Wednesday, June 2, 2021

One of The Strangest Things I Have Ever Seen in the world of Rolex

Note from Jake: I just completed a big update to this popular story and brought it back to the top so readers can gain more insight and ultimately separate the fact from the fiction on 'What is really going on with Rolex supply:




What Is Really

 Going On With

 Rolex Supply


One of The Strangest Things

I Have Ever Seen in the World of Rolex



"If you told me when I first walked into a Rolex Authorized Dealer back in the early 1980s and saw glass countertops filled with a magnificent polished smorgasbord of every single Rolex model, that in 2021 I would have to wait in line outside a Rolex store with a mandatory mask on my face to go into my local Rolex Authorized dealer to see the same glass countertops COMPLETELY EMPTY I would have thought you were crazy!?!!"


This is an update to my original story I wrote back in June of 2018 titled "What Is Really Going On With Rolex Supply". 

The number one constructive criticism I hear from Rolex customers—and I hear from many of them on a regular basis—is how frustrated and disenfranchised they feel as they can't find the Rolex model they want to buy from a Rolex Authorized Dealer. Granted, this is defiantly a first world problem, but it is real. Many people have also pointed out they can find plenty of the Rolex models they want online on the secondary market, brand-new in the box—often times for double or even triple the price and this is really frustrating. 

The second constructive criticism I get is customers HATE when they go to a Rolex Authorized Dealer looking to buy a watch and the dealer offers to put them on a ambiguous and nebulous pie-in-the-sky "waitlist" that often times seem to be the equivalent of being stuck in horological purgatory. This potentially antagonistic behavior puts customers in an awkward position between Heaven and Hublot :-) Just trying to make you laugh, but you get the idea...



Managing Expectations


When customers get confused by a brand they can end up shying away and in Rolex's case end-up in somewhat of an adversarial relationship with The Crown, which is unnecessary and arguably NOT in the best interest of Rolex, nor the customer.

I want to make something crystal-clear about this article. I have been madly in love with Rolex and worn Rolex watches for 40 years—so much so I ultimately became the President of the Rolex Fan Club. This article is 100% CONSTRUCTIVELY CRITICAL and offers a historical context on how we arrived where we are today, and most importantly offers real-world innovative solutions and ideas. I am NOT claiming to have all the answers, but I believe I am asking many of the right questions. I believe Rolex needs to clearly define boundaries and set realistic expectations so customers continue to LOVE and CHERISH The Rolex Brand.

Happiness is expectation management, and I believe that is the key takeaway and solution for Rolex to overcome these challenges that can potentially turn customers away from the brand. I will point out I have noticed many people talking trash about Rolex, but they often times still seem to love the brand—kind of like most relationships actually :-0 

As I wrote and researched this article you are reading, it has dawned on me several times this issue may all just be fake outrage, but I think it's always worth exploring ideas that promote diversity of thought.



The New Rolex Normal

In the middle of April, 2021 I saw one of the most fascinatingly bizarre things I have ever seen and I took a photo I am sharing with you above and below. I just happened to be in a local mall where there is a Rolex authorized dealer which I check out every couple months just out of curiosity. Of course the Rolex section is beyond beautiful. I mean just look at that magnificent color combination of the Rolex green logo wall surrounded by the gorgeous tan limestone tile wall along with the great-looking brown counter and rear wall panels. One thing for certain is Rolex point-of-sale displays are timeless, elegant and IMPRESSIVE!!!

I took the photo below on April 10, 2021 around 3:15 PM and I was shocked to see ZERO watches in their Rolex display counters. Just to be clear, I took this photo during normal business hours.

Beautiful Rolex Authorized Dealer photo taken April 10, 2021 @ 3:15PM with 100% empty counters

The photo above of the Rolex Authorized dealer looks like I snuck in after hours when all the inventory was put away in the vault—but that was NOT the case. It was strange to behold this site as I was both shocked and not surprised at the same time!?!! Why? Scarcity is a strange bird. I have heard stories in the past about how in the Soviet era people would visit stores and have to wait in line for hours to buy bread only to walk in to find empty shelves, and that was clearly not a good thing. 

Fast-forward to today and in a bizarre twist-of-fate we ironically witness the contrary. A Rolex store with completely empty shelves—not because of some kind of catastrophic failure due to the Covid Pandemic, but the exact opposite!?!!: Completely empty shelves like you might expect to find in a North Korean grocery store. This is due to amazing market demand for Rolex!!! Rolex's beloved founder, Hans Wilsdorf must be spinning in his grave (In a good way :-)



Rolex of Yore

I remember when I first got the Rolex bug when I was 16 going to visit multiple local Rolex dealers and it didn't matter whether it was Tiffany & Company in downtown San Francisco, or my local Rolex Authorized Dealer in Marin County, or San Francisco—the one thing they ALL had in common is when you walked in you would see multiple dedicated Rolex display cases fully stocked with every Rolex model. Then in the 1990s I remember it became common for them to have EVERY model, expect the stainless steel Rolex Daytona models. The benefit was at least they had yellow gold Daytona models so you could see what a Daytona looked like.

