Sports steel allocations to ADs

[gerry100]

Assuming 600 watches a year and an average of $5k margin per unit, the AD enjoys $3 million in margin for a product that sells itself.

Understandable that they would protect this product line and not risk their status to support flippers.

Also understand that smart business would be to leverage this for their total business results.

[TickTockChuck]

Originally Posted by gerry100

Assuming 600 watches a year and an average of $5k margin per unit, the AD enjoys $3 million in margin for a product that sells itself.

Understandable that they would protect this product line and not risk their status to support flippers.

Also understand that smart business would be to leverage this for their total business results.

Indeed! Rolex is instant money in the bank for an AD. The profit margin is 40% and requires virtually no sales effort. In fact the special Rolex rooms ADs are forced to install are basically for exhibition pieces. My last AD joked they could sell Rolex out of vending machines (note that they had lost AD status and were talking frankly). All the AD can do is use the steel professional models as a carrot to leverage sales of other even higher margin trinkets in the store, as we're all aware. If you're just wanting the Rolex, it'll be a long time generally without any "relationship". Cheers!

[cy888]

Some interesting things from this thread,
Every AD is going to be different, and seems stand alone boutiques get more then mixed AD's. That also means more pieces that are not so popular they have to carry and try to sell. Not every piece sells itself, many ladies diamond pieces are slow movers.

[luk4s83]

Rolex makes over 1.2 million watches a year. There’s one caveat, in your calculations you’re forgetting about grey market, there are getting watches from somewhere as well.




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[Chaucer1787]

The 2 ADs I deal with (different states) are both medium-sized, family-owned jewelry stores. Both have just recently undergone Rolex upgrades which also included redoing the entire store.

The manager at the one that just moved to an entirely new location was frank in telling me they get around 300-350 total watches a year - about a dozen or so BLNRs and only 4 BLROs.

The other out-of- state store receives about the same from what I’ve gathered. I only deal with the manager at each of the ADs.


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[APPRF]

Originally Posted by Hollie_Rollie

That’s crazy!

DSW got 4 2024 BLROs just last week.

The flip rate has got to be like 90% on the SS models


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ADs and grey were holding Pepsi and telling customers they don't get them or they are rare in 2024 cards, meanwhile stashing them at the back. Now that the Pepsi is not discontinued they are dumping them before the big price fall comes.

[PTCDAD]

One of the huge AD’s in Atlanta gets around 3600 a year or around 300 a month. At this location, around 80% of their sales comes from Rolex. Yet, it’s still hard to get SS sports models from them bc their waiting lists are so long.

[Devildog]

Originally Posted by luk4s83

Rolex makes over 1.2 million watches a year. There’s one caveat, in your calculations you’re forgetting about grey market, there are getting watches from somewhere as well.




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There is no true "grey market" as far as Rolex is concerned. There are secondary market dealers selling watches originally supplied and sold by ADs.

[njlam]

Originally Posted by TickTockChuck

Indeed! Rolex is instant money in the bank for an AD. The profit margin is 40% and requires virtually no sales effort. In fact the special Rolex rooms ADs are forced to install are basically for exhibition pieces. My last AD joked they could sell Rolex out of vending machines (note that they had lost AD status and were talking frankly). All the AD can do is use the steel professional models as a carrot to leverage sales of other even higher margin trinkets in the store, as we're all aware. If you're just wanting the Rolex, it'll be a long time generally without any "relationship".

Why does Rolex allow ADs to enhance their non-Rolex sales at the expense of their overall reputation?

[luk4s83]

Originally Posted by Devildog

There is no true "grey market" as far as Rolex is concerned. There are secondary market dealers selling watches originally supplied and sold by ADs.

I think you're exactly right! It's ridiculous. It is impossible to get a watch from the AD within a year (if ever at all) and on the same time it takes five minutes to find exactly the same model available online, brand new, with warranty card from the current month. But as long as people will keep feeding "secondary market" scalper dealers this situation will never change.

