How Warby Parker Disrupted the Eyewear Industry

Warby Parker was founded in 2010 after it sought to solve the problem of glasses being too expensive. The four founders were inspired by a time when one of them lost his glasses on a backpacking trip and was not able to afford a replacement pair until his next semester. They all realized that they and many others had similar experiences. Together, they started Warby Parker on the principle of ‘offering designer eyewear at a revolutionary price, while leading the way for socially conscious businesses.”

The issue that they found was that there was one company who was monopolizing the eyewear industry. This gave consumers no other options and forced them into paying the artificially high prices. Warby Parker sought to find an alternative to working with this company through disintermediation—or cutting out the middle men. They have a vertical supply chain where they do all their design in house, directly work with suppliers, and source all their own materials. By doing this they were able to sell glasses that would otherwise cost $300-$500 for $95. As soon as Warby Parker launched they were deemed the “Netflix of eyewear” by GQ and had a waitlist of 20,000 orders. Having a strong inventory management system was crucial to their success.

They started as an online store and housed all of their inventory in a warehouse in New York. Here they were able to implement a form of pooled inventory—consolidated inventory from different locations into one place. In Warby Parker’s case they keep edged frames and insert them to customers’ specification. They also keep and ship out base models used in their “Five for Free” option that allows customers to select 5 pairs of glasses to try on for free and then select the one that they wanted to purchase. By doing this, they were taking away the need to customers to even leave the house to purchase the perfect pair of glasses. By pooling the inventory they are able to cut down on costs as well as have high service levels for their SKUs.

Another way they have been able to pool demand is to have a large overlap between their gendered frame options. At one particular time, there were 203 men’s eyeglass SKUs (which represent a combination between frame and color combinations). These overlapped with 199 SKU options for women. There are also only 61 unique eyeglass SKUs for women. This cuts back on having to have a large inventory because a large portion of their inventory is not meant for particular segments. This is particularly obvious in their brick and mortar stores, which do not specify for what gender a style is meant for. For example, the store by my house has two walls of displays—one eyeglass and one sunglass. The only way that each wall is broken up is by style.

In 2013 after many pop-ups and partnerships, Warby Parker made the leap from being a purely digital store to opening it’s first brick and mortar store in New York. It was an extremely successful launch and has pushed them to open 64 other stores with hopes to grow this number to 100 by the end of 2018. The stores operate on a “limited inventory, high-experience” model. This means that a customer is able to try any style that they wish, but will often be sent their purchase if the inventory is not available. This model has been so successful that it was projected in 2017 that there would be a 50/50 split between online and brick and mortar sales.

In the eight years that Warby Parker has been operating have grown to be valued at around $1.2 billion. They have most definitely disrupted the eyewear industry and I look forward to seeing what they do next.

Sources:

https://www.inc.com/magazine/201505/graham-winfrey/neil-blumenthal-icons-of-entrepreneurship.html

http://blogs.anderson.ucla.edu/global-supply-chain/2017/08/warby-parker-vs-luxottica-supply-chain-disintermediation-in-the-eyewear-industry.html

https://www.warbyparker.com/history

https://www.cnbc.com/2018/02/15/as-warby-parker-approaches-100-stores-other-internet-brands-follow.html

9 thoughts on “How Warby Parker Disrupted the Eyewear Industry

  • March 21, 2018 at 11:31 pm
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    Caroline,

    This is a very interesting topic to look at and read about, and it is also a very interesting industry to examine. The monopoly that was controlling the eyewear industry makes Warby Parker such a successful and unique story. There are companies that try to enter into industries, just like Warby Parker has done, and steal market share from bigger companies due to more appealing competitive priorities. While this is very difficult for some companies, Warby Parker has done this perfectly.

    Inventory is always important to a company, but it is especially important to a company like Warby Parker. Having a brick and mortar store usually carries some inventory responsibility, but Warby Parker is able to get away with their model and ship out their glasses because of how much cheaper of a price they are offered at.