Just for frame of reference, below are photos I took at Fourtané Jewelers in Carmel by the Sea which is an Authorized Rolex Dealer—back in 2009—and as we see the cases are filled with 300 brand new modern Rolex watches out on parade!?!!


I had to dig back in my archive for these photos to make certain I was NOT hallucinating about the way Rolex Authorized Dealership used to look with almost every single Rolex model in the countertop displays...




Memories

For me visiting my first Officially Certified Rolex Authorized Dealers back in the early 1980s reminded me of when I first visited Disneyland as a 6 year-old child. 


Disneyland was so otherworldly and positively overwhelming with rides like The Matterhorn Bobsleds (speaking of Swiss Made :-), along with The Pirates of the Caribbean, Tomorrowland, Splash Mountain, It's a Small World, and they even had a monorail that went around the whole Disneyland theme park.

When I was 10 years old I saw the original Star Wars 'A New Hope' movie for the first time and it was remarkably just like my first Disneyland experience.

Watching Star Wars was like visiting another universe with fascinating microworlds like Alderan, The Death Star, Moss Isley and Old Ben Kenobi's cave. There were all these fascinating characters like Hans Solo, Princess Leia, Luke Skywalker, Darth Vader, and Obi Wan Kenobi, not to mention all the Storm Troopers and R2D2 & C3PO. I was in paradise :-)))



So five short years later—when I was 15—I started visiting Rolex Authorized dealers which was another rite-of-passage. In the glimmering glass cases filled with seemingly magical themed bracelets were The Submariner, GMT-Master, Day-Date, Datejust, Daytona, Oyster Perpetual and even the Cellini dress watches and bejeweled Day-Date models which were so 'Shields and Yarnell'. 



Each Rolex watch had a different theme and vibe so when you put it on your wrist you transformed into a different character—kind of like when I would watch a popular TV show during my teen years. If I wore a Rolex Submariner I would become Jacques-Yves Cousteau:

If I put on a Rolex GMT-Master I was Chuck Yeager. If I put on the Day-Date, I was a President. If I put on a Daytona, I became a Race Car Driver and if I put on SEA-DWELLER I became a deep sea aquanaut. If I put on an Explorer I became Sir Edmund Hillary climbing Everest. If I put on an Explorer II, I became a cave dweller. You get the idea :-0

If, after having purchased my first Rolex Submariner when I was 16 (in 1982) you told me 39 years later when I was 54 years old if I went to my local Rolex Dealer I would have to wait in a line outside the store with a mask on my face that I would have to continue wearing in the store when I was escorted to the Rolex department that would have ZERO watches in the case —in my palmiest days—I would never have believed this to be realistic possibility!?!!

So when I visited my local Rolex AD recently and was greeted by a nice sales lady who said, "So you are interested in purchasing a Rolex?" I said, "Yes, but why aren't there any watches in the case?" She said, "Rolex watches are extremely popular and they can't make them fast enough! Everybody knows if they buy a Rolex they will only go up in price and they can sell them for more than they paid!" By the way I had my five year old daughter with me who asked me as we walked out of the store why we stood in line to go into a store and look at an empty Rolex case? I simply responded "People love Rolex watches and they can't make them fast enough." I am certain she was really confused.

So what does all this mean? I am not too sure...I am certain Rolex is a superb store-of-value worn on your wrist...No matter what, for Rolex it's an excellent problem to have...

A few days ago, I happened to walk by the Rolex Authorized dealer and noticed the way they dealt with the bizarre issue of having empty counters was to place Rolex graphics and photos in the case as you can kind of see in this photo I snapped:




Grey Market

Update: June 2, 2021

I have never seen so many comments on the @Rolex.Magazine Instagram page—many of which are fascinating—as perception is often reality.




Many people believe and blame the grey market for the shortage of Rolex watches. If you are not familiar with the 'Grey Market' for Rolex watches, the idea is Rolex sells watches to Authorized Dealers (B2B) who then instead of selling the watches in their store(s) sell them to watch dealers (B2B) on the open market. The watch dealers then offer them for sale in the open marketplace, often at a very high markup for desirable watches (B2C).

My understanding is the majority of grey market Rolex watches come from outside the U.S.A.,—particularly  from the Asian market. As I understand it from decades of research, insight and anecdotal evidence, Rolex U.S.A. is VERY protective and strict with the American market, and frown upon Rolex Authorized Dealers 'Selling watches out the back door.'

The challenge ongoing challenge with current market conditions is many Rolex customers are very upset and frustrated with the Rolex grey market today. In other words, if you go to a Rolex authorized dealer and want to buy a popular model, chances are they won't have it out on display. If you are a great customer of a Rolex Authorized Dealer they MIGHT give you preferential access, particularly if you spend a lot of money on diamonds or other jewelry.

So let's say you want to buy a Rolex Submariner and you just can't find one at a Rolex Authorized dealer (which is very likely), you go online and find many for sale that are brand new with papers for double the price, you would be frustrated and confused as many consumers rightfully complain about this bizarre reality.


