New way to manage allocation, perhaps?

[Whitnail]

In my industry, we have experienced product shortages of varying intensity, and invariably the channel distorted and magnified the issues.
After a couple of rounds of allocation over the years, most manufacturers adopted a form of controlled order entry. The intent was to identify who the end user was and force the channel to direct the available product to the legitimate demand. This didn't completely eliminate the broker community or end speculation, but it helped tremendously.

So, I'll start with a big assumption about Rolex's thinking about the current environment. Who knows the mind of the Watch Company, but this is the premise:
Rolex wants certain models to be rare and trading at multiples of MSRP in the secondary market. They don't want all of their steel sports models to be thus. I'll assume that steel Daytonas, steel Sky-Dwellers, and BLROs will maintain unobtainium status. This allows the AD network to carry on with their VIP and grey market strategy for the extra juice on these models.

For the other steel sports models Rolex introduces a controlled order entry (COE) program. They add a portal to their web site and invite the public to register their interest for eligible steel sports models. They would need to employ systems similar to online voting sites. Your MAC address, IP and physical location will be ascertained to ensure you are located at a residential address. After you provide all of your information and confirm that you are not a reseller you select one (and only one) watch and submit the data. Rolex then comes back to you at some point and provides you with a lead time. Let's say they establish a maximum of 2 years to keep things manageable. If they can't guarantee a delivery inside of two years they won't take your order. So let's say you want a Sub and after the factory analyzes all of the demand you get a response saying you will get the watch in 12 months. If you wish to proceed you select your preferred AD from a drop down list (based on your location) and you place a deposit of 30%. Your credit card must not be a corporate card. Rolex retains the deposit, and you are instructed not to contact the selected AD in the interim as they have no way to expedite the delivery.

Twelve months later your watch ships to the AD and you're notified to arrange for pickup at the AD, Rolex gives you a confirmation number along with the serial number. When you arrive to complete the transaction you pay the balance. The AD confirms the transaction back to Rolex, proves that the serial number aligns with the customer and the credit card and then Rolex sends the AD the 30% deposit that they had been holding.

Advantage; Rolex knows the true demand, and they know who the end users are, where they live, and they can tie the serial number to the end customer. The AD shenanigans are eliminated for these models. As an end user, you get certainty.

Once you have taken delivery, you can get in the queue for another watch if you wish, assuming availability hasn't changed.
I'm sure greys can still find a way to operate in this environment, but it would be a lot more difficult for them.

[Chewbacca]

Makes sense. But sense and inventory optimization for speed isn’t what Rolex demand is about.

Scarcity is the business strategy and its doing fine for Rolex.

However I do see online buying coming very soon.

[watchmaker]

Have to say I like the sound of this sort of solution in theory.

Only fly in the ointment is; what incentive does Rolex HQ have to start intervening like this? They sell everything they produce to dealers with zero effort required. Managing who gets what (customer wise) is the sort of grunt work that it is evident they don’t want to be involved in. And I don’t blame them. When customers are happy the brand gets the praise and when customers are disappointed the AD is on the front line. If it ain’t broke don’t fix it.

[Etschell]

The easiest way is to make the warranty non transferrable. That would really slow it down on new models. But Rolex wont do that. They like what is going on.

[Brew]

Rolex's response: Thanks, but if it ain't broke, don't fix it. Another solution in search of a problem.

[exador]

Great first post and welcome to the forums.

P.S. is there an “I”?

[Whitnail]

Originally Posted by exador

Great first post and welcome to the forums.

P.S. is there an “I”?

Thank you. There is an “I” but not like in the movie.

[djgallo]

I don’t see the incentive for Rolex to change the status quo as it applies to their overall sales. As a consumer, I kind of like the idea of Rolex selling direct online to the customer...and that could change the whole equation over night....would probably accomplish minimizing some of the greys and getting more of the watches directly to us consumers...if thats what they want to do...big ?

[DTap]

Sounds good here.

[AshCashEmAll]

Nah no need this isn’t ticket scalping. Not everyone can afford to purchase these watches with hopes of making money. Eventually greys will lose when demands dies (let’s be honest it will) if they can’t sit on their inventory for long enough till the demand comes back up. Rolex has been shutting down ADs and now ADs are holding warranties for up to a year, taking all stickers off, and forcing customers to pay with a credit card.


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[Muxi]

This method presupposes that the greys and flippers are not going to join the game. If they do, we’re back to the same situation.

[Whitnail]

Originally Posted by Muxi

This method presupposes that the greys and flippers are not going to join the game. If they do, we’re back to the same situation.

Greys and flippers thrive on instant gratification. If you are a flipper, are you going to tie up a 30% deposit for 6/12/24 months hoping that the market is still hot when the piece comes in?

[replicator]

Will get gamed regardless. Folks would just have their relatives, children, babysitters all register on their behalf.

No easy solution here. Plus unobtainium is marketing that money can’t buy.

[Whitnail]

Originally Posted by replicator

Will get gamed regardless. Folks would just have their relatives, children, babysitters all register on their behalf.

No easy solution here. Plus unobtainium is marketing that money can’t buy.

Practically any system can be gamed. But this would be a PIA for the greys, it would at least put a crimp in their game. Unobtainium is great when it applies to some of your offering, not when it happens to an entire segment. I think the brand is getting a bit of a black eye with the current situation.

