Fossil is a brand known for making affordable, trendy watches that are fashion-forward. Many also wonder how Fossil can sell their watches at such low prices. Why are Fossil watches cheap?
Fossil watches are cheap because they focus on low-cost manufacturing and using materials creatively. Fossil also adopts third-party movements and leverages its partnership with its sister brands. Fossil also has a unique marketing strategy that helps to sell more watches.
This article will look at how Fossil manages to keep its watches affordable and some common questions many have about the brands in general.
How Do Fossil Watches Become Affordable?
In general, most affordable watch brands apply these methods to help lower their production cost and increase sales:
- Adopting third-party movements
- Creative use of materials
- Making lookalike watches
- Low-cost manufacturing
- Partnership with sister brands
- Marketing strategy
We will now look into each of the areas individually in detail.
Many luxury watchmakers prefer to create their own movements. This allows luxury watchmakers to distinguish themselves from the competition. Furthermore, in-house movements enable luxury watchmakers to improve the performance of their watches.
However, developing in-house movements requires a significant investment. Luxury watchmakers can frequently fund such efforts due to the high-profit margins they generate.
Affordable watch brands do not always have this luxury. Because of the intense price competition, profit margins in the affordable watch market are meager. Most designers are concerned with squeezing and lowering manufacturing costs.
One strategy is to use third-party movements rather than developing their own.
It made sense in many ways. For starters, it helps reduce costs by allowing movement makers to invest and develop movements.
Second, affordable watchmakers can use the reputation of these movement makers to help sell their watches. Fossil, for example, may sell better if people know they are running a reliable Japanese movement from Miyota inside.
The downside of such an approach is that Fossil might need to use movements from different makers in their watches, complicating their supply chain and production.
Creative Use Of Materials
Some affordable watchmakers also keep their watch prices low by reducing manufacturing costs. They do this by being more creative with material usage.
Customers with a refined taste in watches frequently regarded these features as necessary. Most people who buy inexpensive watches are unaware of or do not notice these subtle differences.
As a result, low-cost watchmakers like Fossil replace these materials with less expensive alternatives to reduce costs. Mineral crystals are frequently used in place of sapphire crystals, and top-grain leather straps may be replaced with synthetic leather.
Fossil may lose customers who prefer more sophisticated watches by taking this approach. However, these customers tend to buy higher-priced watches anyway, so it doesn’t really matter.
Some watchmaking companies also reduce costs by producing watches that focus on look rather than functionality. This often happens to tool watches such as dive or chronograph watches.
For example, designing and building a good dive watch with a 300M(1000ft) water resistance will be costly. But building a watch that looks like a dive watch with only 100M (330ft) would be cheaper, as it does not need very sturdy gaskets or crystals.
The same concept could be applied to chronograph watches, that the subdials may be present, but they do not function. They are merely decorations.
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Fossil does offer watches of similar nature, calling them ‘dive-inspired’ watches. However, these are not the majority of their offerings – most of the tools watches can perform as they look.
Affordable watchmakers frequently manufacture their watches in countries with lower labor costs, such as China, Thailand, or Vietnam.
However, these low-cost factories may not be capable of producing precise parts. So middle and high-cost countries such as Japan, Singapore, and Malaysia may be brought in to help production.
Some of the countries listed above are known to manufacture watches by Seiko, Invicta, and Citizen.
Fossil watches are primarily manufactured in Asia, with minor contributions from Japan and Switzerland. Fossil as a brand does not sell ‘Swiss Made’ watches, although as a watch group, they do host Swiss Made brands such as Michele and Zodiac.
By manufacturing in Asia, Fossil can also locate its manufacturing facility near the manufacturers of its other watch parts. This can potentially save money on delivering these parts to the assembly plant.
Partnership With Sister Brands
Fossil can keep its watch prices low by leveraging its partnership with the Fossil Group’s sister brands.
Fossil Watch Group owns several watch brands in the affordable market segment, including Skagen, DKNY, Puma, Michael Kors, etc. Because they are under the same umbrella, they can benefit from each other in various ways.
These watch brands, for example, can pool their watch movement orders and negotiate them as a single order. This means that the order volume will be significantly higher, and watch movement manufacturers will be more willing to offer better discounts.
The same concept could be applied to the production of watch straps, cases, and various other items, allowing for additional savings and lower production costs.
These companies could also pool their marketing and after-sales service resources to reduce costs and provide better services to customers.
These savings are eventually passed on to you at a lower price tag.
Finally, Fossil watches are inexpensive because they are not intended to be sold as luxury watches in the first place.
Fossil competes in the fashion/affordable market segment alongside brands such as Casio, Swatch, Invicta, and Festina. Consumers in this market are known to highly price sensitive.
For example, if they can get watches with similar style and features and save $5 by purchasing a Casio rather than a Fossil, they will choose the Casio.
Fossil must keep watch prices low and offer better features to remain competitive in this segment. Fossil also attempts to foster its customers to purchase multiple watches.
As a result, Fossil watches promote their watches as fashion accessories. Their customers are encouraged to own at least several Fossil watches to match their outfits.
Customers also do not see much of a problem since Fossil watches are affordable anyway. As a result, Fossil can sell multiple watches to their customers, generating sales and profits to sustain themselves.