IS and Warby Parker

It is an online eyewear retailer that was founded in 2010. The idea for the comp
any was conceived when the firm's founders (MBA students at the time) observed t
hat glassesuncomplicated, easily breakable, and mass-producedwere typically quite
expensive ($500 or more, for example). Significantly, the founders were convince
d they knew the reason why glasses cost so much. They perceived the optical indu
stry as an oligopoly, meaning that a small number of companies dominate the busi
ness and are making large margins.
Consider, for example, Luxottica (www.luxottica.com), based in Milan, Italy. Thi
s company owns LensCrafters, Pearle Vision, Sunglass Hut, Ray-Ban, Oakley, and O
liver Peoples, in addition to the optical shops in Target and Sears. In addition
, as a result of a series of license agreements, Luxottica manufactures eyewear
for more than 20 top brands, including Chanel, Burberry, Prada, and Stella McCar
tney. Warby Parker's founders realized that Luxottica had created the illusion of
choice, when in fact they practically monopolized the industry.
Warby Parker devised a strategy to compete with Luxottica. The company uses the
same materials and the same Chinese factories as Luxottica. It then sells its gl
asses at a lower price because it does not have to pay licensing fees, which can
amount to as much as 15 percent of the $100 wholesale cost of a pair of glasses
. In addition, because Warby Parker markets and sells its products directly to i
ts customers, it does not have to deal with retailers, whose markups can double
prices.
Warby Parker's business model allows customers to test the company's retro-style
glasses via a mail-order, try-it-at-home program. The glasses (including prescr
iption lenses) cost a mere $95, and customers may test up to five frames at a ti
me. In addition, the Warby Parker Web site enables shoppers to upload photos and
try on frames virtually. Such large-scale individualized shopping experiences hav
e attracted a devoted following among young, trendy professionals. This business
model has made the firm a commercial success.
By mid-2013, Warby Parker had sold more than 100,000 pairs of glasses. The compa
ny raised $1.5 million from investors in May 2011, and in 2012 it raised an addi
tional $37 million. It has 113 employees, and it opened a 2,500-square-foot stor
e in New York City.
In addition to enjoying great commercial success, Warby Parker has a social miss
ion. For every pair of glasses it sells, it provides subsidies to help someone i
n need to buy a pairalthough not one of Warby's creations.
The company's success is inspiring competition from more established eyeglass re
tailers. For example, discount fashion site Bluefly (www.bluefly.com) has introd
uced Eyefly (www.eyefly.com), which sells custom, vintage-looking glasses for $9
9.
Another competitor is Ditto (www.ditto.com), where shoppers use a computer webca
m to record a video of their faces and create a virtual, three-dimensional you. Th
en, shoppers can virtually try on different frames, look side to side, and blink
. They can also solicit feedback from friends on Facebook by sharing shots of th
eir virtual selves wearing different frames.
Google wants to avoid making users of its Google Glass product look like an acto
r in a science fiction movie. As a result, the company is working with Warby Par
ker to design more fashionable frames for Google Glass.