Hodinkee’s 10th Anniversary Omega Speedmaster: Future Harvard Business School Case

Yesterday’s launch of a collaboration between the watch enthusiast publication Hodinkee and Swiss luxury watch manufacturer Omega will probably be studied at business schools soon. It is a great example for how to market and sell luxury goods online.
A bit of background first. Hodinkee started ten years ago as a blog for watch enthusiasts and collectors, especially in the market for higher-end modern and vintage mechanical wristwatches. Hodinkee later began selling curated vintage watches online, and recently became an authorized dealer for new pieces from several major brands, including the Swiss Longines, German Nomos, and Japanese Grand Seiko. However, in the era of iPhones, Fitbits, and Apple Watches, nobody really needs a mechanical watch anymore. Selling these superfluous luxury goods costing thousands of dollars apiece, especially to a younger demographic that doesn’t wear watches, has become a challenge for the established brands.
How are luxury watches retailed today? First is the Rolex way. Having established the strongest brand in the industry through product quality, affiliations with historic and modern events, and celebrity endorsements, Rolex tightly controls the supply of their watches to not meet demand and create waiting lists. When the authorized dealer calls you that a new steel Rolex Daytona just came to the store, or shows you the latest “Pepsi” GMT Master from the back room (if you are so lucky!), you buy on the spot or the opportunity is gone. Rolex’s supply is so tight that pre-owned many models sell for more than brand new at retail. This method of selling luxury goods works well with the general public if the brand is strong.
The second way to sell luxury watches is through limited editions. Like Rolex’s way, this too relies on the fear of missing out (FOMO). The difference is that you know upfront there will be a small batch that will be sold at one time, so you’d better hurry to buy if you want it. In addition, this is aimed at enthusiasts and collectors, who need to be aware of the limited edition and distinguish it from the regular product. This method is practiced by Omega, Panerai, and others. It works except when it is overused. When the limited edition is numbered in the thousands of units, it is not that exclusive and there is no rush to buy. When most of the watches are a never-ending sequence of limited editions, it leads to consumer confusion and fatigue.
How did Hodinkee innovate to market and sell the H10 Omega Speedmaster? They combined the two approaches. Historically, Hodinkee has built a strong enthusiast brand. Hodinkee sells out their branded goods quickly and demand on the secondary market is strong, much like for Rolex. Omega is one of the leading practitioners of the limited edition approach. The Omega Speedmaster chronograph is notorious for having multiple limited editions per year, each usually in 2000 or so units (sometimes 1969, 2012, or whatever anniversary year they are marking).
Hodinkee and Omega joined forces to make a more strictly limited edition than usual: just 500 pieces. Of these, apparently half were sold online on Hodinkee’s e-commerce platform. They were gone in anywhere between 5 and 20 minutes (I wake up early: I was ready at 7am California time). The rest were sold solely through Omega boutiques, towards which the disappointed online enthusiasts were steered. It took a couple more hours for that “offline” channel to sell out.
Kudos to Hodinkee: they used its strong brand as a “primer” to ignite unprecedented retail demand for what would otherwise be yet another of many Omega limited editions this year. Hopefully, Omega got not just one-time flash sales but also established relationships with affluent new clients, much in the way Rolex does when it comes to allocating in-demand luxury watches.
