GLau
[Patek Moderator]
12104
Patek would prefer to prioritize customers who can become long-term loyal clients, not flippers.
INTRODUCTION
With recent threads describing the difficulties of purchasing a Patek watch, I reached out and had an informal chat with Patek management to understand more about their objectives and policies. Perhaps some of the bad feelings experienced by our forum members could be eased if clarification be provided on how their distribution system currently works and how final allocations to customers are done. Below is my understanding on the overall system.
DISTRIBUTION STRATEGY
Patek sells to their 100% owned distributors who cover much of the world, and to chosen independents elsewhere. Owned: China, Hong Kong, Japan, Singapore [covering Indonesia, Malaysia, Singapore, Thailand, Philippines and Vietnam], Spain, UK, the rest of Europe, and USA. Independents: Mexico and Taiwan. This distribution network is a strategic choice, enabling Patek HQ to focus on research, development, production and support rather than managing every country’s different business dynamics.
PRODUCTION STRATEGY
Patek prepares forecasts and decides about yearly production. For 2024, they aim to increase production by 2-3% more than 2023. Naturally the existing situation and predicted future market conditions will help to formulate production plans.
DISTRIBUTION NETWORK
Distributors will manage local allocations with respective ADs because retailers can better understand local cultures and practices better than a team back in Switzerland. The distributors are responsible for local logistics, marketing and branding for their own regions.
RETAILERS (what they SHOULD do)
Authorized Dealers manage and incentivize their sales teams which has an effect on how the sales team in turn behaves with customers. ADs are expected to sell to customers in their region (to maintain territorial fairness) and to prioritize customers who can become long-term loyal clients, not flippers. ADs have the final say on customer allocations, thus their respective sales training and sales management may achieve different business outcomes and customer satisfaction levels. Given the high desirability of Patek, AD Management should want to allocate pieces in a way that will maximize a salesperson’s earnings and promotions for the short to medium term, while maintaining professionalism and protecting the brand. AD Sales should aim to please existing customers (newer vs older, bigger purchases vs smaller amounts, etc.) and strike a balance satisfying wants from new vs existing clients.
ADs are expected to “play by the rules” which do not allow for bundling and other forms of customer “blackmail”. Patek management was kind enough to allow me to share with our forum the attached letter that Thierry Stern had written to ADs on bundling.
ADs might not behave as above in all instances as we know. So what are we to do when we are treated in a manner contrary to expectations?
CUSTOMER FEEDBACK
Patek is a family business that focuses on the long term, and Thierry/upper management have expressed their concern for fairness and accessibility for both existing and new customers. FYI, In 2023 around 25% of sales went to first time customers buying ladies' and men's non-complication watches.
Patek encourages customers to write to them about legitimate grievances resulting from interactions with Authorized Dealers. The company engages in direct discussions with ADs found behaving badly such as bundling, and takes "corrective actions” when warranted, such as revoking agreements of ADs that violate Patek guidelines. Of all the recent ADs that got their licenses revoked, the % related to bundling was not an insignificant amount.
IDEAS FOR IMPROVEMENT
Perhaps Patek could directly contact each buyer to ask for feedback on his/her experience with the salesperson and AD, or provide a response mechanism with each product. Based on buyers’ comments, Patek could then help ADs to improve unfortunate situations and also congratulate or reward exceptional service.
What are your thoughts on this subject and suggestions to ensure more fair allocations?
Patek will definitely welcome your comments.
Patek would prefer to prioritize customers who can become long-term loyal clients, not flippers.
INTRODUCTION With recent threads describing the difficulties of purchasing a P atek watch, I reached out and had an informal chat with Patek management to understand more about their objectives and policies . Perhaps some of the bad feelings experienced b...
The letter talks about selling other brands to obtain a Patek...
...what about asking a customer to purchase a Patek they don't really want to get the Patek watch they actually want?
Fair point !
I do not have all the answers but have made some suggestions on improvement for more fair allocation policies. What do you suggest ?
There is obviously more demand than supply...
...so I can see them asking about a customer's history with buying Patek in the past. But I am totally against the practice of 'You may want to consider a Calatrava or two before you can have the perpetual you really want.'
Then the crux is what Patek
should do to ensure the ADs to perform more fairly. Thoughts 🤔?
Here's what I was told by an AD:
I would need $2million in Patek purchases before Patek would grant me the honor of purchasing a minute repeater. What garbage!
