The Burgeoning Universe of Online Retailing

According to Walt Disney, “It’s a Small World After All.” Given the state of retailing today, we should amend this sentiment to: “It’s an Online World After All.”

When was the last time you bought a book in an actual physical bookshop? Or a CD in a music store?

These brick-and-mortar retailers have by and large gone the way of the dodo.

Today’s retailing is all about selling on the web—for the convenience, the comfort and because that is what the consumer wants.

People today buy groceries online, prescription drugs, eyeglasses, clothes, shoes, sporting goods, cars and more.

Watches, however, have been slow to the party, but things are heating up now as major players are selling online.

Revolution reached out to the leaders of the watch industry on both sides of the aisle, brands and retailers, to see what they think about online retailing and to find out what the future holds.

Jean-Christophe Babin, CEO, Bulgari

Online retailing has become an increasingly meaningful channel for Bulgari in many of our markets around the world, starting with the USA where it is already ranking among our top five boutiques. With the evolution, we have seen in the past few years, I think it will only become more and more important in the future. It has the potential to be the number one or two boutique in most of our markets.

The watch industry is traditional, for sure, but I think it’s more than that. The thinking was always that great watches are pieces of art that need to be held and romanced before they could be purchased. And of course, there was always a fear of price resistance online. But the entire proposition has changed and now customers are researching online and reading specialized watch blogs long before they walk into a store. All brands need to figure out how to make the shopping experience easy and personalized for clients who are busier than ever.

Our approach to online retailing is in line with our overall approach at Bulgari, to provide an exceptional client experience and to showcase our magnificent product in a way that celebrates the unique artistry and exceptional craftsmanship. Also, we want to insert it within a 360 degree multichannel approach creating a new privileged relationship with our clients. New products themselves integrate this dimension with, for instance, the new Serpenti Twist watches, which you can customize in 312 different combinations with the online application.

Online retailing is a reality in our world, for all product categories and at all price points. Younger consumers continue to migrate online for their shopping, but not only our younger clients. Each year we see more clients of all ages, some of whom also shop in our brick-and-mortar stores and others who are online only, visiting and transacting on our website.

The customer experience and their satisfaction is the most important factor for us. We are confident in our product and the reality is that the vast majority of purchases made on are not returned. The important thing is to be fair with the policies and then be transparent and honor them to the letter.

Sylvain Dolla, CEO, Hamilton

Online retailing has become more and more important for Hamilton in the past years as we opened several owned e-commerce platforms. We started with USA and then France, Italy and now UK. It is clearly a channel with strong growth potential and thus we are planning on opening more markets with our own e-commerce platforms in the coming years. Our mid-term target is to be present in all our main markets.

I am convinced that today people are ready to buy expensive and luxury items online instead of just commodities. Online is part of everyday life and is no longer associated to cheap or low quality. It is all a question of user experience.

The available variety is also a key benefit with about 300 references available online. The main drawback however is that the consumer cannot touch and feel the product. To counter this, we strive to enhance the user experience as well as the product presentation, for example by gathering “real life” pictures to give a clear idea of what the product looks like in reality. The other main advantage is that we can gather sales statistics, which help us to fine-tune collections for brick-and-mortar retailers.

I cannot speak for the entire watch industry, but at Hamilton we decided to take our time, gather data and manage resources in order to provide the best user experience online. A negative experience can adversely impact the brand, so we wanted to do it the right way rather than rushing and not doing it right.

We support our retailers for online selling and provide them with as much material as we can so they can present our products in the best way possible for their end consumer, just like we support them with merchandising in their brick-and-mortar store. As for unauthorized online retailers, we regularly inform our consumers to purchase Hamilton products solely from authorized sources to avoid counterfeit or defective products.

Karl-Friedrich Scheufele, Co-President, Chopard

For the Chopard Group, online retailing still represents a relatively small percentage of our business. However, it definitely promises potential growth in some parts of the world. So far, we operate two Chopard e-Boutiques, one for the USA and one for Great Britain. Many clients like to browse online and inform themselves about products, in order to complete a purchase in a traditional store environment. That being said, our priority is to make our customers’ journey one of discovery, excitement and quality, independently of the way he or she shops.

One of the biggest advantages is that the online shop is open 24/7 and reachable from anywhere in the world. Personal interaction with clients however, as well as the touch and feel of the product, is unfortunately not possible.