    Having models that overlap genders is also a key component of Warby Parker’s inventory. Since they offer products at such a low price, limiting a wide variety of supplies for production is imperative. Since there are less materials for making the eyewear, this makes the overall processes shorter and allows for products to be made at the time or very soon after inventory runs out. But with the demand that is faced, it is very important for them to have a solid and reliable inventory management system so they know exactly what levels of inventory remain.

  • March 21, 2018 at 8:10 pm
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    The eyewear industry is incredibly interesting and relevant to the topic of supply chain management. Over the past 20 years the industry has been turned on its head by its growth within the fashion industry as well as by the impact of a few major players, like you mentioned. A few of the key catalysts to the changes within the eyewear industry have been: worldwide continuous growth of premium and luxury segments, massive entry of designer fashion brands, the transition from function to fashion, and eyewears implication as a key strategic lever for luxury brands.
    When we think about the major brands within the eyewear industry today, the first firm most think of is not usually the most significant. Luxottica, an Italian eyewear manufacturer founded in 1971, is by far the largest and most influential eyewear powerhouse in the world. With more than 45 brands under its control, it manufactures and sells its product in more than 130 countries with net sales of more than $12 billion last year. In addition to many of the brands Luxottica owns like Ray-Ban, Oakley, and Perosol, it has licenses to exclusively produce the eyewear for dozens of other high end luxury brands like Burberry, Armani, Bvlgari, Dolce & Gabbana, Polo, Prada, Tiffany, Tory Burch, and many more. This diversification between retail brands and licensed manufacturing has helped Luxottica grow to be, what many argue, an undeniable monopoly. In large part, this is the reason for the dramatic increase in eyewear prices for both prescription and fashion products in the past 15 years.
    However, brands like Warby Parker are entering the market and disrupting this trend, as you have identified. With Luxottica’s vertical integration strategy, they own the largest sunglass retail store in the world, Sunglass Hut, which makes the barriers to entry for a company like Warby Parker even higher. Despite these difficulties, Warby Parker has made impressive strides with the design, promotion, and sale of their product to the market. I believe this trend will continue and begin to challenge the historical norm of what the eyewear trend has become.

    http://www.luxottica.com/en/investors/annual-reports-and-publications

    http://www.luxottica.com/en/about-us/company-profile

    https://www.youtube.com/watch?v=gDdq2rIqAlM

    https://www.fool.com/investing/2016/07/10/could-warby-parker-be-worth-more-than-luxottica-on.aspx

  • March 21, 2018 at 5:23 pm
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    Caroline,

    Thank you for your post on Warby Parker, I enjoyed learning more about the company of which I am a loyal customer. I did not realize how big of an industry disrupter Warby Parker has been for the Eyewear industry, and it is so interesting to think that they were able to do this by simply changing the forecasting and supply chain of the designer companies!

    Attached is the link to a Business Insider which includes a conversation with one of the company’s founders. When they initially launched their website, their sales were vastly larger than anything they could have anticipated. They meet their 1 year projections for sales within the first 3 weeks! Company co-founder Neil Blumenthal discusses how they handled the demand. They rapidly started hiring HR, customer service, tech, web service, finance, and design teams to meet the demand. This is a prime example of an incorrect forecast, but a successful response. The company was able to accommodate customer back order through exceptional customer service and rapid expansion of their product output.

    SOURCE: http://www.businessinsider.com/warby-parkers-year-of-insane-growth-we-hit-our-first-year-sales-targets-within-the-first-3-weeks-2012-2

    • March 21, 2018 at 5:30 pm
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      I forgot to mention the most interesting part of Warby Parker’s ingenious inventory management. They don’t waste money on attempting to forecast their sales and holding large amounts of inventory at their locations. Instead, they simply allow customers to enter into their stores and try on their glasses, after which they will have the store order the pair for them. Another example of Warby Parkers great management!

