Transitioning to new technologies or creating new distribution channels opens up completely new opportunities. However, it can also lead to irritated established business partners.
So far, the market for luxury goods has been dominated by traditional distribution structures, meaning very few proper shops to choose from. The client base valued individual consultation and exclusivity.
This market is changing, too. New and younger, nonetheless wealthy customers use online platforms for information. This includes Instagram, Pinterest and Facebook, but also a great variety of blogs.
If customers already decide online whether they are going to purchase something or not, based on the information they are searching for, it is reasonable to also purchase online. However, this approach routinely fails regarding luxury goods, because they are only available in stationary, licensed shops.
There certainly are advantages to this kind of selling. The manufacturers can control the distribution from production to individual customer, even if they do not know exactly who this customer will be.
From the manufacturer’s point of view, this kind of distribution is ideal because it keeps products rare and therefore exclusive and expensive. From the customer’s point of view, however, this lack of transparency is irritating. Furthermore, it is an unnecessary nuisance to decide online and having to buy offline.
What happens if a company wants to escape this outdated structure?
Clock manufacturer Nomos Glashuette serves as an example. So far, Nomos has only been offering its products in stationary shops. Now it also sells them online: Chrono24 sells second-hand Nomos clocks, whereas Chronext sells the whole line of Nomos products to catalog prices.
Following this decision, there was an uproar in the upscale clock trade. Some business partners threatened to halt sales of Nomos clocks. Its biggest distributor has terminated collaboration immediately.
Distributors in stationary shops want to restrict the manufacturer Nomos and want to cut it off from one of the biggest distribution channels. Which is a pity, because especially in the market segment of luxury goods, offline and online could complement each other perfectly.
For example, purchasing online and picking it up in a shop, or a certificate of authenticity or a service agreement you can only get in a shop… the possibilities are endless.
To make an example of Nomos will only deter other manufacturers for so long. Whoever does not participate in changing the market can watch from the bench. Or, to put it plainly, “Go with the times or be gone in no time.“