Today, only very few of our authorized multiband retail partners actually sell Chopard products online. In fact, we have very strict guidelines concerning the presentation of our products and this activity in general. These measures also help us to draw the line between authorized and unauthorized retailers.

No doubt, online retailing will continue to grow and will become a major part of a Chopard purchase experience within the next five years. Online and offline will complement each other as more and more younger customers enter the market.

Jean-Claude Biver, President of the LVMH Group’s Watch Division and CEO of TAG Heuer, Zenith, & Hublot

It’s the medium term future of retailing, so online retailing is already important. It will be crucial to be active and dynamic in online retailing, and we are 100% in favor of it. Mainly, online shopping benefits the customer and his comfort when buying.

Online retailing brings a totally new concept, which needs to be treated and handled totally differently than the other distribution channels. Returns are a bigger factor, and it’s one of the particularities of online retailing and has to be taken into account. To address the issue, we have to help customers make it in one go, or immediately propose the best choice for them.

We are an industry of tradition…but I don’t believe that watches will be reduced to commodities like books or music. Unauthorized online retailers are the biggest problem in regards to the distribution of luxury goods. All necessary efforts at all levels have to be made in order to stop this.

Jonathan King, Partner, Director of sales, King Jeweler

Nowadays, most people’s first point of contact with a watch brand or a jeweler is through the web. People find out about their next jeweler either via word of mouth or via an Internet search.

What we do notice is that we sell a lot of lower to mid-tier items on the site, but we have not yet made a significant watch sale through the web. A large percentage of our high-ticket transactions come from the initial discovery of our business through the web. The website allows people the comfort and luxury of browsing through our merchandise at their leisure, whenever they have time.

I think, in the future, just about everything will migrate online. The idea of brick-and-mortar is becoming less relevant. I think there will be a larger shift of the traffic from in-store to the web. Ultimately, I think a much greater percentage of transactions will be done online.

There will always be a need for the brick-and-mortar, which distinguishes companies like King Jewelers from people who are dealing only online. People are still looking for the credibility of the company, the warranty, the sizing and repair aspect.

When it comes to taking the knowledge to the next step, that’s where the salesman really comes into play, explaining the timepiece and guiding them to the right one. There will always be the need for the personal touch. There is a lot more than just purchasing online, you are going to need to service the watch, learn how to use it, buy new straps and have it sized. The relationship between the client and the store is very important as well for service and for future sales. We know every client by their name when they walk in, we know their birthdays, their anniversaries, their likes and dislikes.

Brick-and-mortar, multi-brand retailers are needed, so people can compare watches and see how they feel. We have been in business for more than 100 years, and we understand how to cultivate our clients. The brand boutiques and e-boutiques serve the purpose of information and image building. Many of our customers go see the watches in the boutiques, and then they come here and buy, because they have the relationship with us.

Nicolas Baretzki, CEO, Montblanc

Montblanc has been in the online business for several years now, and e-commerce has evolved as a legitimate sales channel with substantial share in key markets.

Not only through, but also a successful business with a strong network of authorized e-retailers across the globe has been established.

The rise of digital in all areas is irreversible. Technology is pertinent in our everyday lives and has definitely changed the way we all shop. Consumers’ digital demands are getting more significant and differentiated and this will even increase in the next five years. As a Maison we have to continuously adapt to the digital changes and circumstances in order to offer the best shopping experience to our clients.

Montblanc is constantly looking to rethink, evolve and explore new ways for the shopping experiences. As digital technology becomes a central part of life it opens a whole new world in terms of purchasing experience. It is a great opportunity to target younger audiences and digital professionals as well.

There is certainly a competition with retailers, and with e-commerce being a global business, the once drawn lines of strictly limited physical distribution get blurred. We have defined a framework for our brick-and-mortar retailers to get authorization for online sales. Every retailer is invited to apply, and we are proud to work with the best online partners in the world and serve customers through our own network and also through our partners’ channels.

Returns can be a big factor, certainly in many industries and for many other brands, but not for Montblanc. We address the issue with an exceptional product presentation that prevents the customer from choosing the wrong product. In every market, we also have internal customer service teams, specially trained and experienced in consulting customers over the phone. And personalization plays a big role. A large share of our products sold online can be personalized through engraving and embossing. This is a complimentary service worldwide, highly appreciated by our customers. And it keeps the return rate low.

