To successfully build a watch brand and avoid being left be broke, you need at least the following theee ingredients:
1) Passion and sincerity. If you want to jump on the micro-brand bandwagon just to make money, that’s a wrong start. Most successful micro-brand founders started by wanting to create a product that they would enjoy using themselves, but they got the second and third ingredient right.
2) A novel idea. It doesn’t necessarily mean reinventing the wheel, but you should be able to anticipate or strive to be at the forefront of a trend instead of following it.
In 2006, colourful plastic replicas of the Rolex Submariner made by numerous Chinese factories had been around for several years, but a Belgian entrepreneur combined this already existing product with a catchy brand name and used a packaging design inspired by the 1949 Lego block (which had borrowed the idea from the 1946 Kiddiecraft block). This packaging could double as window display. The brand name was ICE-watch.
By 2011, the nylon watch strap design created in 1972 by the British Ministry of Defence had been back in fashion for use on professional and military watches for at least two decades. A young Swede had the idea to combine this low-cost strap with a minimalist watch based on slim 1960’s timepieces and launch the products under the Daniel Wellington name.
These examples show that all one needs is to come up with the right idea at the right moment. Many aspiring entrepreneurs have tried to clone ICE-watch or Daniel Wellington, but the catch is that there can be no multiple “”first ones” to execute an idea. Either you are the first one to come up with it and you get a chance at making it from micro to macro brand… or you don’t.
3) The right pricing. The price must be suites to your distribution channel, and it must leave customers with the feeling that they are getting great value for their money. Often the price is higher or lower than that expectation. If it is too high, then sales wI’ll not take off easily. If it is too low, then it can prevent you as an entrepreneur to keep the business alive.
Last week I was reading a blog entry from a micro-brand owner who had to throw in the towel. He was describing the challenges and struggles that come with setting up and running one’s own micro-brand. There were at least three ways in which his business plan could have been improved from the start: first, like three hundred and twenty-five other micro brands, he was attemptimy to make diving watches. Ideally one should have zero competition to risk being compared to. Secondly, his first design was based on a vintage model from an institutional brand, and a few semesters after the release, the brand that he drew inspiration from decided to re-issue theit original model, thus indirectly undercutting his products. And thirdly, to make matters worse, it became difficult for him to justify having a product perceived as identical to that of an establishing brand, and his competitive price did not allow him to sustain the business.
So make sure that you bring in passion and sincerity, that you are the first to combine ideas in the way you do, and that your pricing allows you to grow the brand.
We review business plans of watchmaking entrepreneurs on a monthly basis, so the following seven biblical steps are based on mistakes that we see being repeated:
First you must map out the market with styles on an x axis and price on an y axis. Our map of 50+ watch brands can be accessed by subscribing to one of our readers accounts. See how competition clutters around the same areas? Find a spot that is left empty. This is where you are going to make your mark.
Second, you must translate the x and y position into a brand concept. Your brand is your most important product. Make sure that the name is catchy without being tacky, and make sure that there are no existing registrations in the Nice classification 14, that the domain name and social networking names are available.
Third, since your y position on the grid tells you how much you must sell your end products for, decide which distribution model is most suited to your brand (zero level, one level or two level channels). This determines how much cash you are left with, to source your products and spend on operational expenses.
Fourth, hire a jewelry or a watch designer to design your collection. Do not hire another type of designer, as they will likely be oblivious to constraints and clearances of metalsmithing. Choose materials and finishing based on the budget determined in step three. Your end price and commission is at stake, so you must be consistent in adapting the product to the budget, not adapting the budget to the product.
Fifth, make sure to get some reality check from time to time by asking unbiased people for their feedback on your branding and product. Don’t make the mistake of trying to meet everyone’s expectation. This is not a democratic process. Steer clear of any current popular bandwagon. You don’t want to be a “me too” of a trend, you want to be the next “first”. Your brand must be polarising in order to leave a mark, so the worst disservice is to level it down.
Sixth, find suppliers who are specialised in your sourcing price range. Fly over to meet them to kick off development, fly over a second time just before mass production, and fly over a third time after production to do an additional quality control and choose what leaves the factory.
Seven, once that all the above has been complied with, proceed to distribution. Good luck!
Please do not hire a graphic designer to design your watch. I review several watchmaking startup designs per year, and the best graphic designers often do not make for the best watch designers. There are very specific clearances and minimum thicknesses that most people out of the industry are oblivious to. Rather browse portfolios on Coroflot or Behance to find a designer with experience in watches.
Your brand and your industrial design will be much more important than your logo. Longines, one of the top 5 Swiss brands in sales, has changed its logo several times in 185 years, however the brand never stopped being strong. Just make sure that your logo is tasteful, sophisticate and scalable, which is where a graphic designer can help. Believe me, you don’t want your logo to look like something made on Microsoft Draw.
You need to do a lot of homework to define what I call your Dual Brand Attributes, and you should develop a sufficient understanding of the market to be able to map it on a grid of styles as X axis and prices as Y axis. Then plot all iconic brands on the grid. Our map of 50+ watch brands can be accessed by subscribing to one of our readers accounts.
