Limited Editions, Unlimited Profits

If there is one phrase that evokes more reaction from the watch community it must be “Limited Edition.” The consumer marketplace is filled with limited editions. Everything from soda flavors to shoes has a limited edition or LE. Limited editions give manufacturers a chance to capitalize on a popular product by offering a small run in something like a special color iteration or design change that is only available for a small amount of time or number of pieces. Wrist watches are no different. Watch manufacturers have no hesitation creating an LE of one of their watches to make a quick buck.

It seems that limited editions are now more common than non-LEs in the watch world. Baselworld 2019 was a prime example. Almost every release this year seemed as though it was a limited edition. The forums and comment sections of media outlets were ablaze with outrage and feelings of being taken advantage of as consumers. Why does it seem that LEs are more common now? Is it something the watch community created? Is it just the manufacturers capitalizing on consumer’s discretionary income?

First, let’s look at what a limited edition watch is. Limited edition watches are watches that are not defined by any specific number produced but generally come numbered. Most limited edition watches are a color iteration on an existing design. A recent example is the Seiko SPB089, which is known as the blue Alpanist and was a color variation on the existing, non-LE green Alpanist. A total of 1959 pieces of the blue Alpanist were produced. Some manufacturers will create a series of limited edition watches that are a new design but only produced in a small number like the recently released Zodiac Aerospace GMT. A total of 364 units (182 in each color) were produced. Both examples sold out almost immediately after they were offered for sale.

Buy Now or Forever Hold your Peace

Why create a limited run of something if it sold out so quickly? Why not just make it a standard production piece that is available all the time? There are a few answers to this, but the most obvious answer is how we behave as consumers and what the manufacturers do with that behavior.

Creating a limited edition, especially one produced in numbers under 500 creates a high sense of urgency for the consumer. A consumer which may have been saving for a watch on their wish list or previously had no intention of buying a new watch is now motivated to purchase one. The limited edition run of a watch automatically creates what some people call FOMO or fear of missing out. “If I don’t buy it now, I will never get a chance to buy it again” is an entirely rational thought by a consumer who sees a limited edition come up for sale. This is perhaps the most appealing motivation for manufactures to create limited editions. Converting a non-buyer to a buyer without spending vast amounts of money on marketing and simply releasing a product you were going to release anyway can yield huge profits.

Exclusivity is King

Another motivation for consumers purchasing a limited edition watch is more granular, but still realized by manufacturers. You can be the first or potentially only one to have that watch in your group of friends or social circle. In the watch community there is a sense of pride and the ability to brag if you got the newest watch that was just released or managed to score a limited edition. There are even watch manufacturers that cater to this specific thing, the best example being Omega’s Speedy Tuesday LE Speedmasters. These were created almost exclusively based on the Instagram hashtag #speedytuesday.

With all of this said, the motivation to purchase a limited edition that manages to create more fury in the watch community than any other is when a consumer purchases a limited edition watch with no intention of ever wearing it. The dreaded flippers. Many will purchase a limited edition watch, sometimes many of them at a time, with the sole intention of selling them back the community for a profit. It is not uncommon to see a limited edition sell at retail for $600, sell out, and then be sold on the secondary market for twice the price. Manufacturers obviously cannot directly profit off this, but it does help their watch sell faster. If the flippers know the watch is based on a cult classic or from a brand with a history of this happening, they will sell out immediately.

The Bottom Line

For the manufacturers, limited editions can yield huge profits in a short amount of time. The recently released 50^th anniversary Omega Speedmaster in all gold is a prime example. Limited to 1,014 pieces at a price of $32,000 each, Omega stands to make $32,448,000 in revenue from this watch alone. Omega would have to sell 5 times as many standard Speedmasters to make the same amount of revenue. Granted, the gold LE costs more to make but it can easily be argued Omega is still going to pull in a hefty profit.

Another factor to consider in this example is speed, no pun intended. Omega most likely sold out of those 1,014 pieces in a matter of minutes. It may take months to sell 5,070 standard Speedmasters and make the same amount of revenue.

From the Speedmaster example alone, it is easy to see why a watch manufacturer would want to produce limited editions. Speedy sales and quick profits are the main goal of almost any selling organization. Supply and demand are also readily apparent to the manufacturers as well. They do their research and know how many pieces it will take to sell quickly and still present prestige and exclusivity to the consumer.

Manufacturers can also use limited editions to field test a design change and see how actual consumers will react to it without spending a ton of money in marketing research. Many believe the blue Alpanist was Seiko testing the waters on how consumers would react to new color iterations. Whether or not this is true for this specific watch has yet to be seen. With that said, Seiko is a frequent flyer on limited edition airlines which gives these speculations a lot weight.

Whose Fault is it?

The watch industry also enjoys one of the best types of consumer bases, deep pockets. Whether or not we like to admit it, watches no matter how inexpensive, are a luxury item. If you bought a watch, you used discretionary income. Watch manufacturers know this and they also know that there are going to be consumers that will buy a limited edition watch just for the sake of it being a limited edition. This gives the manufacturers the holy grail of sales projections. They can all but guarantee that their limited edition watch will sell out.

Looking at the examples above from both a consumer and manufacturer standpoint, it is easy to see why limited edition watches are so prevalent. Many in the watch community who disapprove of the limited editions becoming the norm have stated, “vote with your wallet!” The problem with that statement is, we already did. Watch collectors and enthusiasts have been buying limited editions so quickly that the watch manufacturers might now see it as their primary source of customers.