In the past, digital could not provide the experience that would meet the high expectations of our industry. And there is also a certain learning curve and acceptance in terms of buying high-ticket items online. What used to be impossible a few years ago is now common practice. With the rise of social media and the usage of mobile devices it is now quite normal that every product can now be bought online.

Raphael Gübelin, CEO, Gübelin

For me, [opening our own e-boutique] was a long overdue natural step that had to be taken. I believe it is very important for today’s affluent consumers that want to interact with us offline and online; just in the way they feel fits best. We already saw it in the fashion industry that consumers started to shop online years ago. At the beginning the ticket prices were smaller and today people naturally buy dresses, even, for several thousand Swiss francs or US dollars online. So, it was expected that this would come in the jewelry and watch industry as well. For me it was very important to show our customers the range of products we offer and also allow them to see the prices. In addition, it also allows us to showcase custom-made or personalized products like our stackable rings, Sparks of Fire or our wedding bands in a simple way.

The first challenge was to get the internal acceptance and then it was to get the needed “online” contracts from the brands. For our own brand, Gübelin Jewelry, we always knew that we wanted to show our portfolio online; therefore, it was easy.

However, the challenge there was much more how to set up the web-shop to be able to show the jewelry category within the same framework as the watches, which have completely different key features. For example, water-resistance is not important for jewelry.

For Switzerland, I believe that the online market will grow, but it will not replace the experience that a customer can get in our boutique. I would say that it will complement the offline experience and drive further traffic to the boutique. Some of our products on the e-boutique cannot be purchased and those will in particular generate traffic to the store. However, I believe also that some customers will move over from in-store purchase to online purchase due to convenience.

Peter Stas, CEO, Frédérique Constant/Alpina

We have minimal sales via online as of today. However, we saw the trend and have created an e-commerce department as of January 2017 and hired specialists with extensive digital experience. We expect that 10-20% of our products will be sold online in the next five years.

When customers are shopping online, it’s very much a design and image experience, so we wanted to develop appealing websites that radiate luxury and integrate the other marketing and distribution efforts into a 360 degree approach.

We have created a vacuum by not stepping in earlier. Leaving online to discounters is not good, we need a brand sponsored activity.

We feel we need to first be much more present with brand supported online stores—fill the vacuum. We are going to be much more selective with the models sold in different channels. Frédérique Constant already has much less problems with discount retailers and we aim to “dry-up” the market even more.

The watch industry in general is slow and there is a strong loyalty to retailers. Frédérique Constant has 3,000 points of sale (POS) and we want to maintain good relationships with them. One of the disadvantages is the loss of retailer confidence if we do not manage our POS worldwide properly. That’s why we created a checkout where customers are shown surrounding POS; in this way, it’s an advantage for retailers to have an online experience. Customers can pick-up their watch at these retailers—so we embrace our POS in our online strategy.

Carlos Rosillo, President, Bell & Ross

Online retailing is very important! More customers are using the Internet to do their shopping and we see this as the future of how to reach our customers. We recently re-designed our website to improve the shopping and brand experience. Actually, we were among the first luxury watchmaking brands to launch an e-boutique in December 2009. Nowadays, the e-boutique is present in more than 20 countries in Europe, US and Asia and more are to be opened.

Online retailing is not going away any time soon, if anything, we will see it increase and develop each year. We anticipate many of our customers’ future purchases will be through our e-boutique. This means it is very important for us to grow with the times so we can stay relevant. For example, our e-boutique is accessible on multiple devices such as desktops, tablets and mobile phones.

One great thing is that online retailing allows brands to bring their product to areas where your brand does not have a great presence or point of sale. Moreover, we look to be closer to our customers as they can find the entire Bell & Ross collection of watches and accessories available on our e-boutique, which is not the case in a normal point of sale.

Overall the online store allows us to perfectly know our customers and their tastes and to offer them a personalized service.

We have a very selective online retail policy as very few retailers are allowed to sell our products through their own online stores. We monitor this very closely. We have tried as well to control our presence on the gray market by not providing a great volume of product to our retailers and by having our own e-boutique.

One of the biggest challenges we face is fraud. Unfortunately for brands, it is becoming increasingly more common and brands run the risk of not getting payment for their product. However, we always try to be one step ahead and protect ourselves from these kinds of practices. We are extremely cautious and so far, we have never experienced a fraudulent online purchase.

