Many consumers haven't heard of Luxottica, or could just as easily mistake it for a sleek line of kitchen appliances. But make no mistake: This Italian colossus has a slice-and-dice grip on the eyewear market — not just in the U.S., but across the globe, as it's worth an estimated $8.5 billion.
Luxottica designs and retails more than 80% of the world's major eyewear brands. That includes not only the frame lines we know and love (including Persol, Oakley, and Ray-Ban), but also the distribution channels where we buy them (including Sears Optical, Target Optical, Pearle Vision, and Lenscrafters). By the way, they also own Eyemed, the second-largest insurance company in the U.S.
While Luxottica hasn't been labeled a monopoly by way of legal definition, its stronghold on the market certainly makes it an eyewear powerhouse that seemed untouchable. Until three young upstarts fresh from the University of Pennsylvania's Wharton School of Business came along.
Warby Parker has become all the rage among the hip, smart, and socially conscious — thanks in large part to a weakness it exploited in Luxottica's armor. Founded in 2010, Warby Parker devised a way to fit folks for glasses online, something no one else in the market had done successfully. To boot, the company began selling glasses — quality glasses, mind you — at the door-busting price of $95 a pair. The result: Warby Parker has already grown more than 500% after hitting its first year's sales target in three weeks.
"We feel like we can have a big impact, and the bigger we grow, the bigger an impact we have," says co-founder David Gilboa. He's the son of two doctors, but may be the first non-doctor in a medical family to have one-upped his parents.
Taking Down a Monopoly With Unbeatable Pricing
As Gilboa describes it, the idea for Warby Parker traces its roots to a vacation debacle. While backpacking in Thailand, Gilboa lost his glasses. Returning to the United States for a semester at Wharton School, he wasn't sure how much it would cost to replace them. That's when sticker shock hit: $700 for a new pair.
"I had just bought an iPhone 3G for $200," Gilboa recalls. "It didn't make any sense that a magical phone that did things nobody could've imagined cost $200, and these glasses that used the same basic technology for 800 years cost $700. There had been no innovation on the product side or on the distribution side."
Instead of swallowing his eyewear ire, Gilboa pondered like any good business student: Why did prescription glasses cost so much? That's when he learned about Luxottica. And with three Wharton classmates — Neil Blumenthal, Jeffrey Raider, and Andrew Hunt — he co-founded Warby Parker, bootstrapped out of a Penn campus apartment on a simple premise: What if you could do a nimble end-around past Luxottica and sell prescription eyewear online for $95 a pair?
That system makes trying on a pair of virtual frames easy. Potential customers can upload a picture onto the Warby Parker website, or request up to five pairs to try on at home, 100% free. Of course, there was some nervousness as to whether such a system, back when it was debuted, would actually work. Judging by sales (and helped along by the low price, no doubt), Warby Parker hasn't seen any groundswell of consumer complaints.
Buy a Pair, Give a Pair to Charity
What's more, Warby Parker developed an angle of doing good that doubled as brilliant marketing. Blumenthal is the former director of VisionSpring, which gave glasses to people living for less than $4 a day, and was a driving force behind the company's charitable giving from the outset. Warby Parker gives away one pair of glasses through VisionSpring for every one sold. While Warby Parker wants to make money, "We also want to be an inspiration," Gilboa says.
Of course, there's always the temptation to sell out, or raise the prices now that it's firmly established that the company can't sell its eyewear fast enough. But that hasn't happened so far, and if Gilboa and his partners have their way, Warby Parker will continue to stay true to its original vision.
"I'm most pleased that we started the business as four good friends, and we were told not to start a business with friends — that there would be tension and it would be bad for the friendship and bad for business," Gilboa says. "But we decided to ignore all of that. And we're all still great friends."
Not unlike TOMS Shoes, Warby Parker has made a name for itself by providing quality products at reasonable prices, with the added bonus of helping those in need. Readers, have any of you bought frames from Warby Parker or another online eyewear site? Or are many of you hesitant to try on glasses virtually? Sound off in the comments below.