Start saving : )
A good friend wanted a limited Lange piece last year or so. He'd already purchased 2 or 3 'normal' Langes and 2 or 3 very pricey special Langes. They told him to buy another Lange he didn't want nor need in order to be considered. Really put him off. He's...
Oh wow. Out of curiosity, do you have
a relationship with the AD on previous Patek purchases ?
As others have, I took my interest elsewhere.
Why buy lower end Pateks when their quality has declined even as production numbers have skyrocketed?
I never did.
I think if you remove the Patek name from most of their low and mid offerings, they wouldn't do well at all. For the minute repeaters, as I mentioned elsewhere, my wofe has perfect pitch, so we would have to see the specific watch (they vary!) before comm...
I had a relationship with an AD...
...but it's complicated. I recommended him to them and he bought many special pieces including a rattrapante and multiple PCs. That AD has since lost their Patek status so he is now dealing with someone else. Also the above should say "He's NOW thinking a...
If an item is advertised as 'for sale'...
...and someone wants to buy it, I believe it should be sold. Perhaps they can put terms on the sale (if supported by local consumer law) like Ford did with the GT to mitigate flipping. But I agree that it is a tough issue and I am often wrong : )
This is why
I have taken my custom elsewhere and enjoying such a refreshing and pleasant experience with Ferrier, Moser and Parmagiani.
I’m more interested in how they address clients who’s AD got closed down and left hanging?
We know how difficult it is, nowadays to establish a new relationship with a new AD. How can they take care of existing clients who were abandoned? Should they give the names of those to another nearby AD and asked that the AD take care of them? PS: I’m o...
Sorry to hear about your unfortunate situation! :-(
My friend was in the same situation. He was introduced to another AD in his location. Starting a new relationship with an AD is always challenging. Other suggestions ?
Yes, my friend's history is recognized, and he
and the new AD hopefully can build a long term relationship.
Other question is how can some PP collectors can have boxes full of Nautiluses and Aquanauts but some PP collectors don't have a single one, lol....
Just teasing you...I know it's pointless to ask any further questions or provide any suggestions. When I called the NY Salon, the first question the sales asked was, "Do you have 10 or more PPs? We have so many customers and we like to see each customer i...
Ya, if a collector does not purchase other Patek watches and is able to only get hot models from Nautilus and Aquanaut at retail, then
something is really wrong with the policies and practices at that AD. Such unfair behavior needs to be reported to Patek for corrective actions.
You have a wonderful collection ! 👏 may be you don't need more Pateks 🤭
just teasing I agree is 100% BS. They don't want just money but status. To be an object that money can't buy. There also many collectors with a box full of nautilus or aquanaut sourced in the grey market
you are welcome, you have a wonderful collection 👏 I am not adding new Pateks and in the last year I was disciplined of letting watches go..
before buying something new else is (even more) madness !
I think there’s still stuff to be bought
I realized just today how ill disciplined I’ve become. There are really some gems out there with uncovering and so I will continue to buy but (with some help, determination and discipline) at a much slower pace. Quality over quantity.. Best Gatsby
Would be great if you could explain
which part(s) you do not believe it and why. Also I would appreciate if you could reply in a more friendly way such as “I strongly disagree because …”. Would this way of engagement be possible ?
I did not mean to offend
Anybody personally. We all know how things work in this world. What is the point of this letter? I don’t believe he is sincere. That is all.
As any firm in a free market economy
Problems arise when there are mismatches between demand and supply. I understand that Patek is its own storied institution, steeped in tradition, and that I have absolutely no right to tell them what to do, but any junior economist will tell you that prob...
The way the market is looking...
...there may be quite a few luxury watches from all brands suddenly available.
Certainly hope so
But bad times will hit the non hyped models much harder than the usual suspects. I would love for the market to soften enough so I can pick up a 39mm Dato at a reasonable price. I have some hope as it isn't a CB or a Nautilus...
Good points you made from different angles, especially about "casualizing the calatrava line".
As Patek is a family business being operated for the long term, IMO the need to have a good balance in selling different products is important. Since "business casual" is now popular, having more casual Calatrava watches is befitting of the times and groo...
I wonder the AD position on long-term, loyal flippers (?)
….a sale is a sale, right ;-)
“A sale is a sale” until the AD is
caught for working with such loyal flippers. Could be game over then ☠️ for that AD
Gordon, this an extremely well written, fair minded and factual presentation of of a problem that has caused great consternation for many.