[MRBolton]

Originally Posted by PTCDAD

One of the huge AD’s in Atlanta gets around 3600 a year or around 300 a month. At this location, around 80% of their sales comes from Rolex. Yet, it’s still hard to get SS sports models from them bc their waiting lists are so long.

That is an obscene number! Selling around 10 a day, when other ADs, granted smaller, are claiming to only get that for the entire week or month.

Not that I don't believe you, but it's just wild how all over the place it is.

[2loaded]

AD's now have plenty of stock to fill the cases, they choose not to, and we all know why.

[PTCDAD]

Originally Posted by MRBolton

That is an obscene number! Selling around 10 a day, when other ADs, granted smaller, are claiming to only get that for the entire week or month.

Not that I don't believe you, but it's just wild how all over the place it is.

Yeah, I was shocked to hear that number too. I assume the Pareto distribution model (80/20 rule) holds true for ADs. The top 20% of ADs probably sell 80% of the pieces. Rolex seems to be consolidating their AD network too, so larger ADs will get even more in coming years.


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[Divingdeep87]

Originally Posted by Devildog

There is no true "grey market" as far as Rolex is concerned. There are secondary market dealers selling watches originally supplied and sold by ADs.

Actually mostly supplied by regular people.


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[luk4s83]

Originally Posted by Divingdeep87

Actually mostly supplied by regular people.


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And what's forcing them to keep buying from "regular people"?

[Divingdeep87]

Originally Posted by luk4s83

And what's forcing them to keep buying from "regular people"?

The AD earns money, the customer earns money and the grey dealer earns money. It’s hard to stop. lol.

But yeah for those that can’t get a steel watch, it most be a bit annoying.

[luk4s83]

Originally Posted by Divingdeep87

The AD earns money, the customer earns money and the grey dealer earns money. It’s hard to stop. lol.

Yep, the only person who is &*% is the one who actually wants to wear a watch...
It's pretty easy to stop, we just need to stop buying brand new watches from "secondary dealers" or advising other people to do so.

[Divingdeep87]

Originally Posted by luk4s83

Yep, the only person who is &*% is the one who actually wants to wear a watch...
It's pretty easy to stop, we just need to stop buying brand new watches from "secondary dealers" or advising other people to do so.

Grey can be good.

I think i’m on my own here. But I kind of like the AD game. lol. Asked my AD for a BLRO to pickup the 8 of June - and the only answer I got was “we will se - plenty of time till June” lol


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[luk4s83]

Originally Posted by Divingdeep87

Grey can be good.

I think i’m on my own here. But I kind of like the AD game. lol. Asked my AD for a BLRO to pickup the 8 of June - and the only answer I got was “we will se - plenty of time till June” lol


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Cool, I asked for Explorer II, the answer was "we didn't even get a single one last year".

[Divingdeep87]

Originally Posted by luk4s83

Cool, I asked for Explorer II, the answer was "we didn't even get a single one last year".

Find another AD. Don’t want to brag or anything, but they offer me that model everytime I ask for something exiciting.


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[luk4s83]

Originally Posted by Divingdeep87

Find another AD. Don’t want to brag or anything, but they offer me that model everytime I ask for something exiciting.


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I'm already waiting with all AD's in my state, spent hours driving and "following up". I saw one on display in Miami while on vacation a few weeks ago but obviously they wouldn't sell it. They told me they could get one in a few weeks but since I'm not local they advised me to check with my home AD. So there you go. It sucks.

[bluestreak]

Originally Posted by njlam

Why does Rolex allow ADs to enhance their non-Rolex sales at the expense of their overall reputation?

Rolex is one of the most prestigious luxury brands on the planet. The fact that people can’t get a Daytona has done very little to their reputation.

The fact that being a Rolex AD likely increases other sales is good for Rolex. It means they have the leverage to demand ridiculous things like boutique like buildouts.


