Prior to 2010, a basic designer pair of eyeglasses probably set you back at least $200-$300. The optical industry was dominated by Luxottica, which enjoyed near monopoly status in the market with over 80% market share and was able to charge exorbitant prices to consumers.
Enter Warby Parker and a revolutionary concept that totally disrupted the optical industry – an all stakeholder-centric business model built on the premise of customer value creation and value sharing. Warby Parker offered stylish designer eyeglasses at an affordable price, while championing socially conscious business. Warby Parker hit its initial annual sales goal within three weeks of launching its website.1
A differentiated customer value proposition
At its core, Warby Parker offers significant economic and functional value to the consumer by selling all eyeglasses at a flat $95 (lens + frame) per pair price. Traditional eyeglass designers typically charge separately for frames and lenses, and costs exponentially rise with eye conditions such as astigmatism and keratoconus.
Providing consistent and high quality customer service is central to Warby Parker’s value proposition model. The company aims to provide an “easy and fun” buying experience.2 At inception, Warby Parker was a pioneer in utilizing e-commerce to sell eyeglasses but has since expanded by selling through 25 company-owned storefronts located in trendy, high-end locations across the US.2
Warby Parker’s brand is pervasive, creating a hip, cool factor. Their intention is to appeal to millennials and ‘break into the world of health and fashion’.3 In fact, the company has been acclaimed by Esquire4, GQ5 and Vogue6, amongst other fashion magazines. Underpinning all this is a company that promotes socially conscious business through its ‘buy a pair, give a pair’ model. For every pair sold, Warby Parker, in partnership with VisionSpring (nonprofit), distributes another pair in developing countries. Warby Parker is a registered B-Corp. (for-profit company that meets rigorous social standards, maintains transparency and accountability) with a carbon-neutral production and distribution footprint.2
Simplistic business model
Robust delivery of value
Warby Parker’s operating model is closely aligned with its business model and the strength of its operating model is central to its ability to deliver low cost, high quality, fashion forward eyeglasses with a strong social element.
This is achieved by disciplined supply chain management. Warby Parker bypasses the traditional model by being vertically integrated, enabling them to have direct control over costs. They procure high quality materials directly from overseas (Japan and Italy)2, design and produce all eyeglasses in-house and sell directly to the customer (online or through company-owned stores). Comparatively, the traditional supply chain model involves companies such as Luxottica selling production rights to other companies who then design, manufacture and sell eyeglasses to optical shops. Optical shops then add additional mark-ups before selling to the end consumer.2 Consequently, Warby Parker saves significant costs on licensing fees and retail mark-ups, and pass these savings onto consumers.
Value chain comparison between Warby Parker and traditional industry competitors
As part of its customer offering to provide an ‘easy and fun’ buying process, the company’s ‘Home-Try-On’ program allows customers a free 5-day trial period where they can order five frames online, and try them at home before deciding their preference. Customers can also try on frames virtually by uploading a photo onto Warby Parker’s website and choosing their frames of preference.
Warby Parker also sells through company-owned storefronts where they provide additional in-store services such as eye tests. Physical stores have aided in enriching personalized customer service and increased brand resonance. In-store, each customer, shepherded by a dedicated salesperson, is able to try as many pairs as they want. Additionally, store design and layout, featuring open space, ‘chevron wood floors, original murals paintings, banquette seating and magazine racks’7, is focused on providing a fun experience that will create a buzz and encourage a social atmosphere. Such has been the success of the company-owned stores that estimates show that Warby Parker are amongst the leading retailers in average sales per sq ft.7
$ per sq.ft comparison
Typical Warby Parker store layout
Source: Wall Street Journal, November 17, 2014 and Warby Parker website
Effective human capital investment is critical to maintaining robust customer service. Warby Parker invests heavily in training and encourages creativity through a ‘fun, open and growth-driven culture.’ In addition to onboarding training, the company conducts monthly informal feedback sessions and 3600 reviews to ensure accountability and enhance personal and professional growth.2 The company actually fired one of it’s first employees because he wasn’t friendly enough in emails to customers.3
Warby Parker continues to invest in process improvement and innovation. In 2014, they launched a proprietary retail point-of-sale system called Point of Everything that enabled payment processing, eye-test management and inventory control, amongst others, all through the use of iPad minis.2 This technology greatly improved speed of customer service and internal company recording system.
Warby Parker has been able to build a revolutionary business model, disrupting the entire optical industry on the back of a creative, well-aligned and innovative operating model. While competitors ponder the next step, Warby Parker continues to break into unchartered territories.
2 Warby Parker website (https://www.warbyparker.com)