Thierry hits the crux of the benefit and dilemma succinctly: “sustained demand which we cannot satisfy”.ADs are basically in an untenable situation - Very limited supply and both existing and potentially new clients clamoring to buy a Patek. Clearly Thier...
Many thanks Patekova for your kind comments and objective assessment of the current "dichotomy" that Patek and ADs are facing !
Many salespeople from various ADs have told me how difficult and challenging their jobs have become :-( Saying "no" and/or "sorry" is/are against the nature of being in sales. I am glad that this post has generated some great discussions and suggestions.
This isn’t news.
It’s just now it’s so much more amplified. ADs have always done this. I was once told to buy an omega, JLC and a panerai in order to get a 5711. In retrospect it was a good deal. Or, how many datejusts did one have to buy to get a SS Daytona? Before pande...
Hi Gary, when you wrote "in retrospect it was a good deal", I presume that you
meant from a financial perspective, correct ? The "bundling" of other brands is exactly what Patek will not tolerate based on TS's letter. Patekova described above that Patek wanting a collector to build a relationship starting with less desirable piece(s...
Well done, Patek
Lucky my experiences with Ad are great, every time visiting are alway enjoyable. I am on the side of Patek for their policy.
Thanks for weighing in Chaiwat !
I understand and appreciate Patek's allocation system and policies. The key issue here is how to assist the ADs to be more fair.
This letter did not address purchase with purchase for PP as most ppl point out here and what is flippers?!
If no flippers, PP would not be where they are today with the astronomical prices they fetch at auctions. It a flippers market at auction… a watch that is sold less than 8-5years can end up in auction houses, no different frm so call flippers as they can ...
That’s a good poin.
That’s a good point. My thoughts are you shouldn’t be left in the lurch when your AD loses the relationship. You should be invited to shop at the nearest AD and your interest list and purchased piece history should carry over to the next. Like with Ferrar...
How would you feel
If you were in line for a piece you want at your AD and someone else got the piece instead because their AD in the next town over closed? Every policy has winners and losers...
I understand
what you are saying but you shouldn’t just start from scratch and have no communication at all. Even an invitation to enquire elsewhere would have been nice, but nothing. For what its worth, before I moved elsewhere I was told I would not accepted at anot...
Indeed,
There seems to be no easy solution. Perhaps Patek could direct or prioritise the allocations for the "refuge AD" for orphaned collectors...
I like your suggestion….
If PP was to direct or prioritize it could help the situation. With all of the ADs being cut there must be some slack
Your suggestion on "Take the piece back in from your customer have a certified pre owned with the AD and reward their loyalty" is a good suggestion ! Do you mean for Patek to implement a similar practice as
Rolex ? If you multi-brand AD used bundling, then this method could be the reason for it to lose it license unfortunately.
Yes I was thinking along the lines of Patek certified pre owned with the AD
so that if your customers who had bought the Patek piece a few years back could upgrade from say 5205 to 5320 or 5270 just like how a Porsche customer could upgrade from say 718 to 911. It keeps the piece within the local AD and rewards the customer for t...
If no flippers
Then auction prices will get even higher, surely? Because more Nautiluses are sold directly to keepers, there will be fewer on the market so auctions will be bid up even more...
Fair points you made ! You are correct in that the letter did not address buying Pateks other than the watch a customer wants.
As Patekova wrote above, he believes that "Being required to build a relationship by buying presumably lesser desired Pateks before getting the more highly desired ones, is not considered bundling. Nor apparently is it discouraged. It is also understandab...
Lawsuit filed in 2023 over bundling in SF
Here’s a link to a story I’m sure most of you know already regarding a lawsuit filed against an AD for asking their client to buy “other” watches or jewelry before client is allocated a Nautilus model. I understand the importance of having several Patek ...
Thanks Patekfinity for your thoughtful comments !
If someone has no history of buying Patek watches but wants a MR which other big customers have been waiting for a while, AD simply will not entertain the request.
Any updates?
Wow! I wonder if there are any updates to the lawsuit filed. If ruled in favor of your friend then this case will have precedence for other lawsuits in the future against ADs bundling purchases.