Do you see clutter somewhere? Avoid that spot like the plague.
Do you see an empty spot? Investigate deeper because there’s a high chance that the next big brand will meet success there, where no one saw it coming.
In 1980, a watch executive had the outrageous idea of putting a rubber strap on a gold watch. Poof! Hublot was born. He earned enough money so he was able to set up and run a charity.
In 1999, an advertising executive with zero experience in watches made the observation that diamonds and plastic were never mixed. Bam! He created Technomarine, grew the brand and sold it for a fortune before taking a sabbatical year around the world.
In 2011, a young dude was traveling to Australia and found out about 1972 British military nylon straps. He decided to fit one on a 1960’s slim watch and poof! Daniel Wellington was born. He recently bought the most expensive apartment in his country.
Don’t jump onto that “affordable luxury” bandwagon. By definition, luxury is not affordable.
Determine how much your watch should be sold for, decide how you plan to distribute it, and work your way backwards to determine your sourcing cost. Most people make the mistake of working their way forward by stacking up features on top of a concept and then trying to manufacture it for cheap, and of course it never ends up being cheap.
However, you should spend more on the watch than the box, and you should put the money into what people experience on a daily basis: dial, hands and straps. When carefully sourced, these can lift up even the most mundane case design.
How easy is it to create a ‘luxury’ watch company (such as Rolex) now, compared to when the well known brands were established?
I am assuming that by producing a watch, you are talking about proprietary designs?
If you browse a B2B portal like, you can find publicly-available information on manufacturing cost. Chinese Private Label companies can supply catalog watches in bulk, with Japanese mechanisms, from USD 15 upwards.
If you are willing to settle for a catalog design, you can probably start with a bulk order of 100 to 300 pieces. That means a production budget of USD 1,500 to USD 4,500, for a very basic watch in stainless steel. Nothing as fancy as those microbrands.
Above 300 pieces, you can actually start thinking about having your own design, which is what the best of those microbrands do.
GERMANY & SWITZERLAND
This is probably not 100% accurate, but based on the above publicly-available information I am usingin the respective countries to compare manufacturing costs. Raw materials like surgical steel and leather do cost the same, no matter where you buy them, but wage still accounts for most of the added value.
With China at, Germany at and Switzerland at ; it would roughly cost 3.5 times more to produce a watch with similar specifications in Germany and 4.5 times more in Switzerland.
That puts your minimum production cost at USD 67.50 for a Swiss-Made watch, in bulk of 300 units; corresponding to a budget of USD 20,250.
In terms of branding, you should probably pick a name that doesn’t conflict with existing trademarks and register it in the prominent markets: USA, Canada, European Union, Switzerland, China, Hong Kong and Japan. It can be settled with a budget between USD 3,000 and 5,000.
There is also the possibility of protecting the novelty of your design to put yourself further from reach of competitors. Having your own design rather than using a catalog one is a good way of doing that.
I work with watch startups on a weekly basis via my consultancy Woodshores AB , and a solid business plan, a strong brand idea and a great design concept do contribute to success. The common denominator between successful microbrand and upcoming brands is that they had those three things figured out from the start. It doesn’t necessarily need to be laid down on paper, but at least they have a clear vision of what they want to achieve.
Some of the entrepreneurs that I meet tend to overlook this and put the cart before the horse. I’ve recently worked with one of them, and he just ended up wasting tens of thousands of dollars by changing idea every two months and putting the blame on all the parties involved. The worst disservice that an entrepreneur can do to himself is not having a clear business plan, having a vague brand idea and no real design concept.
You should look into incorporating some form of business, which will make you look more credible to all involved parties.
It will require man-hours to come up with a design and formalize it, handle suppliers, sales, customer inquiries, after-sales and deliveries. Depending on your skills, budget and availability, you might want to subcontract some of those tasks.
In terms of logistics, you also need to account for shipping fees, import duties, storage rend and order fulfillment fees.
Absolutely! There is no reason why a company incorporation name can not be different from a trade mark that it sells. For example, Daimler AG is very successful at selling Mercede-Benz vehicles.
You need to incorporate your company with the local chamber of commerce, while trade marks must be registered at a national or international level.
One of the obvious advantages of separating company name and trade mark is that you can easily create new trade marks, buy them, sell them or shut them down during their lifespan.
In its simplest form, a movement only needs two wheel trains to display hour and minute.
Displaying further information required further gears, which makes the display more “complicated”. Complication is this the French term that generally designates any additional display: seconds, date, weekday, monophasé, seconds chronograph, minutes chronograph, and so on…
Complication can also describe features that are not visible: hack seconds, minute repeater or vertical clutch, to name a few.
We work with Swiss and foreign watch components factories on a weekly basis, so we have seen the loopholes in both the old and the new Swiss Made regulations.
Currently, 60% of the creation of added value has to happen in Switzerland, and that does not include the bracelet nor the strap.
