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When watch enthusiast website Hodinkee acquired the used-watch marketplace Crown & Caliber in February 2021 after raising $40 million, the merger made perfect sense on paper.
Hodinkee had a loyal audience, while Crown & Caliber knew how to operate in the booming business of second-hand watches, which topped $22 billion in sales that year, according to Boston Consulting Group.
But three years later, a downturn in the watch market, an erosion of reader trust and multiple rounds of layoffs have led the once-promising merger to founder, according to interviews with nine current and former staff, as well as industry experts.
A Hodinkee representative disputed that its readers’ trust has eroded, pointing to Net Promoter Scores of 58 and 71 for Hodinkee and Crown & Caliber respectively.
Now, after gutting much of Crown & Caliber, Hodinkee is scaling back its ambitious marketplace plans and refocusing its strategy.
The arc of Hodinkee’s misfortune mirrors the rise and fall many media companies have endured amid the economic turmoil of the last four years. But its failed attempt to interweave commerce and content reflects the challenges of the business model itself.
“The theory was that Hodinkee could cover the entire market by adding pre-owned watches, so they flooded the site with pre-owned watches, which is not what the audience was used to,” said one person familiar with the company’s plans. “It hasn’t worked, and because it hasn’t worked that side of the business has been pulled back on dramatically.”
The company said in an email: “Since the acquisition, Hodinkee’s overall readership/consumer loyalty and sentiment has remained positive, with no proof of reader suspicion. Editorial coverage also remained balanced in the watches being featured across pre-owned and new watch styles in the market.”
Layoffs and luxury headwinds
Neither Hodinkee nor Crown & Caliber were profitable when they merged in 2021, according to five people familiar with the companies’ finances. But the combined operation generated more than $100 million in revenue that year as the new and pre-owned watch markets surged during the pandemic.
Hodinkee brought in money from its affiliate marketing, advertising and insurance operations, but between 50% to 66% of its total revenue came from Crown & Caliber, whose margins were thinner, those people said.
