OUT OF STOCK! Smart watch strategy or stupidity ?

So guys like most of you, I’m always looking for an another watch, wanting to get a Chronograph again for my little collection, had my eyes on these two, 

(1) Hanhart 417es (2) Tag Heuer Carrera 60th anniversary .

besides these I’ve wanted a blancpain fifty fathoms but one of the limited editions of the 39/40mm sizes. 
Guess what? They are always sold out‼️

so my question is this: 

why are these watch company’s doing this ? Knowing these are the models we watch nerds really want! As a company & business isn’t it in their interest to make money? Yet they continue to make many others that no one really wants or cares for~
 

rant over 🤦🏻‍♂️

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I suspect they keep the supply low, so they sell every single one they make for top dollar, rather than having them sit and be sold at a discount. 

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KristianG

I suspect they keep the supply low, so they sell every single one they make for top dollar, rather than having them sit and be sold at a discount. 

maybe? , it’s feeling like the Rolex game now, the ones buying them just to re-sell them to make a profit when most of us true enthusiast can’t get them~ really ticks me off 😤

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I happens in every hobby where there are collectable/desirable items, I have a friend who is into flipping Lego. 

The Carrera is an anniversary watch, so it was always going to be hard to get. Even without flippers, every enthusiast with an interest in Heuer and a credit card was going to try to grab one. 

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I think of it as a decision tree:

  • Are the firms profit-maximizing or not?  In the case of watch manufacturers, it's hard to know.  They're traditional and hide-bound, and so much of their enterprise value is wrapped up in brand (smoke and mirrors) that they can and do often get away with being terribly run companies that don't give 2 sh*ts about shareholders
  • But, let's assume for a second that they are profit-maximizing
  • In which case, it's a simple stocking optimization problem
  • If you have goods that have very low marginal costs to produce, then you should stock excess inventory - think loaves of bread.  Each loaf may cost you $0.05 to produce, but if you are able to sell it, you can sell it for $1.00.  In that instance, you stock lots and lots and lots of inventory
  • If you have goods that have high marginal costs to produce, and they depreciate with shelf-life, then you under-stock

Again, can't tell if these firms have the right incentives in place for management to try to maximize profits or not.  So, it could very well be that they just don't care enough about profits, so they do things that are stupid from a shareholder perspective like "restrict supply" in order to create "hype."  Or, it could be that they want to maximize profits, but don't know how to do stocking optimization! 

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HotWatchChick69

I think of it as a decision tree:

  • Are the firms profit-maximizing or not?  In the case of watch manufacturers, it's hard to know.  They're traditional and hide-bound, and so much of their enterprise value is wrapped up in brand (smoke and mirrors) that they can and do often get away with being terribly run companies that don't give 2 sh*ts about shareholders
  • But, let's assume for a second that they are profit-maximizing
  • In which case, it's a simple stocking optimization problem
  • If you have goods that have very low marginal costs to produce, then you should stock excess inventory - think loaves of bread.  Each loaf may cost you $0.05 to produce, but if you are able to sell it, you can sell it for $1.00.  In that instance, you stock lots and lots and lots of inventory
  • If you have goods that have high marginal costs to produce, and they depreciate with shelf-life, then you under-stock

Again, can't tell if these firms have the right incentives in place for management to try to maximize profits or not.  So, it could very well be that they just don't care enough about profits, so they do things that are stupid from a shareholder perspective like "restrict supply" in order to create "hype."  Or, it could be that they want to maximize profits, but don't know how to do stocking optimization! 

Yes indeed ~ so far Blancpain‘s FF makes me scratch my head the most , as a drive watch with the heritage & specs it’s better then the iconic Submariner , yet they only do it in a huge 45mm case! Not many ppl can pull that off myself included , if they made them in the 39,40mm size they would sell like hotcakes ! Yet they only make theSe ones in a limited supply with an expensive price tag~ so I feel they do this on purpose so what the hell do they do with all the other watches they make that no one buys or cares about? They have the ace up their sleeve but refuse to use it! Just crazy to me.

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ChowJunbon

Yes indeed ~ so far Blancpain‘s FF makes me scratch my head the most , as a drive watch with the heritage & specs it’s better then the iconic Submariner , yet they only do it in a huge 45mm case! Not many ppl can pull that off myself included , if they made them in the 39,40mm size they would sell like hotcakes ! Yet they only make theSe ones in a limited supply with an expensive price tag~ so I feel they do this on purpose so what the hell do they do with all the other watches they make that no one buys or cares about? They have the ace up their sleeve but refuse to use it! Just crazy to me.

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Yeah!  I would totally buy a Blancpain FF, were it not for the 45mm case!

In this particular case, I suspect it has to do with Blancpain being a part of the Swatch Group.

  • Each manufacturer has a set of product managers, probably, and each product manager's job is to maximize sales of their particular product
  • However, being a part of a larger conglomerate ties their hands
  • There's probably an overall product portfolio strategy, to which they have to adhere
  • So, the product manager in charge of the FF would absolutely love to sell at 39mm or 40mm, but the overall portfolio strategy is probably preventing him from doing so - the conglomerate has probably decided they don't want to cannibalize Omega Seamaster sales!!!
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Somebody has it in stock. 

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These brands believe that scarcity is a key factor in luxury marketing.  They create this artificial scarcity to maintain that veil of desirability and exclusivity.  They could make more money but brand prestige is more important than money. 

For all the crap Rolex takes over it’s stock levels, they were making 800k units pre-pandemic and are currently estimated to be making 1.3m units.  Despite this large increase in production, they are still facing organic scarcity based on consumer demand.

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2 all the way 

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HotWatchChick69

Yeah!  I would totally buy a Blancpain FF, were it not for the 45mm case!

In this particular case, I suspect it has to do with Blancpain being a part of the Swatch Group.

  • Each manufacturer has a set of product managers, probably, and each product manager's job is to maximize sales of their particular product
  • However, being a part of a larger conglomerate ties their hands
  • There's probably an overall product portfolio strategy, to which they have to adhere
  • So, the product manager in charge of the FF would absolutely love to sell at 39mm or 40mm, but the overall portfolio strategy is probably preventing him from doing so - the conglomerate has probably decided they don't want to cannibalize Omega Seamaster sales!!!

Maybe make a 39mm FF at 10 times the price of a Omega Seamaster? Doesn't invade the Seamaster marketspace and someone will buy the FF. I have business acumen and it shows... just a thought. 5 X the Seamaster price? 

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Davemcc

These brands believe that scarcity is a key factor in luxury marketing.  They create this artificial scarcity to maintain that veil of desirability and exclusivity.  They could make more money but brand prestige is more important than money. 

For all the crap Rolex takes over it’s stock levels, they were making 800k units pre-pandemic and are currently estimated to be making 1.3m units.  Despite this large increase in production, they are still facing organic scarcity based on consumer demand.

💯 u said it so correct

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Holydiver42mm

2 all the way 

Doesnt really matter , they are sold out 😞

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TimeJunkie

Maybe make a 39mm FF at 10 times the price of a Omega Seamaster? Doesn't invade the Seamaster marketspace and someone will buy the FF. I have business acumen and it shows... just a thought. 5 X the Seamaster price? 

I’m think that’s what they are costing , the FF 39mm models are all limited edition only and are already way more expensive then the seamaster at retail then they sell out and you have to pay even more for them on the grey market , so x5 is already close