time-business


An app to regain control over watch distribution

SELLING WATCHES

Français
October 2020


An app to regain control over watch distribution

A new word, promising if not exactly elegant, has made its way into the horological lexicon in 2020: “phygital”. Thomas Baillod is among those who have popularised the term, having launched his concept watch brand to the market in February, as a vehicle for a new approach to watch distribution. He explains how his pioneering system of “controlled decentralisation” of sales is articulated, with a view in particular to curbing the destructive phenomenon of online discounting, which has become all the more pronounced with the crisis.

F

or Thomas Baillod, decentralisation of the sales process is the future of the watchmaking business – and potentially many other businesses besides. The app he has just launched is the result of more than six months running a watch concept brand, “BA111OD”, which applies the principle of “user-generated commerce”, whereby each buyer is also a potential seller.

Having just passed the milestone of 1,000 timepieces sold, for a turnover of CHF 400,000, this former advertising manager and international sales executive at Victorinox, who also founded the Watch Trade Academy, is ready to learn from this “in vivo” experience, which embodies a theoretical approach to distribution.

“When I was explaining my concept, some people told me that I hadn’t invented anything, that it was simply Tupperware sales,” Thomas Baillod points out. “I borrowed some elements of its genetic code, as with other business models, but with a new DNA sequencing.” But in fact, when he reached out to an app development company, the computer scientists told him that nothing like that was on the market – which is why they “had to start from scratch”.

“The fourth industrial revolution is different in nature from the previous three; the digital age is a bit like DNA sequencing, combining different technologies.”

 Launched in February, and priced at less than CHF 400, the BA111OD Chapter 1 timepiece was a “crash test” for the distribution system developed by Thomas Baillod. The entrepreneur passed the mark of 1,000 units sold in September. Designed by a Swiss team and produced in Asia, the 43 mm watch houses an automatic movement with double oscillator and 47 jewels, a domed sapphire crystal with double anti-reflective coating, Côtes de Genève finishes and applied hour markers.
Launched in February, and priced at less than CHF 400, the BA111OD Chapter 1 timepiece was a “crash test” for the distribution system developed by Thomas Baillod. The entrepreneur passed the mark of 1,000 units sold in September. Designed by a Swiss team and produced in Asia, the 43 mm watch houses an automatic movement with double oscillator and 47 jewels, a domed sapphire crystal with double anti-reflective coating, Côtes de Genève finishes and applied hour markers.

“Discounts are excluded, not retailers”

With the help of French developer Popsell, a specialist in the gamification of sales systems, the La Chaux-de-Fonds native has just launched an app that is structuring the interactions of his brand with a network of “afluendors” (a portmanteau word of “ambassadors”, “influencers” and “vendors”) – buyers of BA111OD watches who benefit from sales rights to these same models.

“At a time when the traditional retail trade is being called into question, the context is favourable for the creation of peer-to-peer alternatives,” says the entrepreneur. “But this does not mean that retailers are excluded from this process.”

Thomas Baillod is the founder of the Watch Trade Academy and experimental watch brand BA111OD.
Thomas Baillod is the founder of the Watch Trade Academy and experimental watch brand BA111OD.

“Total control of prices, via the selection of sales rights, is an essential component of the project.”

Everyone who buys a watch automatically obtains sales rights for four watches. A bonus system is at work: the initial buyer receives 300 points for each model he sells, and at 1,200 points he gets a new watch. Gamification is also at work: two or more watches can be obtained for the price of one, while at the same the brand’s total sales are augmented.

The brand benefits from the system by claiming a margin that is equivalent to or even higher than what traditional retail would supply, where discounts are applied on a large scale, as Thomas Baillod is keen to point out. “Total price control, via the selection of sales rights, is an essential component of the project. Discounts are excluded.”

The watch retail dilemma

For the entrepreneur, watch retail faces three major problems: the loss of price control, the abandonment of selective distribution (particularly via the pre-owned segment) and above all the end of point-of-sale in favour of point-of-test or point-of-experience, when actual sales are increasingly being made elsewhere (particularly online).

He therefore believes that the retailer’s business model must change, and that his system can contribute to this by “decoupling the sale from the service, and rewarding the retailer for the service.”

“My model is not omnichannel – a concept that in practice means trying to ‘eat at every trough’, putting the channels in competition with each other, and often triggering deep discounts. Rather, it’s monochannel, which allows prices to be controlled and rewards those who drive the sale. The afluendors do not sell a watch; they sell the right to buy a watch. That’s the whole point.”

“Afluendors do not sell a watch, but the right to buy a watch. That’s the whole point.”

A retailer that adopts the system set up by Thomas Baillod will be able to give their customers the opportunity to acquire a model via a QR code, which in return will give the shop a commission based on this transfer of sales rights. This is possible with professionals but not with the private community of afluendors, where there is a risk that the company will find itself in the situation now facing Uber and Lyft, which have been undermined in California by new legislation that considers drivers using their apps as “employees”. It should be noted that the current limit for the acquisition of sales rights for afluendors is set at 16 models.

Potential for other industries

As we have seen since the beginning of the year, the eruption of Covid-19 is further accelerating a “disintegration” of the traditional distribution system, a breakdown that was already underway before the pandemic. In Thomas Baillod’s assessment, “Today, it’s a free-for-all: everyone is trying to sell as quickly as possible. And retailers who have the opportunity to do so are falling back on known quantities, whether through authorised channels or pre-owned. The result is that the watchmaking ecosystem as a whole is shrinking.”

His BA111OD models are made in Asia, which has led to some criticism, but this is not really the point of the debate for him: “The afluendor system can be applied to any product. It offers both individual and collective facets, while respecting local culture.”

A next step will be to offer the app to other watch brands, or even other industries, in the form of a user licence.

For the entrepreneur, the next step will be to offer the app to other watch brands, or even other industries, in the form of a user licence. “The integration of this sales process will enable brands and retailers to act again in the right place, at the right time,” he believes. “It is Time-T, the instant of the act of buying, that is decisive. That’s what transforms investment into turnover. The experiment we have carried out since February validates our business model. It shows that it is possible to regain control of distribution in a troubled context.”

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