  • March 21, 2018 at 5:19 pm
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    Hey Caroline,
    Warby Parker is a great selection for this topic! As you’ve pointed out, Warby Parker employed a strategy of disintermediation while positioning themselves in the glasses market. Compared to their biggest competition Luxotica who had a dominant market share, Warby Parker was marketing much more directly to consumers with less middlemen involved. By removing middlemen, Warby Parker was able to provide lean distribution and sell their glasses for a fraction of the cost the competition was, which lead to their incredible success they have had.
    However, immediately after gaining recognition from an article in GQ, Warby Parker sold out their entire years stock of glasses! The incredible demand they received following the article was unforeseen and they were unable to meet it all. Had Warby Parker anticipated the increase in demand following this article and created buffer stock they would have been able to capture all the increased demand and insure new cuwstomers started business with them. Attached is an interesting video about the founders of the company!
    https://www.youtube.com/watch?v=AWRF2wvUDxQ

    -Matt Thomas

  • March 21, 2018 at 1:51 pm
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    Caroline,

    I really enjoyed reading your post about Warby Parker. I’m a huge fan of the brand and have purchased two pairs of their glasses over the years and I loved my experience with the company. I also recently listened to the episode on Warby Parker from NPR’s podcast series called ‘’How I Built This”…I found it really interesting, especially for people who are interested in learning more about the company. https://one.npr.org/?sharedMediaId=506455305:506610651

    I think Warby Parker is an interesting and unique company to look at in relation to forecasting and inventory management. Their business model is revolutionary in comparison to traditional eyewear companies. The value added of Warby Parker is their elimination of the middleman. For customers, this translates to a lower price point and smaller markups. However, with everything being done in-house, Warby Parker isn’t eliminating style. Their in-house management also gives the company control over almost every part of the chain.

    According to the podcast, the company was experiencing double digit month-on-month growth. For Warby Parker, it was easy to scale their website than it was their production line. The company has expanded the number of supplier that they work with and has expanded to three full distribution centers in the US. Forecasting demand will guide the entire supply chain process for the company. Glasses are a common product therefore the company doesn’t have to be concerned with seasonal or cyclical demand. Forecasting will allow the company to better plan their inventory and budgets. For Warby Parker, forecasting allows them to continue to have good supplier relations, multiple advantages in product innovation, and lower costs and higher speed to the market.

    Something unique about Warby Parker’s inventory is the fact that their showrooms don’t actually carry the finished products. Customers don’t expect to leave the showrooms with their glasses. For Warby Parker, this eliminate a large amount of holding costs in each store but might be balanced out with ordering costs related to creating custom pairs (lenses, color, etc.) for each customer.

    Overall, I think Warby Parker has done a great job in make the supply chain and their management of their process fit cohesively with the nature of their business. I’m excited to see what new product ideas the company decides to come out with!

  • March 21, 2018 at 12:38 pm
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    Caroline,
    Wow what an impressive company! Their ability to disrupt such an established industry and quickly gain traction just goes to show how effective the principles of supply chain and inventory management can be. I really thought that it was interesting how they have so many brick and mortar stores, but don’t store their inventory in each storefront. This is a brilliant solution to the traditional brick and mortar model because it allows them to keep their inventory centralized and avoid costs associated with each and every brick and mortar storefront. I also thought it was brilliant how they overlapped their designs by gender to further simplify their production and supply processes. They essentially looked at the existing industry, and then ran some of the supply chain analysis techniques that we learned to diminish the impact of bottlenecks and massively reduce costs. This provides similar products, faster, and cheaper than anybody else in the industry.

  • March 21, 2018 at 8:43 am
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    Caroline,

    Warby Parker transformed the eyewear industry when they launched their idea of eyewear at a revolutionary price. When Warby Parker launched, it was an online retailer of prescription eyewear based in New York City. The company was purely based on e-commerce and its inventory was in one location, its warehouse in New York City. This singular location allowed inventory to be pooled. The inventory management of Warby Parker allowed the company to manage its costs and focus on high service. In class, we discussed the importance of inventory management because it is “the planning and controlling of inventories to meet the competitive priorities of the business.” The inventory management of a company needs to match up with competitive priorities of a company enabling the company to satisfy its customers. Warby Parker’s inventory planning and controlling corresponds to its competitive priorities. The company’s pooled inventory system allows Warby Parker to cut costs; therefore, keeping prices low while focusing on service matching Warby Parker’s mission.