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[MRBolton]

Originally Posted by bluestreak

Rolex is one of the most prestigious luxury brands on the planet. The fact that people can’t get a Daytona has done very little to their reputation.

The fact that being a Rolex AD likely increases other sales is good for Rolex. It means they have the leverage to demand ridiculous things like boutique like buildouts.


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It's not just Daytonas. The fact people can't readily get any relatively desirable model has impacted their reputation. When you still have people paying over MSRP for a Datejust or waiting around with no end in sight... or better yet, ADs that won't even add people on to the waitlist... that is damaging to Rolex's reputation.

If I were 22, a fresh college graduate living in a big city, and wanting my first Submariner I think the taste I'd quickly get in my mouth would be enough to walk away from the brand either permanently or at least for a very long time.

I've been lucky on a few instances--I.E. getting a ceramic Pepsi when I was 23 in 2019 as things were heating up, but I think the current system isn't really welcoming to the younger generation and that I was an exception to a backwards and broken system.

[bluestreak]

Originally Posted by MRBolton

It's not just Daytonas. The fact people can't readily get any relatively desirable model has impacted their reputation. When you still have people paying over MSRP for a Datejust or waiting around with no end in sight... or better yet, ADs that won't even add people on to the waitlist... that is damaging to Rolex's reputation.

If I were 22, a fresh college graduate living in a big city, and wanting my first Submariner I think the taste I'd quickly get in my mouth would be enough to walk away from the brand either permanently or at least for a very long time.

I've been lucky on a few instances--I.E. getting a ceramic Pepsi when I was 23 in 2019 as things were heating up, but I think the current system isn't really welcoming to the younger generation and that I was an exception to a backwards and broken system.

The unavailability of these models makes them more attractive to most folks. Half the people here wouldn’t want a Daytona or a Pepsi or a Skydweller if you could just walk in and buy one.


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[Devildog]

Originally Posted by Divingdeep87

Actually mostly supplied by regular people.


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Agreed - my point was they are all originally sold (to ordinary people) via the AD network

[Oystersteel92]

Originally Posted by TickTockChuck

Indeed! Rolex is instant money in the bank for an AD. The profit margin is 40% and requires virtually no sales effort. In fact the special Rolex rooms ADs are forced to install are basically for exhibition pieces. My last AD joked they could sell Rolex out of vending machines (note that they had lost AD status and were talking frankly). All the AD can do is use the steel professional models as a carrot to leverage sales of other even higher margin trinkets in the store, as we're all aware. If you're just wanting the Rolex, it'll be a long time generally without any "relationship". Cheers!

They're in the cat bird seat for sure. With the current state of the market, they can even hold watches in the vault and allocate them as needed based on sales of other goods. Slow month in bridal? Make a few phone calls the last week of the month and make some people happy.

[TickTockChuck]

Originally Posted by Oystersteel92

They're in the cat bird seat for sure. With the current state of the market, they can even hold watches in the vault and allocate them as needed based on sales of other goods. Slow month in bridal? Make a few phone calls the last week of the month and make some people happy.

Agreed. Rolex and the ADs probably like the current situation and want to perpetuate it. The only hope for a regular buyer is to find a decent SA who is fair and willing to go to bat for them, plus some good luck. I'm not willing to pay grey prices and am okay with waiting as there are other priorities in life. Rolex has an amazing skill to market its products to create almost unlimited demand.

[rjohnston713]

Originally Posted by MRBolton

It's not just Daytonas. The fact people can't readily get any relatively desirable model has impacted their reputation. When you still have people paying over MSRP for a Datejust or waiting around with no end in sight... or better yet, ADs that won't even add people on to the waitlist... that is damaging to Rolex's reputation.

If I were 22, a fresh college graduate living in a big city, and wanting my first Submariner I think the taste I'd quickly get in my mouth would be enough to walk away from the brand either permanently or at least for a very long time.

