AP 5 Year Warranties at AD?

[SMD]

Few assumptions in here that I think are misplaced. First, that the manufacturers actually want to shut down the grey market. If they wanted to shut down discounting, they could but it would come at the expense of the cash flows and and profits. Second, that manufacturers actually want to retail their own watches at the scale needed to maintain existing sales levels. Much different business model and again will come at the expense of cash flows and, potentially, profits.

[tyler1980]

Originally Posted by SMD

Few assumptions in here that I think are misplaced. First, that the manufacturers actually want to shut down the grey market. If they wanted to shut down discounting, they could but it would come at the expense of the cash flows and and profits. Second, that manufacturers actually want to retail their own watches at the scale needed to maintain existing sales levels. Much different business model and again will come at the expense of cash flows and, potentially, profits.

AP does want to shut down the grey market as far as i can tell. Having a 20 minute conversation exclusively about grey market with two AP people in high level positions gave me the impression they really hate it, a lot.

Hating it and actually being able to stop it are different and i concede that point. I never said they could pull it off but if that is the thinking on behalf of AP then its on their radar in a big way.

I lost count but there are a lot of AD's that lost status this year already so the consolidation to fewer AD's and moving to more brand owned sales channels is already underway.

[SMD]

Originally Posted by tyler1980

AP does want to shut down the grey market as far as i can tell. Having a 20 minute conversation exclusively about grey market with two AP people in high level positions gave me the impression they really hate it, a lot.

Hating it and actually being able to stop it are different and i concede that point. I never said they could pull it off but if that is the thinking on behalf of AP then its on their radar in a big way.

I lost count but there are a lot of AD's that lost status this year already so the consolidation to fewer AD's and moving to more brand owned sales channels is already underway.

Very simple -- if AP wants to shut down grey market, sell on 'consignment" to ADs. Meaning, let the AD pay AP for the watch once they have sold it for full price. If they cannot sell it within 6 months AP takes it back. Now stores will still have other bills to pay, but not having all of your capital tied up in slow moving inventory would significantly reduce the incentive to resort to the grey market. Will AP ever do this? Of course not as they now take all the risk on sales, they have a lot more of their capital tied up with inventory, etc. Again, they could pretty much shut down the grey market, but not without costing themselves money in the process.

[jem7v]

Originally Posted by SMD

Very simple -- if AP wants to shut down grey market, sell on 'consignment" to ADs. Meaning, let the AD pay AP for the watch once they have sold it for full price. If they cannot sell it within 6 months AP takes it back. Now stores will still have other bills to pay, but not having all of your capital tied up in slow moving inventory would significantly reduce the incentive to resort to the grey market. Will AP ever do this? Of course not as they now take all the risk on sales, they have a lot more of their capital tied up with inventory, etc. Again, they could pretty much shut down the grey market, but not without costing themselves money in the process.

It would cost them in the short run. But they would more than make up for it in the long run.

[tyler1980]

Originally Posted by SMD

Very simple -- if AP wants to shut down grey market, sell on 'consignment" to ADs. Meaning, let the AD pay AP for the watch once they have sold it for full price. If they cannot sell it within 6 months AP takes it back. Now stores will still have other bills to pay, but not having all of your capital tied up in slow moving inventory would significantly reduce the incentive to resort to the grey market. Will AP ever do this? Of course not as they now take all the risk on sales, they have a lot more of their capital tied up with inventory, etc. Again, they could pretty much shut down the grey market, but not without costing themselves money in the process.

i see that logic i truly do. That is more the nuclear option IMO. I think any strategy will be more measured. As i said earlier its the huge grey dealers buying 20 of the same watch every year they are the most worried about. Reducing the grey market as its out of control at the moment would be a win for AP and but it would not end it all together.

In the UK there are probably about 10 models that are not boutique specific that i can't get from an AD. APSC who is the distributer to the AD's is only selling them to people on their own wait lists. So they are not discounting and are not leaving it up to AD's to sell the watches. So here at least they are holding back a significant number of watches to control the price and their margins as they literally do not discount at all.