The new capital brings Udaan’s total funding to date to US$1.15 billion. Indian Business-to-Business (B2B) ecommerce startup Udaan announced on January 6 that it has raised US$280 million in additional financing from existing investors Lightspeed Venture Partners, DST Global, GGV Capital, [...]
By Alvin Mak
The luxury watch industry is showing signs of weakness once again.
Swiss timepieces have been the pinnacle of watch engineering for much of the history of the wristwatch. They have long been defined by their elegant and luxurious aesthetics.
These watchmakers pioneer engineering techniques while at the same time upholding their long history of complicated mechanical harmony. The finest Swiss watches today are completely handcrafted—placing immense value in the organic human touch. These companies, backed by the lofty foundations of European craftsmanship, have built renowned international companies.
Yet this emphasis on craftsmanship comes at a heavy cost, driving the prices of these products through the roof. The industry bubble finally popped in 1980, when the “quartz crisis” gave Swiss watchmakers a run for their money.
Japanese watch company Seiko developed battery-powered timepieces that were more accurate, sustainable, and affordable than their mechanical counterparts; they demonstrated that quartz mechanisms were quintessentially better in every sense of the word. In fact, these battery-powered devices were at least 100 times more accurate. The Swiss industry was left to scramble to stay afloat, or submerge into obscurity.
Swiss watch company Swatch then rose to create affordable quartz timepieces. The company’s success prompted the acquisition of many struggling brands such as Tissot, Glaschütte Original, and Blancpain, and ultimately salvaged the reputation of the Swiss watch industry.
As a result, companies such as Rolex, Omega, and Audemars Piguet remained relevant, and are now part of a luxury watch market that was worth just shy of $7 billion in 2018. Ardent communities of collectors are also credited with much of the industry’s recent successes.
However, the Swiss are once again facing a similar predicament. With ‘affordable luxury’ on the rise, the heyday of these vaunted watchmakers may soon be ending for good.
MVMT—pronounced “movement”—could not have had a more different inception than the aforementioned established Swiss watchmakers. Instead of being developed and nurtured over hundreds of years, it was founded by Jacob Kassan and Kramer LaPlante—two college dropouts.
Inspired by the often overwhelming prices of the luxury watch industry, Kassan and LaPlante realized that there were no stylish, affordable watches for their demographic: millennials fresh out of college.
They thus dedicated MVMT to “disrupt[ing] the overpriced and outdated models of the fashion industry.” MVMT’s online store also pledges “Quality, minimalist designs at radically fair prices,” drastically differentiating themselves from expensive European craftsmanship.
Founded in 2013 in California, the startup mainly grew its loyal customer base through rigorous social media promotions. As of 2020, MVMT watches have shipped out to 1.5 million watch owners in over 160 countries. According to Business Insider, MVMT’s watches cost between $87 and $195, which is drastically lower than the cheapest Rolex model—the Oyster Perpetual, which costs just over $5,000.
The absolute clearest possible indicator of MVMT’s divergence from Swiss watchmaking it its product offering on Amazon’s online marketplace. Though perhaps sacrilegious to brands like Rolex and Omega, it was first instinct for a digital-native brand like MVMT to recognize the convenience of ecommerce and use it to increase MVMT’s accessibility.
Avid luxury watch collectors have, however, criticized MVMT for its lack of “horological heritage”; they say MVMT lacks the ingenuity and tradition that European companies offer, opting for cheap quartz mechanisms instead. Regardless of where you stand, however, MVMT’s numbers don’t lie—it is expanding the watch industry to include consumers that previously wouldn’t even consider purchasing luxury watches, which is a savvy business decision from any angle.
MVMT was acquired by Movado in 2018 for $100 million. The watchmaking conglomerate also owns the manufacturing rights of timepieces from reputable fashion brands such as Lacoste, Tommy Hilfiger, and Hugo Boss. As a result, MVMT has stepped into direct-to-customer and wholesale operations, as well as the production of sunglasses and other accessories.
Linjer was founded by Jennifer Chong and Roman Khan, on similar grounds to MVMT. Chong and Khan were bothered by the ridiculous prices of leather goods offered by luxury brands; they were “fed up with choosing between fast-fashion and luxury brands.”
What they created was Linjer (meaning “Line” in Norwegian)—a brand specializing in watches, leather bags, and jewelry, all at an affordable price. Linjer prides itself in its ability to offer “minimalist, high quality products that [don’t] cost the earth.”
Linjer is an alum of popular crowdfunding portal Kickstarter – the starting point for now-viral products like the Exploding Kittens card game and the infamous fidget cube. By raising $350,000 in a crowdfunding campaign, Chong and Khan were able to launch Linjer and propel it to a staggering $1 million in sales in the first 14 months.
Similar to MVMT, Linjer reinvented the timepiece supply chain by pushing its products into the realm of ecommerce; the watches have been selling online since 2014. By cutting out the middlemen and investing in a more direct supply chain, Linjer’s price tags come without the luxury mark-ups too often seen in big-name designer brands.
Even though the company’s timepieces are more pricey than MVMT, coming in between $179 and $549, luxury brands like Rolex and Omega remain far beyond that range; Linjer’s products are unequivocally a much more affordable option.
Luckily for customers, a cut in cost doesn’t always come with a cut in quality. Linjer’s watches are powered by movements manufactured by reputable Swiss brands such as ETA and Ronda, which at least at face value, promises the same level of reliability as a luxury brand could offer.
Additionally, Chong and Khan have dedicated Linjer to environmental sustainability; its Italian tanneries have won awards for their environmentally conscious practices.
Linjer raked in a whopping $10 million in sales in its first three years of operation, and is looking to continue making waves in the unsustainable luxury watch industry.
The interesting part in all this is that signs of weakness in the luxury watch industry resurfaced even before these affordable watch startups were on the scene. Tim Cook said two years ago that his Apple Watches have already outsold all Swiss watchmaking companies combined. Perhaps luxury mechanical watches are witnessing a second “quartz crisis.”
This, perhaps, is a foregone conclusion. While wealthy watch collectors are a loyal bunch, for a brand to depend so highly on such a niche population is ultimately unsustainable. Smarter entrepreneurs would do what MVMT and Linjer have been doing—extend the watch industry beyond the top 1% and provide an option to those who cannot afford the outdated, all-too-familiar designer markup.