Warby Parker: Too Good to Sustain?

Warby Parker, a retailer of prescription glasses and sunglasses, was founded by Neil Blumenthal, Dave Gilboa, Jeffery Raider, and Andy Hunt who wanted to find a way to provide relatively affordable, stylish eyeglasses and sunglasses. In 2015, the Global Eyewear industry was characterized by a near monopolistic situation. More than 80% of major eyewear brands were designed and retailed (over 7,000 stores US alone) by Luxottica, an Italian manufacturer of prescription frames and sunglasses. Luxottica was heavily integrated and had a long value chain and intermediaries which added mark-ups, thus making the eyewear very expensive. Warby Parker, which started as an online store of prescription glasses, had the objective of reducing the value chain and not selling the products wholesale to a retailer who would sell it at a high markup. It intended instead to sell its glasses directly online or offline. It also designed its glasses in-house and licensed its production to Chinese and Italian factories. Warby Parker entered the offline retail space in 2013 with its first store in SoHo, New York.

Warby Parker made hip eyeglasses inspired by the retro era and focused on millennials who celebrated individuality. It also evolved into an exemplary company of corporate sustenance. It had a solid social cause, the social dimension to its business model being to donate a pair of glasses for every product sold through its partner Vision-Spring. It had grown its revenue over 500% since its inception and thus was a big blip on the radar of private equity circles. A funding of US$100 million by Tiger Global Partners in 2015 had boosted its valuation to US$1.2 billion. Warby Parker was looking for rapid scaling in the wake of rising competition. ..