Today, Warby Parker customers can buy a pair of customized and colorful prescription glasses for $95. Just four years ago, the average price of a pair of eyeglasses, with frames and lenses, was $253. Why should a pair of glasses cost more than an iPhone? Warby Parker’s four founders would argue, simply: they shouldn’t.
Warby Parker has effectively aligned its business and operating models, marrying people and products with purpose. Creating affordable yet stylish eyewear, Warby Parker focuses on performance and philanthropy while beating the competition in both cost and convenience. For each pair of glasses purchased, the company partners with nonprofit Vision Spring to provide glasses to a person in need in the developing world. In 2014, Warby Parker gave away its millionth pair of eyeglasses to people living on less than $4/day — and, in 2015, closed a Series D round of funding, valuing the retailer at $1.2 billion [i].
Putting the customer first
Warby Parker is an eyewear company that sells glasses to consumers. The eyewear industry is dominated by Luxxotica, an Italian company that “owns” 80% of global eyewear. Luxxotica controls licenses for the most popular designer brands, including Prada, Burberry, and Michael Kors. These frames are often sold in Luxxotica-owned boutiques and stores like Sunglass Hut and Lenscrafters [ii].
In a category with limited innovation — yet artificially high margins — Warby Parker’s founders set out to digitally disintermediate Luxxotica, focusing on customers first. Warby Parker designs and sells eyewear that is:
○ Glasses priced at less than ½ the cost of most designer frames — a price point unattainable for existing competition [iii]
○ Wide range of colors, styles, and materials — unlike competitors
○ Launched online first → very convenient, unlike competitors
○ Online store enabled more effective customer marketing and tracking vs. competition
○ Continued focus on technology: today, Warby Parker has a proprietary retail system called “Point of Everything”
Early digital investment and excellent service proved to be cornerstones of Warby Parker’s unique approach. After launch, the company hit its first-year sales targets in just three weeks [iv]. The ‘buy a pair, give a pair’ program was also well-aligned with business objectives. Committing to the global community resonates with customers: Nielsen found that 46% of consumers are willing to pay more for products made by companies that give back [v]. Social good unlocks value not just for the world, but also Warby Parker’s core business.
Seeing the eyewear industry through a new lens
Warby Parker is a vertically-integrated “lifestyle brand offering value and service [vi]”. The company manages design, manufacturing, and sale of all its products. This approach affords maximum control and lower costs by avoiding licensing fees, royalties, and optical shop profit.
Eliminating unnecessary costs makes it possible for Warby Parker to invest in other areas, like service. The retailer developed a Home Try-On program for customers to pick five pairs and keep them for a trial period. Warby Parker also takes a personal approach to customer service that strengthens its brand in the process. Employees are empowered to act as Warby Parker brand stewards and have produced over 2,000 videos responding to customer questions. Cost savings re-invested in innovative services allow the company to drive sales, keep prices competitive, and create value for customers.
With vertical integration comes tighter distribution control. While its initial business was founded on the web, Warby Parker has recently moved to a hybrid e-commerce and brick-and-mortar model, with plans to expand to 20 stores by the end of 2015 [vii]. Warby Parker stores currently sell an average of $3,000/sq. ft. annually, outperforming Tiffany & Co., Best Buy, Ralph Lauren, and Tumi. Despite rapid initial growth from physical locations, Warby Parker continues to bolster its online presence to scale the in-store experience.
The future in-focus
Warby Parker’s business grew 500%+ in its first two years. The company’s valuation has more than doubled since December 2013 [viii]. By cutting out middlemen, expanding the distribution model, and staying customer-centric, Warby Parker is uniquely efficient and effective: controlling design, driving profitability, undercutting competitors on cost, and keeping prices low for customers. None of us need 20/20 vision to see that Warby Parker is here to stay.
i. Wall Street Journal http://on.wsj.com/1bYpZT0
ii. INC http://bit.ly/1HOMyV0
iii. TIME http://ti.me/1yPQD7w
iv. Business Insider http://read.bi/1Ovbzd2
v. Nielsen http://bit.ly/1HEPuYc
vi. Fast Company http://bit.ly/1vbb6F1
vii. Wall Street Journal http://on.wsj.com/1HUwFjv
viii. INC http://bit.ly/1ttt01v
xi. Quora http://bit.ly/1XGGfxN
x. Neil Blumenthal (via Quora) http://bit.ly/1lCq572