And not only Seiko, but also every watch brand that continues to disrespect dealer, customer, and market value with irresponsible distribution practices. That’s right, we said it. The topic that other watch bloggers are scared to touch for fear that these whore-brands won’t send them any more freebies to write about.
Seiko is one such brand.
The Japanese manufacturer recently released two watches to mark their 100th year of watchmaking. The new generation Blue Monster and the Blue Baby Tuna. Both with remarkable dials and gold accents. These watches retail for $495 (Monster) and $550 (Tuna) respectively. For those of you who know, these limited edition watches just came out.
As a collector, how would you feel if you went to your local authorized dealer, negotiated a bit, finally paying $475+tax for the new Baby Tuna… then went home and saw it online for $235+free shipping? You would be pissed at the AD for ripping you off! But in fact, they did nothing wrong and could not possibly match the lower price. Here’s why:
Most Seiko dealers placed orders for these limited edition pieces around the time of Baselworld last spring. The dealers’ cost would have been 50% of the retail price. So, in the example of the Baby Tuna, dealers pay $275 with hope that they would be able to sell the watch and make a profit.
Business is business, right?
Companies do not buy products to sell at a lower cost than they paid. That would be charity, not business. Maybe they break even in some cases, but certainly wouldn’t want to take a loss. So how is it that Seiko watches are being sold for less than authorized dealers are paying?
It means that Seiko is either whoring out watches at a lower price than they invoice their loyal dealers, or they are allowing distributors to get away with whoring out watches at less than dealer cost.
Distributors in general pay about 50% (or less) of what a dealer would pay. So their price on a Baby Tuna would be $137 (or less). Keeping in mind that they also have the power of moving large quantities at once. Making $30/watch in one high volume sale is easier than making $150 per watch over a longer span of time. Plus it looks good for them to move a lot of watches quickly.
It screws up the market and flip-ability.
Watch brands like Seiko have a responsibility to customers and dealers (and shareholders if there are any) to protect the value of the brand. That’s why MAP (minimum advertised price) exists. It prevents dealers from advertising a sale price for less than the limit set by the manufacturer – usually within 10-20% depending on the brand.
The most respectable brands (ie: Rolex) do not allow any flexibility on advertised prices and force dealers to maintain retail pricing. This also protects your watch’s resale value. Imagine trying to flip your $475+tax Baby Tuna a week after you got it… you would have to sell it for less than $235+free shipping because forum trolls would reference the new one they saw online for that price.
Pay less for brands that do not value themselves.
Avoid whore-brands like Seiko unless you can get the watch for at least 50-75% off the retail price. Even if that means buying pre-owned or negotiating with online sellers. It can be done! Since brands like Seiko do not have enough integrity to properly manage and enforce reasonable MAP, then why should you pay them more than they’re worth? (Just keep in mind that watches sold on the grey market most likely won’t have a valid warranty.)
Any other whore-brands that you know of? Talk about them in the comments below!
(Pics found online. Proof!)