Watch entrepreneur Thomas Baillod: “Our model delivers the lowest prices ever”

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Born and raised in La Chaux-de-Fonds NE, Thomas Baillod (52) studied business and describes himself as a “salesman”. Before starting his own business in 2019, he was responsible for establishing and managing international distribution at Victorinox, then briefly at Maurice Lacroix and then at Louis Erard. He knows the watch industry closely, knows how to sell, and creates havoc in the watch industry with his stubborn concepts.

He founded his own watch brand called Baillod, written BA1110D, not because of the watches, but to validate his business model on his own. Before this, he had tried for a long time in vain to get one of the established watch manufacturers to offer him a collection of watches for practical testing. His basic idea: to reduce, if possible, everything that costs a watch beyond its production costs and price everything saved. Whether their watches are beautiful or not is a matter of taste. What they offer and how much they cost is undoubtedly impressive.

Blick: Mr. Baillod, how did it all start?
Thomas Baillod: I come from La Chaux-de-Fonds. I always had great respect for watchmakers, for over 15 years I built worldwide sales networks of various brands and later became self-employed. Initially as a consultant.

For whom and with what?
I am convinced that we need to approach the entire watch business differently and focus on how to sell the watch. I approached a few brands and said: Let’s rethink the way you sell your watches. I wanted to move distribution online and put marketing into customers’ hands. It is the purest model available and allows for the lowest prices ever.

Do you want to sell watches of well-known brands at a cheaper price? No wonder no one attended.
It could also be a capsule collection that we would sell with a multiplier of 2 instead of 6-7 as in the industry. Word would certainly spread quickly.

Loss for producers?
No it is not. In the normal course of business, they calculate it with a factor of 2: Specifically: A watch that costs 175 francs to produce is sent to the distributor, from there to the retailer, and from there to the end customer, who makes the payment for 350 francs. Frank paid 1000 francs for this watch. My idea was that mechanical watches needed to become cheaper to increase their appeal. No one wanted to try this, so I created a watch to test my system.

It sounds complicated.
It wasn’t. I approached designers here in Switzerland who were collaborating with partners in Asia and produced a beautiful watch for a surprising price and called it Chapter 1: Three-hand mechanical watch for 360 francs. I announced it on my LinkedIn account. I had $30,000 in 36 hours and started production without knowing that I was starting a watch brand. At that time, my goal was not to create a watch brand, but to prove that my idea worked.

So did you make money from this?
Yes, as usual, the manufacturer’s margin is 50 percent, that is, 180 francs per hour. I did it to show that user-generated commerce works, that my business model is selling online and to existing customers.

Were the watches of the man from La Chaux-de-Fonds made in Asia?
I just needed hours. These questions came up when I started working. Swiss Made: Movement and assembly in Switzerland is usually sufficient to achieve the 60 percent added value required for the Swiss Made label. Many brands also source other components from Asia. In any case, I had to hear that my model might work on watches made in China, but not on Swiss watches. That’s how I came up with the Chapter 3, a Swiss Made watch that I launched for 470 francs – mechanical, skeleton. It was really a surprise, no one but me could sell such a watch at this price.

Who are your supporters?
All my friends are in the industry. It was very easy to mobilize all the contacts and they wanted to help me. Then my friends bought watches and their friends also wanted them, so they started selling watches for me. In 2022, we sold 80 percent of the watches in French-speaking Switzerland to many people in the watch industry. Someone recently described us as “Swiss Made’s best kept secret”, which is true but I’d like to change that now.

How many hours is 80 percent?
About 5,000 of the total 6,500 hours in French-speaking Switzerland. We achieved sales of 3 million francs in 2022. We will get almost the same amount this year, albeit with significantly fewer hours.

From where?
Meanwhile, we have introduced a Swiss-made Tourbillon that costs under 6,000 francs. It was a bolt of lightning. Other brands have the same thing, but their watches cost 50,000 francs.

WHO?
I definitely won’t say that here. If anyone could talk about it, it would be Olivier Mory, who made tourbillons.

Are your watches becoming more expensive?
No, I made the Tourbillon only to refute those who claim that my model can work not with expensive watches, but with cheap Swiss-made watches.

What is the business model?
You buy a watch, we take the money, have it produced, and deliver the watch six months later. When it comes to prices, I’ll give you an example from a different context: You buy a T-bone steak from the butcher, you pay for the bone, but you don’t eat it. This is distribution. They pay for the oil that adds flavor but they don’t eat. This is marketing. We remove the bones, remove the fat and sell the meat.

Are you talking about Baillod now?
Normally, deployment requires a location, a service, and a warehouse. My selling point is the customer’s wrist, the service is done by the customer, they tell the unpronounceable name, the prices, the idea behind it and the warehouse: We do not have this, because we do not sell watches, but the right to buy watches.

Why focus so much on prices?
For many people, 1000 francs for a watch is a lot of money. Our prices start with Apple Watch. We want mechanical beauty at entry-level prices. Do you know why so many watchmakers buy our watches? Because they know that we offer the smallest difference between value and price.

Do you have a vision for your company?
I want to continue with great wrist machines at great prices. My mission is to attract as many people as possible into the world of Swiss watches with my brand.

How is the industry reacting to this?
First they ignore you, then they laugh at you, then they fight and then you win – just like Gandhi said.

Where do they stand?
In war. There are brands that sell the same products as us, and when they see our prices, they get upset and start questioning our quality. A few customers also seem uneasy. Do you know the Veblen effect?

NO.
Thorstein Veblen was an American economist. The effect named after him is also called the “snob effect”. This is based on the fact that price and demand move in opposite directions in the luxury industry. When the price is high, demand increases. That’s why I named my Tourbillon “Veblen Dilemma” and engraved it on the bridge. I knew the first reaction to this price would be that if it’s this cheap, it’s worth nothing. People should decide for themselves whether this model is worse because it costs much less than the others.

However, they can put pressure on the Tourbillon manufacturer.
No, because I’m his biggest customer. You order 100, I order 1000. No one sold more Swiss-made tourbillons than us in 2022. And I can assure you that we can do much more that some big brands might be uncomfortable with.

Because they ruined your business?
Rolex, Patek Philippe and Audemars Piguet have no problems thanks to me. They don’t care about me. But there are also brands that sell the same Tourbillon for 50,000 Francs without any problems.

But they don’t have the customers you target, right?
NO. Our customer drinks wine, not the label.

Source :Blick