Before January 1st, 2017, qualification for Swiss Made watches was looser than for Swiss Made movements. Until December 31st, 2016, you only needed the following to certify a watch as Swiss Made:
- A “Swiss Made” movement.
- Assembly on Swiss territory, but the factories are often located a stone’s throw from the border with France, Italy or Germany, so more than 30% of the workers are non-residents.
- Quality control in Switzerland, but it could be anything such as the above employee just taking a peek at boxes during his coffee break.
With that in mind, you could hire an overseas company to design and manufacture all external components, which would then be delivered for assembly in Switzerland.
Since January 1st, 2017, the qualification for watches has been aligned to that of movements. You need the following:
- Research and development carried out in Switzerland. You can still have the project run overseas and just hire a Swiss technician to print the drawings with their Swiss company logo and to invoice the development (=print) job from Switzerland. You can actually divide that cost by the amount of watches in your first batch, and replicate that cost on future batches.
- You now need to balance between the cost of components or the cost of operations to spend at least 60% of your production budget in Switzerland. Typically you source the expensive components from Swiss factories, who can themselves source blanks overseas and do some finishing inhouse to qualify with the 60% rule.
- As before, you still need assembly and quality control to be carried out in Switzerland.
Overall the major consequence of the new regulation is to raise the entry level, and to make it harder for overseas OEM to produce Swiss Made watches. It will potentially create new jobs for mechanical constructors, who are typically called upon to output production drawings, and create new jobs for component suppliers who are resourceful enough to mix 40% overseas and 60% local added value.
However, there are still loopholes as big as the ones in emmental cheese, so I personally don’t see this new regulation as an Earth-shaking improvement for the consumer.
There are initiatives such as the Qualité Fleurier or the Poinçon de Genève, that take it more seriously, and aim at guaranteeing a 100% production in Switzerland, but we are taking about watches that retail above USD 10,000.
I would like to get a wrist watch designed. Something of good quality. Where can I get a manufacturer that can take my specs and make them come alive?
- If you don’t want to worry about the details but you are willing to settle for less flexibility, you need to hire a centralized company that advertizes itself as “Private Label” in Switzerland or ODM (original design manufacturer) in greater China.
- If you want flexibility and control over the process with the possibility of replacing a weak link, you need hire a decentralized company.
- Ideally, you should’nt wear it two days in a row to let it “breathe” and get rid of your skin moist.
- You should avoid getting water on it.
- It should be treated from time to time with a good leather oil.
Watch straps are typically either made with vegetal tanned leather or chrome tanned leather.
Traditionally, leather used to be tanned with vegetal oil to transform the organic bio-degradable material into an inorganic one. Tanning would leave the leather somehow stiff and prone to staining. At some point, chrome tanning was introduced to create softer leather with better color consistency and a higher resistance to wear. Chrome tanning used to get a bad rap because of the lack of environmental concerns, but Italian tanneries have since adopted environment-concious chrome tanning processes.
The watch industry uses a subcategory of leather that must pass additional testing such as: resistance to corrosion (sweat), color stability and low presence of allergenic compounds. A leather that is good enough for upholstery or bags might not pass the test for straps.
The quickest way to know if a watch is high quality is to look at how the back of the case is polished.
- If most of the edges and corners are “rounded” off, it is a low cost case.
- If they are razor-sharp, the quality is one notch better.
- If the edges and corners are somehow sharp, but not razor-sharp, the case is of good quality.
The Swiss watch industry is not being disrupted by technological innovation, but there are four possible reasons to the ongoing drop in sales.
One of the fundamental differences between watch companies and tech companies today is that the Swiss have learned to build their watches from inside out: they start from a predefined movement size and add components around it. Tech companies do it the opposite way and build smart watches from the outside in: they try to cram as much tech as possible into the thinnest possible volume.
As a consequence the Swiss tend to use simple and cost efficient processes such as metal punching, stamping and forging, which all have very low mould costs. Tech companies use injection moulding, which require expensive and fancy moulds, and a lot of CNC machining that adds many labour hours to the cost.
Based on those differences, it is no wonder that the Swiss can produce as little as 1000 watches and make a profit, while tech companies risk going into red if they fail to sell more than 100,000 smart watches.
Regarding the ongoing slump in Swiss watch sales, here are four possible reasons:
- End of a speculation bubble in the Chinese and Hong Kong market, that allowed some brands to double their sales between 2007 and 2013, thus temporarily hiding the damage of the Subprime Crisis.
- Generational change: the typical consumer has become older and has been replaced by Millennials, who don’t see much point in wearing a watch.
- Price hike: between the 1980’s and the 2010’s, Swiss watchmakers have been increasing the price of watches beyond reason. The chart below shows the evolution of Swiss real estate (red), wages (blue) and the price of the Omega Speedmaster Professional (green). This watch is still being manufactured today with the same design and materials as it was in 1969:
- A lack of novelty: Swiss brands keep making the same type of watches, but consumers want something fresh, fun and exiting to wear. Crowdfunded brands have understood this and are capitalising on it.