Why the faux scarcity Swatch?

The reason for limiting the number of watches you can buy is because a manufacturer can only produce and stockpile so many in any given period of time.  The more I hold in inventory, the higher my working capital requirements, which is a major drag on earnings.  Beyond that, nobody ever knows how a product launch will go.  If we assume that any given product launch has a 50/50 likelihood of success / failure, then it makes no sense to stockpile a ton of inventory - if it fails, you end up with this:

https://en.wikipedia.org/wiki/Atari_video_game_burial

Atari stockpiled an insane number of E.T. game cartridges, in anticipation of the crushing demand.  They ended up sending 700,000 of them to a landfill.

If you want fun stories about inventory issues, I can wax eloquent for days about how companies have to deal with demand spikes for hot dogs (4th of July) and turkeys (Thanksgiving)!

Do you think that Swatch was scared that the release was going to tank?

I mean they produced everything before anyone knew what the public might think about it.
But I can't help but think that they at least should have produced more than about 20k watches. (if we think that every store had about 150 in stock) 

For a producer like Swatch that is nothing. Maybe they are ready to mass produce and flood the market in the next few weeks. But the decision to limit them so hard at the start is kinda weird. 

Thanks for the insight tho. I did not think about the "maybe the release is going to tank" idea. 

Have you seen the documentary on that game? It’s really good! 

Yeah, here's something that is very seldom discussed:  

• Roughly 50% of all new product launches fail
• And these aren't tiny, hole-in-the-wall launches.  When behemoths like Proctor & Gamble launch something, they spend years in development, years testing, years conducting market research, years focus grouping, etc., etc.  And 50% of the products released fail
• So, what you do is you build up some small inventory, launch the product, and hope that early adopters like it, and then word-of-mouth builds, sales look good so you start to ramp up production, etc., etc.
• It is a once-in-a-generation thing to have your product become viral, hit the #1 spot on Hypebeast, and to have lines like what we've seen with the MoonSwatch

It's hilarious, but every other post we see online is now saying either "Swatch completely F&^%'ed up this launch!" or "Total failure!" or "They did this on purpose, just to create more hype for the product!"  Ridiculous.  As an executive, your annual bonus and your stock options / restricted stock units and your job all depend upon a combination of revenue and earnings numbers.  Why the F&^% would I give up, potentially, millions of dollars in compensation to create hype for my company?   I don't give a F&^% about my company.  But, I care deeply about my bank account balance!

The demand for this product took everyone by surprise.  And, well, that's just how life is!

Oooooh!  No!  Send me the link, dude!

Thank you for always replying in great detail. I enjoy reading your perspectives. It looks like u have a lot of experience on the business side of things.

BUT

I still don't understand how they could be that wrong with production. Even if you think this event was not going to go crazy. U should have guessed that 20k watches is not enough.

Look at the marketing of this launch. They were going for something great. And they did it. But they were not ready for what they wanted. For that i think we can at least give them a little bit of "come on man". Looks like they would not have been able to handle even 1/5 of the hype it got.

Kimberly-Clark is the world's most formidable paper products company.  Founded in 1872, they own household brands like Kleenex, Huggies, Depends, among many others.  2020 revenue of $19.1B and operating earnings of $3.2B!!!  That's an operating margin of over 16%, which is unheard of for an old-line consumer packaged goods company!  Can we agree that these guys know what they're doing?

They prepared for 1/5th of the hype associated with the launch of their new, revolutionary product, which they had spent over $100M to develop.  Here are the results:

https://www.wsj.com/articles/SB1018817069329538160

Honestly, when people say, "Come on, they botched it.  Anybody could have seen..." my response is always, "Well, if you know how to run the company better, you should!  The CEO makes $10M/year.  Why don't you go take his spot and earn that for yourself?"  One time my father-in-law started asking me why big, famous Software Company X, that I was an exec at, "doesn't just do X, Y, and Z?"  My response was, "Well, it ain't easy to do that.  And there are other people who do it better.  And so, the best we can do is manage the decline in revenue in such a way that costs fall faster than revenue.   And there's lots of money to be made if you can do that."  He then proceeded to lecture me on how to grow the company, and take over the world.   And my response was simple, "Yo, CEO is a buddy of mine.  He's a pretty bright dude.  He's a force to be reckoned with.  If you're better at the job, you should interview, and do it, and you'll get paid roughly $50M if you succeed."

He still told me I wasn't being smart and that I should do what he says in order to turn the company around. 😜

For me this is not about the Execs doing their job wrong or that some of us could do it better. 
Their earnings speak for themselves. They are obviously doing a lot of things great. Including this collab.

That does not change the fact that this launch was a horrendous costumer experience.

Right now u have more people disappointed than happy. And from a consumer point of view that counts a lot. I don't think we need to see it through the eyes of the execs. It may explain things a little bit better. But our job is not to understand the company. Its the company that needs to understand their costumers. 

Anyways. Thanks for your perspective. Its refreshing. Looking forward to reading your comments in the upcoming threads :)

@Omeganut, totally agree - except that the ET game was actually really bad in addition to being a failure at launch 😀. My point - which comes out of not being able to get one day and date, is that it's not a limited edition but the amount produced seems to be less than what would normally be manufactured for other releases. The cynic in me says this is deliberate in order to feed the #hypetrain. Nevertheless, come a time when they're available online I'll buy... one...? Two...? Because I am a sheep. #capitalism #hypetrain #omega #swatch #moonswatch #shillforbigwatch. 

I dunno about the marketing - really the 6 top watch blogs got to go on a junket to Switzerland 10 days ago...and get a free one! Hahaha! I totally agree @R16013 it's not so much about hedging their bets as it is about just not being prepared for the #hypetrain with enough product. Choo-choo! 🚂

It's on Netflix yeah?

Personally - I think #Omega was the scared one. They have a bit of a legacy to protect (to be fair, so does #swatch). This all comes down to the fact that I want one, and I don't have one. 😢 (That comment is applicable to both the #moonswatch and the #speedmaster LOL)!

Yeah, I concur, @Omeganut's comments are always well thought out and a good read. Much better than some people's comments (and I include myself at or near the top of the list of "some people")! 

Why are we (as a society) so quick to jump on the #hypetrain? Why am I so quick to? Clearly I need to see my therapist because I am trying to plug a hole in my life with expensive (not too bad in this case) watches. But reading everyone's comments here is productive at least. Shout out to @WatchCrunch this is so much better in terms of comment quality than #reddit.