I've been lucky on a few instances--I.E. getting a ceramic Pepsi when I was 23 in 2019 as things were heating up, but I think the current system isn't really welcoming to the younger generation and that I was an exception to a backwards and broken system.

I agree with this totally. I don't understand how hard it is for Rolex to just have a centralized database that customers get added to across the ADs and then they can see where and when to send models to based on demand.

Prioritizing the younger generation should be a major concern for the company and all watch makers. They are all living in the clouds with how the last few years have breathed life back into the industry.

Im 35 and if Im trying to get into watches long term I hate to say it but barring major tragic life events I have more decades of purchasing power ahead of me than other established customers. They need to do more to get younger people into the brands. I am running into the same thing at PP, AP. and VC. Oh you don't have a purchase history but no we can't get you a watch to start your purchase history. I have 4 Rolex ADs here and none of them has been able to get me a simple blue OP 36 or mint green 36 DJ in 2 years....

Oh and that's not even factoring in Millennials and Gen Z are about to receive the largest transfer of wealth in human history coming from the Boomers and older generations. These companies are missing the forest for the trees just because its easy at the moment.

[MRBolton]

Originally Posted by bluestreak

The unavailability of these models makes them more attractive to most folks. Half the people here wouldn’t want a Daytona or a Pepsi or a Skydweller if you could just walk in and buy one

There definitely are some hype chasers out there, but how much do they really account for the overall fanbase (not just on TRF) of many of the hot watches? 25%? 50%?

ADs sold plenty of watches when they were widely available 6-7 years ago, and Rolex was still the most successful Swiss watch brand.

There are still tons of people out there that would buy the watch because they like the watch. Look at Omega. Almost all of their watches are widely available, and they can sell them. Sure, they're not flying off the shelves for the most part, but they're getting sold.

At this juncture, I wonder how much of the waitlist for each desirable model on average is just a flipper. I wouldn't be surprised if it was over 50%. Rolex now having a target audience whose primary purpose is chasing value and/or flipping just isn't sustainable for the brand either. I believe their current CEO also recognizes this and wishes to correct it.

[MRBolton]

Originally Posted by rjohnston713

I agree with this totally. I don't understand how hard it is for Rolex to just have a centralized database that customers get added to across the ADs and then they can see where and when to send models to based on demand.

Prioritizing the younger generation should be a major concern for the company and all watch makers. They are all living in the clouds with how the last few years have breathed life back into the industry.

Im 35 and if Im trying to get into watches long term I hate to say it but barring major tragic life events I have more decades of purchasing power ahead of me than other established customers. They need to do more to get younger people into the brands. I am running into the same thing at PP, AP. and VC. Oh you don't have a purchase history but no we can't get you a watch to start your purchase history. I have 4 Rolex ADs here and none of them has been able to get me a simple blue OP 36 or mint green 36 DJ in 2 years....

Oh and that's not even factoring in Millennials and Gen Z are about to receive the largest transfer of wealth in human history coming from the Boomers and older generations. These companies are missing the forest for the trees just because its easy at the moment.

I think that the database topic has been discussed before, and one conclusion was that Rolex didn't want to take on the privacy law exposure by keeping all the customers' data. However, I personally think it makes perfect sense to do so.

Regarding these watch brands shooting themselves in the foot with younger generations, I definitely agree. Many brands had their time in the sun the last 3-6 years, and the chickens are coming home to roost on the grey market now. Look at brands like Vacheron or Czapek. They hit highs you would've never predicted, and things are correcting.

Rolex, AP, and Patek, on the other hand, I think has done so much damage to their brand experience that I think it will be hard to shake off down the road. As Warren Buffett once highlighted, customers often forget things about that they bought, including the price, but they usually don't forget whether the experience was good or not. The majority of people walking into the majority of ADs are not walking out with a good experience right now.

You're not even able to get the most simple entry level models from the brand, and yet you have people who have been able to buy multiples of even the hardest to get models. It is so backwards and an absolute racket being ran that Rolex at this point is complicit in allowing.