Apparently they settled a while ago
Probably saved the AD who is building a brand new Rolex boutique in Stanford Mall / Palo Alto some embarrassment
Patek Should Open Company Owned Mono Boutiques
They definitely have the clout. Certainly would improve interactions with their collectors regarding how/when purchases occur. Also, the after sales experience would be streamlined for all parties.
Your point is well taken in that Patek can open their only retail stores. Based on my past and recent chats with Patek executives, owning its
retail network does not fit its strategy. Although it has 5 (I believe) self-owned Salons and Maisons (Geneva, London, Paris, Beijing and Shanghai), Patek wants to remain mostly a manufacturer as explained in my post.
Nautilus and Aquanaut should be made in thousands a year
With this action, Patek would instantly get rid of flippers, investors and all the other sneaky behaviors that affect the brand's reputation.
Not Patek is the problem, we buyers are!
I am since 6 years on the waiting list for an Aquanaut. When I ordered it, I was asked, if I know the value of the watch on the second hand market, I was really wondering that they put my name on the list. Three years later I was asked to buy some three h...
Why didn't you just leave?
I mean, after six years you accepted to be treated like that? Seriously?
You are right in that only the customers can change the situation. It is a
free market and consumers should buy what they want. Did you end up buying any Patek three hand watches ?
You are right. If Patek produces as many steel Nautilus and Aquanaut as demanded, flipping of these watches will not occur. Production capacity will
be taken away from other lines then. Patek will quickly become a one horse pony which might not be wise from a long term business perspective. What will Patek do when that time arrives ? Due to its huge success with Royal Oak, AP several years ago created...
Thank You
A variety of comments above but I just wanted to say thank you for an interesting and informative post.
Many thanks Koozy for your words of encouragement ! Your kind comments made it
all worthwhile for me to do the research and for the hours spent to write this post !
For me it's very simple
I don't play these games. No bundling, no waiting lists, no allocations, no premium. Never. I do things in my work and life that are far more important (don't want to seem pretentious because really I'm not, it's just a fact, a watch is only a watch) than...
Well said Eric67 ! You are spending your money as you see fit and you make
your own decisions ! It is a free world after all.
I don’t like the use of the word blackmail
Because it seems there is sanctioned “blackmail” if it’s Patek’s own products of buying a Calatrava, complications, etc. to get an aquanaut or nautilus. I also don’t think there’s anything wrong with that too—it’s just the word they use. And I can see why...
Hi Matty, thanks for your comments ! If "blackmail" is not the correct word, then perhaps
coerce or force might be better ? As Patekova wrote in his reply, he thinks "Being required to build a relationship by buying presumably lesser desired Pateks before getting the more highly desired ones, is not considered bundling. Nor apparently is it di...
I don’t have a problem with ADs rewarding repeat customers
I think it makes sense. There’s a finite amount of pieces and do you allocate to someone who has purchases several watches or no watches. I don’t feel someone has a “right” to buy an aquanaut or nautilus or whatever — so long as there’s not some unlawful ...
Agree with you final sentence. As a consumer, one decides where and when
to spend his/her own money. As I mentioned above, it is a free society as far as horology is concerned.
Thanks pmh6000 for your wise words ! We should simply
spend our money the way we wish. Glad to hear that your AD has never asked you to buy pieces that you did not want. Trust that you have a great relationship with this AD and you get what you want.
Thanks for sharing the letter, but.. 😎
I understand that some Patek Philippe models, such as the Nautilus and Aquanaut, are in high demand and that there is a supply-and-demand situation to consider. However, I'm not sure how much it would help the client who has lost trust in the brand. Altho...
Thanks Christian for weighing in ! To me the crux is how to ensure ADs behave better in terms of fairness and customer service.
IMO Patek has the ability to guide the ADs to improve performance. Us as individual Patek collectors and together as a Patek collector community, we can provide useful suggestions (which what this thread is about) to assist Patek. The various replies abov...
Great post Gordon.
I absolutely hate the new world we all live in today for so many reasons. My beloved hobby of horology has all but been ruined by the new money supposed watch enthusiasts. Those that know me know I speak my mind. As an old school collector who started col...
Thanks Miles for your words of encouragement which motivates me to write more of this type of posts ! :-) Your honest feedback
is what our forum members want to read. Given your enjoyable journey and understanding of the dynamics between Patek and ADs, can you please provide suggestions on how Patek can better guide ADs to be more fair and create a win-win-win situation for all t...
