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When watch fanatic web site Hodinkee acquired the used-watch market Crown & Caliber in February 2021 after elevating $40 million, the merger made good sense on paper.
Hodinkee had a loyal viewers, whereas Crown & Caliber knew the right way to function within the booming enterprise of second-hand watches, which topped $22 billion in gross sales that yr, based on Boston Consulting Group.
However three years later, a downturn within the watch market, an erosion of reader belief and a number of rounds of layoffs have led the once-promising merger to founder, based on interviews with 9 present and former employees, in addition to trade specialists.
A Hodinkee consultant disputed that its readers’ belief has eroded, pointing to Web Promoter Scores of 58 and 71 for Hodinkee and Crown & Caliber respectively.
Now, after gutting a lot of Crown & Caliber, Hodinkee is scaling again its formidable market plans and refocusing its technique.
The arc of Hodinkee’s misfortune mirrors the rise and fall many media corporations have endured amid the financial turmoil of the final 4 years. However its failed try and interweave commerce and content material displays the challenges of the enterprise mannequin itself.
“The idea was that Hodinkee may cowl your entire market by including pre-owned watches, so that they flooded the location with pre-owned watches, which isn’t what the viewers was used to,” stated one particular person accustomed to the corporate’s plans. “It hasn’t labored, and since it hasn’t labored that aspect of the enterprise has been pulled again on dramatically.”
The corporate stated in an electronic mail: “Because the acquisition, Hodinkee’s general readership/client loyalty and sentiment has remained constructive, with no proof of reader suspicion. Editorial protection additionally remained balanced within the watches being featured throughout pre-owned and new watch types out there.”
Layoffs and luxurious headwinds
Neither Hodinkee nor Crown & Caliber have been worthwhile once they merged in 2021, based on 5 folks accustomed to the businesses’ funds. However the mixed operation generated greater than $100 million in income that yr as the brand new and pre-owned watch markets surged in the course of the pandemic.
Hodinkee introduced in cash from its internet affiliate marketing, promoting and insurance coverage operations, however between 50% to 66% of its whole income got here from Crown & Caliber, whose margins have been thinner, these folks stated.
