rolex knows all of this and accept that it is a necessary evil. If they wanted to shut this down they could easily do so. But it works for them because they keep pushing pieces out the door, and ADs take the inventory (and the risk) on their balance sheet. Margins dont mean a thing if you don't have cash to keep the lights on.
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X2. Agreed. Think of the invoice when Rolex sends an AD a watch shipment. It could be 100K-200K or more depending on the quantity of watches and how many precious metal pieces. If you are an AD who has a slow moving watch inventory or the time of the year sales are slow, such as right after the holiday season how do they pay the invoice, pay the employee payroll, pay the rent, the utility bill? Rolex expects payment for their watch delivery and as an AD you can't just refuse a shipment because of slow sales. So they have to move inventory one way or another. Out the front door or out the back. Or both.