    After Warby Parker saw success as an online retailer and had successful partnerships and pop-up shops, Warby Parker expanded the company into brick and mortar retail. Warby Parker opened up one store in New York City and with the success of that New York City store opened additional stores. Warby Parker’s expansion from purely e-commerce to e-commerce with a brick-mortar retail is opposite of what is being observed in the major department stores. For example, Macy’s has closed many of its storefronts as a result of the increasing online sales with decrease of profitability of their storefronts. Additionally, Warby Parker’s transition from e-commerce to a mix of e-commerce and bricks and mortar relates to what was mentioned in a previous blog post (https://blog.richmond.edu/mgmt340-05/2018/03/06/evaluating-risk-a-look-at-the-retail-industry/). A previous blog post examines the risk of bricks and mortar stores in the retail industry. In addition, Warby Parker shows that e-commerce may not be the future of the retail industry and brick and mortar stores may have a future. Warby Parker is redesigning the in-store experience to be smaller, more efficient stores which have “tech-enabled spaces that mimic the choice and simplicity of the online experience while offering exceptional customer service that is typically expected in-store.” This redesigning of the in-store experience is reflective of the way Warby Parker handles its inventory. The stores have a limited inventory and customers are able to try on frames. If their desired frame is not available, they are shipped their residence . Since inventory is one of the most expensive assets of a company, Warby Parker has found a way to minimize their inventory while maximizing their sales and profits. This approach Warby Parker is taking to its brick and mortar stores is similar to the mom and pop shops of the past where inventory was low and owners were willing to purchase and ship from catalogs.

    https://www.forbes.com/sites/nitinmangtani/2017/06/07/why-warby-parker-is-the-poster-child-for-the-store-of-the-future/3/#78118ee13c62

  • March 20, 2018 at 9:11 pm
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    Caroline,

    I found this post incredibly fascinating. I had never heard of Warby Parker until now, but I am sure I won’t forget about them. There is nothing typical about the way they busted head-first into the eyeglass industry. For them to be able to interrupt a clearly monopolized sector with such force speaks volumes of their vision and strategy. Interestingly, after reading some of the articles you linked, it does not seem like Warby Parker had the ability to hit the ground running as they did. By the time their name got out, they were still finishing their MBA’s and working from their apartment. Then they suddenly had a wait list 20,000 people long for their glasses. On the surface, it seemed like a hyped up and marketed idea without any capital behind it. However, they hit their first sales target in three weeks. Perhaps the media just played up the idea of Warby Parker being the underdog working out of a garage, but truthfully, they had some seriously top-notch processes in place to be able to pull off this move in their industry.

    I think you touched on some of the biggest factors that make their inventory management so efficient and versatile. For eyeglasses more so than most apparel items, style does not change quickly and demand is less seasonally determined; people just need glasses when their old ones break or get lost. Consequently, demand is rather consistent throughout the year and styles do not change too dramatically in the short run. This makes forecasting for demand particularly simple; an exponential smoothing model could rather accurately project sales. Since accurate forecasting is one of the most important factors in inventory management, Warby Parker has an instant advantage.

    One thing I would be interested to learn is the inventory costs and lot sizes for Warby Parker, both for their online sales fulfillment and their brick and mortar stores. I would imagine that their holding costs are pretty minimal for eyeglasses compared to their setup costs, so they would lean towards having a larger lot size, higher EOQ, and longer time between orders. Especially since styles do not change too much and eyeglasses are so small, they could easily handle large purchase orders.

    Regardless of the reality of their inventory numbers, Warby Parker has proven themselves within their industry, and they’ve done it in under a decade. For anyone interested, I linked below to a fascinating and oddly satisfying video of Warby Parker’s production and order fulfillment process.

    https://www.youtube.com/watch?v=Rw6EdzcJqdM

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