I do not think the Swiss watchmaking craft will ever lose its appeal or luxury status, it is simply not something that can be mass-produced. It is a craft that enthusiasts appreciate and are looking for when they purchase a timepiece, even if that purchase is taking place online.

Guillaume Têtu, Chief Operating Officer, Ralph Lauren Watch & Jewelry Co.

We are always late in the watch industry! It’s not a question of opportunism, but it is related to our product ranges: we had to find the right balance between the new channel and the consumer experience. [Watches] are sold for a lifetime, they are still considered “hardware,” and they are not being made into a commodity like online shopping has done to books or music.

This is the beginning of a new era—we all shop online now! It will be a channel by itself, a part of the consumer experience. We started through, then the Watches site one year ago and Jewelry just now, so it’s still fresh, and we have plenty of ideas to leverage on the Ralph Lauren experience, including proposing a complete look to the client!

The benefit is that you can satisfy some customers who don’t travel for shopping today, because they don’t have a local retailer around, or they have already seen the product so they can purchase online later. The disadvantage is that you can lose a bit of the “human relationship” and sales experience when you “dematerialize” the store, and when you see the quality of our flagships and stores, it’s still our best showcase and brand experience, so it’s vital to offer both.

It’s important to have good IT that’s linked to the logistics. We’re speaking of luxury products, not DVDs. Thanks to the Richemont Group, we have access to a powerful distribution and logistics network, we can expect better support for that.

We have plenty of tools like concierges’ chats or telephone calls to ensure that the follow up is well done, we can provide some testing experience, and again, this is just the beginning.

In the luxury world, we talk about experience more than a product purchase—it’s emotional, as long as the sales experience is qualitative, the online purchase is just another channel of distribution, and this is where we have to focus, keeping the customer satisfaction and service at the level of the expectation.

Thomas Morf, CEO, Favre-Leuba

Online retailing is becoming even more important for most of our consumer goods. The watch industry neglected this fact for a long time. The industry captains had a very arrogant attitude for this kind of business model. They thought: “We’re luxury and we don’t need this. It’s all about discounting and it’s for fast moving consumer goods only.” That was totally wrong and now they have started to change their minds.

Online business is another sales channel with enormous potential. The ideal thing is a hybrid model with brick-and-mortar stores and a well-made e-commerce platform. One thing seems to be important to understand: you need brick-and-mortar retailers to help build a strong brand image first. If you start with an e-commerce platform first, the brand building process is way tougher. Your digital strategy better be good to drag consumers to your e-commerce platform to pull the trigger. It’s always the same story: your brand needs desirability first. Then consumers will gravitate to your brand. Five years from now, even the last person on this planet will accept online retailing.

The watch industry started long ago to treat their products like a commodity. It’s got nothing to do with online retailing. How many watch brands in the past 10–20 years were following the “more is more” approach, pumping out more units, generating more profit. That’s not how luxury works. Make one piece less than the demand is.

Brick-and-mortar stores do hate brands who sell online. They see it as a threat to their business. To build distribution is tougher if the trade knows about your online activities. They don’t want to support your brand. They only start to show interest in a brand when consumers show interest. All of a sudden, they accept a brand’s e-commerce activities if the demand for the brand is strong enough.

If you set up an online platform you need to know exactly what this platform should do for your brand. It’s not just selling a product, it should convey the brand image in a strong way, make it attractive like a brick-and-mortar store you would walk into. Make it an experience, make it simple to navigate, make it simple to guide you through the sales process, make it so that consumers want to come back often, make it active and dynamic and make it classy.

Edouard Meylan, CEO, H. Moser & Cie.

Online retailing is becoming more important as customers get used to purchasing high-price tag products online. Historically there were psychological barriers preventing most from purchasing high value products online. This is changing.

And it will be even more important as people get used to it and a business model is put in place. We need to still find the right business model/balance between brands, retailers and consumers. We’re very open to online retailing and currently working on our own specific platform.

The benefits include more margin and the possibility to reach out to uncovered markets. But the disadvantage is competition against current retailers. Brand direct online retailing is probably not good for brick-and-mortar retailers but we can’t avoid this business and they will have to adapt as we do.

The biggest challenge is local regulations, especially towards returns; it’s a big factor. But we want to be flexible and factor in the customers’ needs. The client is king.

Online is a different experience, so we shouldn’t try to copy pure retail, but instead bring the brand’s identity and spirit using digital tools. Online sellers and retailers should be connected and not in competition. Availability and price control is very important.

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