How many ADs are there globally?

[2careless]

I'm trying to do a back of the envelope calculation on AD margins.

Say Rolex makes 1M pieces a year, say each piece on average sells for $USD 7k, AD's at average 30% margin (there has to be some dead stock which they discount out heavily), approx USD2.1k margin per piece.

So, if they got 10k ADs, each AD's profit is approx USD210k p.a. (they get 100 piece each on average p.a.) Hardly good business.

I would expect an AD on average would do $1M margin p.a. (before expenses) to be viable, so globally there should be like 2000 ADs.

Would this be a reasonable guesstimate?

[SPACE-DWELLER]

I guess only Rolex knows, and as usual they ain't telling us nuthin'.

Anyway, personally, I believe there are more than 2,000.

According to this post by Rob, there are 950 AD's in the States alone...

[2careless]

Ah, very interesting.
http://www.wider.unu.edu/publication.../dp2008-03.pdf
has a comparison of the distribution of "wealth" for different countries. On page 9 of this paper, as of 2000 USA had 32.6% of the total "wealth" of the world. Hence, using "wealth" as a leverage factor, if USA has 950 ADs, globally there should be like approx 2900 ADs.

[SPACE-DWELLER]

Excellent article and thinking, Kai!

[2careless]

Thanks Bo. We got some more estimates. From the article you quoted on another thread:
http://www.watchtime.com/archive/wt_...006_04_102.pdf
It mentioned they estimated Rolex to produce 750k watches per year with approx 2B CHF income. That's approx 2.7k CHF per watch they sell. Using this data (back in 2006), 2.7k CHF ~= 2.1k USD per piece (1.3 CHF = 1 USD at 2006 rates). I think on average Rolex gets 55% of the MSRP so average sell price per watch is like USD 3800.

With 750k pieces p.a., with say 2900 ADs, on average each AD gets 258 pieces p.a. so turnover is approx USD980k p.a. so each AD should make approx 295k p.a. before expenses (at 30% margin).

If an AD only sells Rolex watches, I don't think it's a viable business. So, my next question is - how do AD's make a living???

[SPACE-DWELLER]

Kai, you have WAY too much time on your hands!

[2careless]

I love to play with numbers...

[SPACE-DWELLER]

Originally Posted by 2careless

I love to play with numbers...

May I call you "Kai Rain Man"?

Since a Rolex Day-Date was seen on the wrist of Tom Cruise in "Rain Man" (1988), the remark is still Rolex related.

[2careless]

P.S. I think Rolex deliberately made their website so that their AD network doesn't show up globally, so that nobody can easily find out how many ADs they have, to make guesstimates of their margins, production numbers etc much more difficult.

[sherwin]

how would you account for the asian ADs... we seem to have too many of those............