Warby Parker – making eyewear accessible

How it all started

Warby Parker (“WP”) is an American glasses brand that was founded in 2010 with the objective to offer designer eyewear at a revolutionary price, while leading the way for socially businesses. At the time, the company’s co-founders, David Gilboa and Neil Blumenthal, were frustrated by the unaffordability of prescription glasses – an essential item for many people. They realized that the uniformly high price for the product is because the eyewear industry was dominated by a single company, Luxottica, which took advantage of its monopoly position (controls 80% of all eyewear companies) and reaped huge benefits from customers. David and Neil started WP with the goal of making good-quality glasses more affordable and accessible to everyone. The ultimate mission of WP is to decrease the number of people who cannot effectively learn or work due to lack of access to glasses (currently at ~1 billion, or 15% of world population).

Business Model

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As a start-up, WP has inevitably gone through several iterations of its business model since the company was founded five years ago. WP started off as an e-commerce platform that ships five pairs of “trial glasses” to its customers so they can try them on at home or outside for five days at no cost. After the trial period, the customer returns all five pairs of glasses and orders one(s) that they want to keep (at $95 per pair, including frame and lenses). WP will then ship them a brand new pair of their chosen glasses.

The launch was highly successful. Customers demanded that there be physical locations for them to try on the glasses to make the purchasing process easier. To satisfy the demand, WP has opened 12 storefronts to date.

An important part of WP’s identity is its social mission. Since day one, the company vowed to “buy a pair, give a pair,” and has kept its promise.

Operating Model:

• Circumvent traditional channels: WP cuts down costs in every part of the production / distribution process in order to come up with a high quality, low cost product, while still remaining profitable. The measures imbedded in their operating model include the below:
  • Design all glasses in-house to eliminate licensing fees (usually 15% of wholesale price).
  • Source all materials directly, from premium Japanese titanium to custom single-sheet cellulose acetate made in Italy. The direct sourcing strategy ensures best prices and high product quality.
  • Sell directly to customers to avoid retail markups (selling through third party brick-and-mortar retailers can easily double or triple prices)

• Physical stores: As mentioned above, WP started off as an e-commerce company with no physical storefronts. The founders launched the brand this way in order to minimize large capital investment associated with physical stores. However, since WP built its first store in 2013, this strategy has turned out to be a huge positive for the company. The average sales per sq ft at a mature WP store is currently higher than any retail store out there (including Apple!). Because of that, the average pay back period of a WP store is significantly less than the 2-year average for “successful” physical retail stores. This turned out to be a great driver of profitability for WP because it dramatically decreases shipping costs from its e-commerce business. These physical locations have been highly successful in communicating brand identity, driving buzz for the brand, and converting foot traffic into purchases. The reasons that contribute to the physical stores’ success are the quality of their product, the affordability, and the “feel” that customers get in store. The sales associate in store are trained to be very friendly and informative; they offer opinions on the various glasses that customers try on. More remarkably, the store layouts are far from being efficient from a display standpoint – a typical WP store tend to have lots of “wasted physical spaces” like large columns, large long tables. WP chose this “inefficient” layout because 85% of its buyers had already browsed online; they are there to experience the glasses in person while learning about what WP really stands for as a brand.

• Thrive for Improvement: As a young company, WP is always looking for ways to improve, and this is driven from all corners of the company. Every week, each WP employees is required to complete a “15Five” report explaining what they accomplished in the past week and what they plan to achieve the following one. They must also rate their happiness and offer an “innovation idea.” This mandate propels the company to keep moving forward and explains their success thus far. 

• Philanthropy: WP founders really believe in the saying, “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” In order to achieve its social mission of improving access to prescription glasses worldwide, WP has kept its promise of “buy a pair, give a pair.” Every month, it tallies up the number of glasses sold and makes donation to their nonprofit partners. The nonprofits train men and women in developing countries to give basic eye exams and sell glasses to their communities at affordable prices. These same people also spread awareness and make eye care available to their communities. The company believes this is a better way to achieve its ultimate mission than simply donating glasses, which would be a temporary solution and would contribute to a culture of dependency.

Sources:

http://www.warbyparker.com

http://www.fastcompany.com/3041334/most-innovative-companies-2015/warby-parker-sees-the-future-of-retail

http://www.inc.com/kimberly-weisul/how-warby-parker-took-the-risk-out-of-its-business.html

http://www.wsj.com/articles/warby-parker-adds-storefronts-to-its-sales-strategy-1416251866