This is a Founder's Update article where we share our recent experiences in growing Vaer and provide you with a deep dive into our recent business strategy.
What have been our latest developments?
In the past few months, we’ve succeeded in delivering a national in-home catalog campaign, receiving and announcing the delivery of prototypes of our upcoming R1 Racing Chronograph, and the development of two key models from our 2022 survey: 1) the new entry-level DS4 Solar Diver and 2) Our first all-black PVD tactical watch. We’ve also been hard at work improving the education and information side of the purchase process, with the re-design of our reviews page, and the active creation of more accessible “explainer” videos for our watches (more on this below).
Today, at the halfway point of the year, we’re very confident in the overall strategic position of the business, and are excited to tackle the following key priorities over the next 6 months:
- Keep all core models in stock with immediate shipping (improve US assembly capacity)
- Bring a wider audience into the brand through differentiated releases (42mm sizing, more affordable “Standard Issue” pieces, Chrono, etc.)
- Deliver more value and increase the dialogue with our existing owner community (referral program, member login, more founder videos, etc.)
Here’s our plan for how we’re going to make this happen:
How can we limit our frequency of sell-outs & pre-orders?
If you’ve been following business news over the past few years, you’ll be aware of the increasing complexities of supply chain management with the impact of import tariffs, shipping costs, factory closures, labor shortages, and unexpected shifts in consumer demand. Like all businesses, it’s an ever-changing environment we’ve had to continuously adapt to - and as owners and the sole strategic operators for the company, the experience often feels like trial by fire. We’re first-time entrepreneurs, and our entire pricing, discounting, and inventory management strategy has been built “on the go”, and like our watches themselves, gradually improved and refined over time.
While many of the watches on our website ARE still on pre-order, we HAVE made significant progress on production timelines in the past two years. Where in 2020 it was common for many models to be sold out for 3-4 months (and then shifted to a 4-6 week pre-order), today, most watches are only sold out for a month or two, before returning on a 2-3 weeks pre-order.
Though holiday demand can throw a wrench into the best-laid plans, we’re confident that by early 2023, the vast majority of Vaer Watches are going to always stay in stock and ship on-demand.
To make it happen, we’re going to focus resources around our strongest selling and best-reviewed models. For example, the C5 Field Black nearly outsells all of the other C5 designs. Despite the sales data, we’ve always tried to maintain a certain balance of the lineup to ensure that there are a range of different aesthetics available at each price point. This has come at the cost of C5 Field Black availability, especially since our USA assembly process is batch-oriented, and more designs = slower output.
Moving forward, USA assembled models like the C5 Field Black, C3 Tradition & Korean Field, D5 Arctic & Tropic, A3 Atlas and Tradition, and D4 Meridian (which achieve a much higher than average sales velocity) are going to be elevated to the position of a core model status. While other designs will stay in the mix, they will either be transitioned to Swiss or Asian assembly or only re-stocked occasionally as limited edition re-issues (at least until their sales velocity reaches a pace to justify an “always in-stock” status). This just serves as a reminder - if you see a watch that you like that's in stock, get it while you can - not all watch models will be restocked regularly.
Furthermore, we will continue to relieve the pressure on our top-selling US-assembled watches by continuing to invest in our Standard Issue collection. As an example, by releasing the $259 DS4 diver we are able to “conserve” pieces of the popular $359 D4 models, by providing an outlet for consumers who don't want to pay a premium for a USA assembly origin.
The other big piece you may have noticed in the past 6 months, is a significant reduction in sales and discounting and an increase in prices on some models.
While it was always exciting to try to sell through a batch of watches as quickly as possible, over time, we’ve come to realize that the fundamentals of our business are much healthier when we apply a bit more patience and sell only to those folks who are willing to purchase an item at near full price (which, given our low margins, still represents a huge discount compared to heavily marked-up luxury brands).
Additionally, we've raised the price on certain watch models (mostly our US-assembled pieces) and we will continue to do so in order to make each product self-sufficient in the long term. While this is partially tied to inflation, it’s mostly tied to the fact that we’ve been long selling these watches for far below what they’re worth (essentially, subsidizing our US assembly to gain traction).
Our D4 USA Solar watches cost nearly the same to assemble as our Swiss Made Divers, but they retail for a fraction of the price. Sacrificing margin on these models in the past helped give the collection room to grow, but now that they're proven and well-loved, it's important that they move to a margin that can support a scalable long-term production. With the DS4 covering the "entry-level" price range, our plan is to shift the D4 upmarket by adding a ceramic bezel and date window and raising the retail to around $399 (which is sustainable).
How can we generate more excitement with new watch releases?
After 5 years of business, we’ve proven our ability to deliver on the core mission of the brand: building durable, everyday tool watches at a fair price. Last week, we reached a milestone of 4,000 five-star reviews, which is a big testament to the scale and scope of our overall company mission. In terms of growing the brand, the key goal is to understand how we can gain our next 4,000 glowing reviews as quickly and efficiently as possible.
The incredible opportunity we have as a watch brand is a near endless reserve of new watch designs and ideas. Watch sizing alone is a huge opportunity for further expansion.
In the entire history of the business, we’d never released a watch that was larger than 40mm until the launch of the 42mm DS4 Diver at the beginning of July (despite the fact that the most popular sizing for men’s watches in the USA is 42-44mm). Our commitment to smaller watches was born from outdoor practicality, vintage aesthetics, and lack of competition (and our own slim wrists) but we are the first to acknowledge that branching out into larger sizes will be an important way to broaden the appeal of Vaer watches to a wider audience.
