Eyewear Retail Is Nearing An Extinction Event And Almost No One Is Ready For It
The prescription eyewear business has had the same structure for a long time. You go to an Ophthalmologist or Optometrist to get a refraction exam and then buy your glasses from them or in a retail store where you try the glasses on and make a purchase. A number of companies are selling prescription eyewear online but it’s a limited market because you have to go get your eyes tested and you can only do that in a store or doctor’s office. Once you’re out getting tested, it makes sense to buy the glasses at the same time and get to try them on in person while you’re doing it.
A lot is going to change. It’s hard to say exactly when, that’s up to the Food and Drug Administration (FDA), but change is coming. The change is driven by advances in another area, telemedicine, treating patients remotely or electronically. The refraction exam, the test for your eyeglass prescription, will be doable at home using either your smartphone, laptop or possibly both. Most important, it will likely cost the same or less as going to a store or doctor to do it. A number of companies are working on developing an at-home version of the exam, several say they have it, and they’re working their way through the FDA to get approval for sale to consumers. I am told it is months away but even if it’s years, it won’t be long in the evolution of the industry before the test can be marketed broadly.
The established players in the industry are fighting this change; they say it will never be allowed. Among their arguments is that when a consumer goes to a doctor’s office, they also get checked for serious eye diseases like glaucoma and a lot of prevention happens as a result of those tests. The established industry says that if consumers take their vision tests at home, they will miss out on other eye care that could help them avoid more serious eye diseases. The advocates for online refraction respond by saying they will continue to advocate for consumers to go to their doctor to get those tests. (In the farther off future, there is research being done to do those more serious disease tests remotely too but the time frame for that is too uncertain to know for now and it will certainly be longer than it will take for approvals of the refraction test.) Like so many changes in technology including streaming music, Uber, Amazon and so much more, the established interests can push back for a while but in the end, Luddites lose and change happens. Consumers want convenience and that can only be held back for so long.
If you ask most people which company sells the most online prescription eyewear, they usually say Warby Parker. That is incorrect. The correct answer is Zenni Optical whose prices are far lower than Warby Parker’s. Zenni says it operates the largest manufacturing complex of prescription eyewear in the world, shipping about 17,000 pairs of eyeglasses per working day out of Chinese facilities of almost one million square feet. (Assuming an average price of $50, that’s revenue of over $200 million per year.) And Zenni isn’t stopping, it is building additional manufacturing capacity so it can make up to 120,000 pairs per day. The company estimates that it sells half the prescription eyewear sold online in the U.S. and no one has a bigger market share than Zenni. I have not been shown their financial statements but Zenni says it has never raised outside capital, has been profitable since inception and its marketing budget is minimal. (You can test that yourself by googling “buy online glasses” and you will find there is no paid ad for Zenni but they come up first after the paid ads.)
如果你问大多数人哪家公司在网上销售的处方眼镜最多，他们通常会说Warby Parker。这是不正确的。正确的答案是Zenni Optical，其价格远远低于Warby Parker。Zenni说它经营着世界上最大的处方眼镜生产综合体，每个工作日从中国近100万平方英尺的设施中运送约17000副眼镜（假设平均价格为50美元，这意味着每年收入超过2亿美元）。而且Zenni并没有停下脚步，它正在建立额外的生产能力，以便每天可以生产12万副。该公司估计，在美国网上销售的处方眼镜有一半是由它销售的，没有人比Zenni拥有更大的市场份额。我没有看到他们的财务报表，但Zenni说它从来没有筹集过外部资金，自成立以来一直在盈利，其营销预算也很少。你可以自己在谷歌上搜索 "在线购买眼镜"，你会发现没有Zenni的付费广告，但他们在付费广告之后首先出现）。
Since the development of online shopping, we have seen many consumer product markets disrupted by online providers. But we have never seen a market poised for disruption where there is an obvious online winner right from the start.
Think about this: you can get your eye test at home and it’s cheaper, faster and easier. Because Zenni is the runaway leader now, they have the opportunity to dominate the online market when it explodes. No one else has the infrastructure, scale and experience that Zenni has and it will take time and a lot of money for anyone else to catch them.
The biggest winner of course is consumers. They will get their glasses cheaper, faster, easier and who wouldn’t want that? The established industry will fight it but in the end the industry will lose and consumers will win.
Who Are The Losers In This Change?
A lot of companies are losers when eye exams go online:
1. The existing eyeglass retailers. The top three retailers of eyewear in the U.S. are EssilorLuxottica, Walmart and National Vision Holdings. Together they operate almost ten thousand vision locations which means these changes will have a massive impact. EssilorLuxottica alone has a market value of over $60 billion. That value is at risk as their in-store traffic declines. A lot of their stores will close and that will cascade on.…
2. Landlords. Someone owns the eyewear stores that will become empty and those assets will lose value. The glut of retail square feet already on the market will increase, putting more downward pressure on retail real estate values.
3. Optometrists and Ophthalmologists. There will be fewer exams for them to do and their market will shrink. That will drive massive consolidation of practices, reduced incomes for professionals and lower enrollments in professional schools.
4. Eyeglass brand licensors. A great many designers today license their names for eyewear. As Zenni and other imitators sell direct to consumer, there will be less need for those designers’ imprimatur as consumers adapt to online brands, just as we’re seeing in other consumer products. As it is, most designers sensibilities don’t easily translate to eyewear, it’s hard to tell one designer’s eyewear from another without seeing the name on it.
Who Stays Even
Luxury, high-end eyewear stores will continue to exist and can still do well. They sell service and prestige. It will be a very long time before technology replaces that.
The retail market won’t go away. But as with so many other consumer products, stores will be less necessary and it will be harder for traditional stores to compete. They will go through the same trials that other existing legacy retailers are experiencing. It won’t be good.
Now is the time for legacy eyewear retailers to prepare. Now is the time for them to figure out how to develop and sell their own refraction test online. But like so many established retailers, they are resisting the change and leaving themselves vulnerable. What they need now more than anything is vision.