[EDL7]

I think Rolex should do what the Yakuza do..
Chop off a finger (of customers choice...) for every Rolex bought..
That is the price you pay for unobtainium..
Rolex gets to keep the finger for genetic material and proof of ownership..
Then after you own the watch for 5 years..you get your finger back...lol...with your 1st service..
Maybe your doctor can reattach then..if kept on ice...
The only problem would be..where to do the chopping...lol..and...who's going to do it..
And where to store all those fingers..
Definitely would get rid of the greys and flippers..
And maybe..bring prices down too!
And those with the least fingers..and the prettiest watch..will be worshiped and admired..lol..
A thumb for a Daytona..
A pointer for a blue Sky Dweller..
Who needs fingers..lol..

[Scapegoat]

Thank you for your suggestion, at least some constructive work being put out rather than relentless whining.

Ultimately, my thoughts are that it is just a watch. No need to go crazy over a luxury item...

[Rado63]

Great post except you ignored whats been happening to date . Eliminating AD's , reducing supply, increasing MSRP to come, no discounting, more bundle sales to sell slower moving product, and selling multiples to big spenders. Probably no online sales to end users in any part of the near future, or ever.

[Muxi]

Originally Posted by Whitnail

Greys and flippers thrive on instant gratification. If you are a flipper, are you going to tie up a 30% deposit for 6/12/24 months hoping that the market is still hot when the piece comes in?

Or they can just buy from the flippers already in queue. It’s the same banana.

[TswaneNguni]

Originally Posted by Whitnail

Rolex wants certain models to be rare and trading at multiples of MSRP in the secondary market.

I love these posts about people trying to help out Rolex in their business model...

Your assumption is wrong .

Rolex do what they have been doing for decades according to the binding trust instructions from Wilsdorf .Quality watches in percentages of model ranges according to the trust instructions.

High demand = shortage .

Rolex produces excellence and sponsors excellence .
It is a remarkable brand.

[Muxi]

Good effort though.

[jets]

Checking into these forums once n a while and these posts kill me. It's their game and they're taking all your money either way. Why would they even bother with this consumers distributing business model? The notion that they'd even consider doing anything other than what they're already doing is pure fantasy. Get over this brand people it isn't worth it.

Half the people that even care to notice your Rolex wonder if it is genuine anyway.

[Calatrava r]

The aftermarket frenzy is fueling demand for Rolex. Why would they do anything to stop the current market place. Very few brands can boast the value retention of Rolex which I am sure Rolex is rightfully proud of.

[Exploradori]

Rolex response: screw you.

[teck21]

Originally Posted by Exploradori

Rolex response: screw you.

Clearly you have spoken with top management at Rolex.


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[Whitnail]

Originally Posted by TswaneNguni

I love these posts about people trying to help out Rolex in their business model...

Your assumption is wrong .

Rolex do what they have been doing for decades according to the binding trust instructions from Wilsdorf .Quality watches in percentages of model ranges according to the trust instructions.

High demand = shortage .

Rolex produces excellence and sponsors excellence .
It is a remarkable brand.

Rolex is a remarkable brand, one of the most valuable in the world. So how do you think they feel about their customer relationships being moved from their carefully selected ADs to Wally’s Watches in a strip mall? Don’t you think Rolex wants you to be sipping scotch on a Rolex branded chair while your client advisor sizes your watch for you? Do you think it’s good for the brand when the ADs look like they got robbed a few hours before? It is not good for a brand when multiple boards are mocking your ability to deliver while the greys have an abundance at massive premiums, it is unseemly. The brand is being tarnished and some buyers are taking their business elsewhere.

[JR16]

Originally Posted by watchmaker

Have to say I like the sound of this sort of solution in theory.

Only fly in the ointment is; what incentive does Rolex HQ have to start intervening like this? They sell everything they produce to dealers with zero effort required. Managing who gets what (customer wise) is the sort of grunt work that it is evident they don’t want to be involved in. And I don’t blame them. When customers are happy the brand gets the praise and when customers are disappointed the AD is on the front line. If it ain’t broke don’t fix it.

Bingo. People seem to think Rolex “cares” that not everyone and their mother can easily get a Daytona/blro/skyD etc ...they don’t (and nor should they IMO)


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[Muxi]

Originally Posted by JR16

Bingo. People seem to think Rolex “cares” that not everyone and their mother can easily get a Daytona/blro/skyD etc ...they don’t (and nor should they IMO)


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Agree. They should just focus on value retention and durability of their product. The rest will take care of itself.

We all know the story of the man who tried to please everybody, right?

(Spoiler: he ended up not pleasing anybody)

[Harry-57]

Originally Posted by Whitnail

Let's say they establish a maximum of 2 years to keep things manageable. If they can't guarantee a delivery inside of two years they won't take your order.

This is the point at which it could all fall down. The way things are at the moment, it would need to be three years tomorrow and ten years by next week. It is not a Rolex problem. They don't need a solution.

ADs would lose collateral business. They can't sell other things to people if they are not walking in on a regular basis. This could make the Rolex franchise more of an impediment than an enabler. Add to this the fact than many are upgrading their premises this year to install new Rolex dedicated sections (my AD just spent £250K on theirs) and a company policy that potentially reduces foot fall seems not so much like meanness as madness.

[lawrence1]

Originally Posted by Exploradori

Rolex response: screw you.

love it!

[zengineer]

Rolex sells every watch they choose to make at a price they set. This helps them in no way. The ADs can drive sales in their store by rewarding big spenders with desirable and scarce models. This hurts them.

The watches would still hit the grey market at the rate they do today because all of the safeguards you propose can be faked by anyone with even basic computer skills. There would be crews doing nothing all day but signing up to be next in line. The more technical the process gets, the easier it is to set up a system to beat it.