Furthermore, with the stability of the always-in-stock “core models” mentioned above (which are essential, time-tested, classic designs) our goal moving forward is to deliver a consistent schedule of limited edition releases and colorways to maintain excitement with collectors and watch press. The C3/A3/A7 Atlas is one of the first new models built around this vision - with a string of new small-batch color variations coming in the months ahead. While releasing a 100/100 piece serialized batch of the Atlas in Tiffany Blue is not exactly going to “move the needle” in terms of total revenue, it IS an awesome opportunity to deliver excitement and a sense of uniqueness around an otherwise affordable wristwatch.
In an email from June, we shared an example of how some of our watches (like the D5 Tropic) are selling above retail on 3rd party auction sites. This is something that we love to see and is evidence that with careful planning and consistent execution we can turn some of our rarer models into highly collectible/tradable goods.
This strategy of "limited drops" and hard-to-access releases is the bread-and-butter of most Swiss Luxury brands, and it’s something we aim to integrate into our company moving forward.
How can we reward our existing customers?
We know our audience is one of the very best in the world of e-commerce. You can simply look at the length and depth of our product reviews if you want to see evidence of the sophistication and knowledge within our owner community.
Our third and final focus for the remainder of the year is finding new ways to deliver exceptional value to this community.
Side Note: We’re excited to see that one of our owners recently created a Vaer Watches Owner’s Group, where you discuss products and share photos and videos of your watches - we recommend checking it out.--
While delivering exciting new watch releases and highly requested colorways is one aspect of this, we know that there’s a lot of value we can deliver beyond shipping watches.
Examples of creating added value in the community could be more in-person events, more trade shows, more watch knowledge articles, more pop-ups, more videos and films, more social content, more Q&A live-streams, more cross-collaborations, more brand merchandise, etc.
Currently, the main challenge in building out these efforts is our limited time as founders. Our company size is somewhere between a traditional microbrand and a small national retailer. This means we’re often too big for us (as founders) to attend regional trade fairs ourselves, but too small to have sales reps or employees that can attend on our behalf. Our goal is to find the middle ground and test strategies that can improve dialogue and maintain excitement around Vaer in-between new watch releases.
In recent weeks we’ve started conversations with both Hodinkee and Worn and Wound around the possibility of a Vaer in-person event in New York City by the end of the year. We’ll also likely host at least one new film screening in Los Angeles. Simultaneously, we’re working to get our watches in more brick-and-mortar stores in the next few months as a way to promote the brand and allow for in-person try-on before purchase (to start, this will likely be focused on brand-aligned retailers in Southern California).
Of course, we’re going to continue to lean into digital media to help share our personal insights and advice. People seem to generally like the “direct-from-the-founders” format so we’ll continue to double down on the strategy with more short-form video content outlining our product lineup, key value propositions, and strategic updates as a brand (these will likely exist as 1-3 minute Youtube Shorts).
What’s the current status of re-stocks and new releases?
There is a lot in the pipeline right now, all of which we’re very excited about.
Below is our current restock schedule for Pre-Order watches:
A3 Atlas Orange and A3 Tradition Black are currently coming out of assembly - they will be stocked and shipping next week.
The D5 Tropic, D5 Meridian, D5 Arctic White, and D5 Pacific are all in assembly now and will be shipping in ~2 weeks.
We’ve got a pretty packed slate of new models ready for release, with the brand new C5 Tactical Field Watch (all-black PVD + 25x layers of C3 lume) leading the way next week. Following that, we’ve got quartz versions of the popular Atlas design in both black and orange versions on the way, as well as a new A3 Atlas Black. Leading into September will be the launch of the R1 Chronograph Pre-Order, which will be our premier release for 2022.
We’ll also be sharing more information about the re-launch of our Swiss Made A7 line in the coming months.
What's on our wrist this week?
Reagan: To my surprise, I’ve actually been wearing the 42mm DS4 Solar Diver quite a lot the past month. Before seeing it in person, I thought that the 42mm size would be a bit large for my wrist (6.75”), but as it turns it’s a great fit. Its total weight is pretty close to our D5 automatic watches, which gives it a bit more presence and sense of “expensive-ness” over the 38mm Solar quartz (which is a model I’ve worn for much of the past two years). The other thing I appreciate with the DS4 is the black sunray dial - it’s a small feature but adds a lot of character. We’ve made a lot of great watches over the years, but this one might be the model that punches the furthest above its price point.
Ryan: Not much has changed for me here - I can’t get away from the D5 Tropic on Jubilee as my daily wearer. It’s such a gorgeous piece, and I get excited every time I put it on. Lately, I’ve been keeping a D4 Arctic on our FKM Tropic in my car so that when I go surfing I’ll always have a watch to throw on - no worries about timekeeping, winding, or batteries.
Thank you for your continued support, and please feel free to share your thoughts and feedback. We value your input and will do our best to respond promptly.
All the best,
Reagan Cook & Ryan Torres
Ryan and Reagan co-founded Vaer Watches in Venice, California in 2016. As small business owners they handle just about every aspect of the daily operations of the company from watch design and supply chain management, to customer support and photography. Over the years, they've learned a thing or two about watchmaking, online retail, and American sourcing and assembly. If you have a question, comment or correction related to this article you can contact the authors directly at team@vaerdesign.com.
