Watchmaker Warns Shoppers to Avoid Its Products Online

Premium watchmaker Baume & Mercier took the unusual step Wednesday of taking out a national newspaper ad warning consumers not to purchase the company’s products on the Internet.

“We urge cyber shoppers to beware of so-called deals on our products on the Internet,” read the full-page ad, which appeared in Wednesday’s Wall Street Journal and urged shoppers to avoid “dot-com retailers.”

Officials for the Switzerland-based company said the ad was meant simply “to inform the public” of the risks of online shopping. Others interpreted the ad as either a clever branding ploy or a futile swipe at the e-commerce juggernaut.

But analysts agreed that the Baume & Mercier ad comes at a time when many luxury-goods makers are increasingly concerned that the Net could undermine their ability to maintain their lofty prices and fend off counterfeit products.

Experts say counterfeit merchandise is a growing problem online. According to Cyveillance Inc., an online research firm, 4% to 8% of Web sites selling Gucci-, Rolex- and Mont Blanc-branded products are selling fakes.

“A lot of luxury brands are very paranoid about putting their products on the Web,” said Lisa Allen, an analyst at Forrester Research in Cambridge, Mass. “What Baume & Mercier is doing indicates their skittishness about a very viable retail channel.”

E-commerce still accounts for a small percentage of total retail sales. But Baume & Mercier’s tactic reflects widespread unease among traditional retailers and manufacturers. Another example came last month, when a St. Louis shopping mall, the Saint Louis Galleria, barred its stores from promoting e-commerce sites. It later rescinded the ban.

Though the full-page ad was the first of its kind, other luxury brands are using different means to convey the same message. David Friedman, co-owner of Sarah Leonard Fine Jewelers in Westwood, said that Movado, Seiko and other premium watchmakers have sent authorized dealers similar Internet warnings to place in their stores.

Baume & Mercier is a Swiss-based subsidiary of the Vendome Luxury Group. The company’s watches range from about $750 to upward of $10,000.

In its ad, Baume & Mercier stressed that it “entrusts the sale of its timepieces ONLY to a highly select number of authorized dealers.” Consumers who shop online, the company says, could end up with “a counterfeit or second-hand good presented as new merchandise.”

Baume & Mercier’s ad singled out Ashford.com, a fast-growing online jewelry store, as an example of an online merchant carrying the company’s products without authorization.

Kenny Kurtzman, chief executive of Ashford, said the ad came as a surprise and reflects Baume & Mercier’s resistance to the reality that Internet retailers are “beginning to become a force and make a difference in this industry.”

Kurtzman, a former Compaq Computer Corp. executive, acknowledged that his company is not an authorized Baume & Mercier dealer, though not for lack of trying. Instead, Ashford.com obtains the products from other authorized suppliers and retailers, Kurtzman said, adding that “every watch we sell is guaranteed to be authentic, new and unworn.”

Ashford.com is an example of the growing online market for upscale merchandise. The company carries more than 200 luxury brands, and is poised to record about $15 million in sales in the current quarter. It sells about 15 Baume & Mercier watches a day, Kurtzman said.

Experts said there are drawbacks to buying from unauthorized dealers including Ashford.com. Chief among them is that most luxury brands refuse to honor factory warranties unless the item was purchased from an authorized dealer.

Though these are legitimate concerns for consumers, some analysts said Baume & Mercier’s ad was probably less about consumer awareness than clever branding. Mike May, an analyst at Jupiter Communications, called the ad “a publicity opportunity at Ashford’s expense.”

“It positions Baume & Mercier as a luxury maker of fine watches who want to remain exclusive,” May said, “while at the same time pandering to their brick-and-mortar retail partners.”