Counterpoint

I came up with with some interesting ideas for how Rolex can essentially eliminate the grey market if they really want to and here is how it would work:

EVERY Rolex Authorized dealer would be required to carry the full range of Rolex watches in 'Demo' models in their cases which was my pal, Clyde's idea. These special 'Demo' models would lack movements, and the rehaut instead of saying 'ROLEX, ROLEX, ROLEX, ROLEX' would have an engraving that says "Demo Rolex. NOT for SALE".

Customers would visit each Rolex Authorized Dealer and instead of seeing empty counters, or displays with a small assortment of the least desirable models would instead see every Rolex model as they would have in the days where that was standard, which would take us back at least 3 years ago. Customers would be able to try on each model to figure out exactly what they like, and then place an order. The terms would be such that after the customer chooses their model they would be offered an accurate delivery date for their watch. If they accept the terms using the Rolex smartphone App, they would get a pre-order delivery date—just like with Tesla.

The customer would be required to pay a 25% non-refundable deposit, and would be required to give the name they would want etched on the rehaut of the watch. This would deal a killer blow to the grey market as nobody would want to own a secondary market watch with somebody else's name engraved on the rehaut of the watch—and kill all the Rolex flippers who want to make a fast buck. 

[Note: I understand some people would not like to have their name or some kind of text on the rehaut as they would be concerned it would adversely affect resale value. The simple way around this would be to prioritize customer who want their name on the rehaut over ones without it. This prioritization would move every person who genuinely wants a Rolex to wear for life to the front of the line. So if a customer wants to order a stainless steel Daytona with their name on the rehaut, the standard pre-order might take a year. If somebody wants it with the standard generic rehaut they might have a 2 year wait, but at least they would know when to expect it. 

This brings to mind another idea. What if customers could pay a premium to be moved to the front of the line, which might go something like this: If you want your watch with your name on it you wait a year. If you want it sooner, you could get it in 3 months, but the customer would have to pay a 30% premium. Doing this would create a Rolex marketplace which could be controlled in a Rolex smartphone app or on the web in a browser. I realize it might sound weird, but welcome to the real world! Capitalism is about supply and demand, and if demand significantly outstrips supply, it makes sense to have some kind of smart prioritization system.]

So why doesn't Rolex incorporate this innovative idea which on the one hand would eliminate the grey market all-together while making customers happy so EVERYBODY who wants to purchase a Rolex can stand in a REAL line on a REAL and equitable waiting list which will allow them to anticipate exactly when they will receive their Rolex watch? I've heard people suggest Rolex doesn't really care about the grey market so long as they sell every watch they make but that is NOT an issue, especially since Rolex can't keep up with market demand. 

Also, it is possible Rolex is afraid to rock the boat by changing things. They are probably concerned if they make too many changes like this it might mess up their secret sauce. At least that is my best guess. In case you were not aware, the Swiss can't stand disruptive change and are very conservative and relatively averse to 'NEW' ideas or new ways of doing things. If it ain't broke, don't fix it mindset, but that is NOT what leads to innovation. Innovation in NOT about maintaining the status quo. Innovation is about constant change, improvement, and critical thinking skills which ironically was the standard Rolex founder, Hans Wilsdorf built Rolex upon.



If I was Rolex CEO

Rolex, if you are reading this, I really think it's time to make some real and meaningful changes: I have been publishing Jake's Rolex World for 14 years now, and I would challenge Rolex to reinvent their distribution process and evolve from a B2B company to a B2C company. If I were the CEO of Rolex—which I obviously am not—I would incorporate this innovative next level system I mentioned and ensure every person who wants to own a Rolex could, and I would NOT be worried about economic fallout. I would rather have happy customers than having an antagonist passive/aggressive relationship with customers.

The bottom line is we are living in the 21st Century, where brands like Tesla and Apple sell directly to customers in a browser, which is a relatively friction-free and easy process. And after all, you are reading this in a browser. 

I would NOT eliminate Rolex Authorized Dealers. Instead, if a customer were to purchase a watch online they would be required to pick it up at their local Rolex Authorized dealer, who would still make money on each watch so long as they deliver it regardless of whether or not they were involved in the sale. 

Speaking of Apple and Tesla, they both have an amazing direct B2C network of company-owned-stores that handle the entire transaction with customers from end-to-end. Apple and Tesla often have their repair centers in their stores (think: Genius Bar).

If I were the CEO of Rolex I would keep building company owned Rolex boutiques all over the world in order to control the entire ecosystem and make Rolex a truly vertical B2C operation. Just to be clear, today, Rolex is largely a B2B business.

Another consideration for significantly reducing the grey market would be for Rolex to keep raising the prices of their watches in order to radically slow down the secondary watches so that Rolex would be making the money the grey marketers make. This approach, of course, would be a slippery slope as it likely would also upset many customers as they would get further priced out of the market.

Special thanks to my pal, Clyde the Watch Wrangler who has continually shared his fascinating perspective with me on this issue. Clyde pointed out that ALL the other watch brands have websites with Contact Us or Chat with Us features. He quipped "They do this because they have to. Rolex doesn't do it because they don't have to, but they should before it's too late." 

If you have ideas or feedback please feel free to share it on our @Rolex.Magazine Instagram page. You can also check out some fascinatingly insightful comments in the Instagram thread below.



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