Gordon my friend I’m not sure you are
Correct that the members here want to read honest posts like mine. The lack of response speak volumes I’m afraid. However I will always be honest and not be worried about upsetting anyone else. To answer your question what can Patek do to improve the rela...
I think you are being a bit unfair
TS and Patek do a lot - just alone keeping the rare handcrafts alive can’t be a high margin business and must lose money. Same with the amazing exhibitions that are FREE every other year. Remember to do all that including the upkeep of this amazing museum...
Absolutely agree.
That Patek do so much to give back to its collectors and clients and spend a vast amount of money keeping their Arts alive which is admirable and I am so pleased they do. However I can’t help but feel a bit let down and disappointed about who they sell wa...
I understand you wish back the good ol' days :) - don't want to dwell on it
but what would you like them do? I am just honestly curious how your ideal process would be like? How can they possible choose a certain type of collector exclusively ? Or am I misunderstanding you ?
Loved your post Miles:
Knowing you for many years even way back when I first started out- remember me and the I had my grail PPDRSD from Dr Ed and my you helped me contact your good friend Jed and helped me there too 😎. I loved your passion and that you never sought or bought a...
Thank you my friend.
Comments like that is what makes it all worth while. I do remember you so lovely to hear from you. I hope your journey has been enjoyable and still is. Dr Ed….. what a Gent he was also always had time for people and never wanted anything back. Do you stil...
Wanting to obtain another PP, I experienced bundle sales already more than five to ten year ago
Mostly in a combination with (higher margin) jewellery. So looking to the future I would say, finally!
Even more elegant? When buying jewellery for the same amount as the PP, you were invited to the exclusive PP diners and visit to the manufacture...
But I agree, bundle sales tend to go on as long as the other (in)direct commercial interests of the AD (selling jewellery and other trademarks than PP) remain.
sure. but as we all know, AP boutiques pitch codes 11.59 to people interested to ROs. and lange does not sell an odysseus unless one buys a ....
...zeitwerk or datograph. i find that really funny since i bought my odysseus WG unworn brand-new for 12K euros under list:: )) i guess there will be argon awakening sooner or later for those companies.
.
The RO company will be fine. Lange on the other hand is in for a rude awakening haha. I have no problem with brands asking their clients to buy sh1t items from their own brand, but patek letting Ad do their thing and blackmail clients into buying jeweller...
Patek tries its best
I buy my Patek mostly from an AD and my AD never hinted to bundle or buy other brands to get a Patek. It's a good thing my taste spans across their model lines and I felt ecstatic receiving my 5270P just the same way I received my 5740. I can imagine my A...
Thanks for your comments ! Delighted to hear that
your AD does not request “bundling” of any sort !👍 Please create posts for your Pateks 😃
Just posted!
My AD doesn't explicitly tell me about the bundling but they probably won't call me for a sport Patek if I don't ever buy a less popular model.
closing ADs
by PP is usually based on economic considerations like location (they only want prime locations in the various cities), negotiations with chains like wempe, bucherer etc. on where to best position PP, concentration avoidance (does not apply to hongkong fo...
There is a collector I know that got caught flipping quickly on a popular model and the AD
put him in the penalty box.
Can’t read your text… all jumbled up
But reading all the responses below it seems nothing is solved and there is no answer to the solution the market HOWEVER…is resolving itself. When the majority of the market wants a steel Patek the price gets overheated, as Greenspan puts it, irrational e...
My suggestion:
Patek should make their other watches (non aquanaut and nautilus) more desirable. I like the new modern Calatrava, but not at its price point. Make a calatrava I can submerge in water without ruining it (not necessarily a sports watch diver) and make the ...
Interesting suggestions ! Which calatrava are you
referring to in terms of being tempted at $25k ??
Sorry I should have been more specific
I was referring to the 6007 with its various colors. All I am saying is that the idea that a company has to force people to buy product they are not interested in just to get what they are interested in is absurd and reflects poorly on the company. I don’...
Thank you for clarifying that you were referring to 6007 👍
This reference with colorful hands, markers and stitching is expanding the Calatrava line to become more stylish and sporty. I hear and understand about your concerns, and appreciate your comments. To me, assuming that only a small % of yearly production ...
Very good article
Thank you for help clearing doubts we all have. I’m sure you talked to the right people as the replies are along the same line I got. But I think the letter should have stated the “consequences” they will face if they don’t abide by Patek’s rule… and do i...
