Warby-Parker-Vision-of-a-Good-Fashion-Brand

9-413-051REV:SEPTEMBER19,2012________________________________________________________________________________________________________________ProfessorChristopherMarquisandResearchAssociateLauraVelezVillapreparedthiscase.HBScasesaredevelopedsolelyasthebasisforclassdiscussion.Casesarenotintendedtoserveasendorsements,sourcesofprimarydata,orillustrationsofeffectiveorineffectivemanagement.Copyright©2012PresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto:Visionofa“Good”FashionBrandInJanuary2012,almosttwoyearsaftertheirgraduationfromTheWhartonSchool,NeilBlumenthalandDavidGilboafoundthemselvesrunningWarbyParkerfromaSoHoofficestaffedwithfiftyemployees.Intwoyears,theeyewearcompanyhadgonefromselling20,000eyeglassestoover100,000peryear.Whatbeganwithacommoncomplaint—thehighcostofdesignereyewear—hadbecomeasuccessfulcompanywithasocialmissiontoincreaseaccesstoprescriptioneyeweararoundtheworld.BothBlumenthalandGilboawereawarethatthecompany’slong-termstrengthwouldrelyondecisionsmadeduringitsfirsttwoyears.Thetwofriendsrememberedhowin2010,whiletheystruggledtofindtimeforclasses,asmallteamworkedfromBlumenthal’sapartmentinPhiladelphia.Theywereproudtoseethatdespitethecompany’sgrowth,theethosofthatinitialteamremained.Theycouldnothelpbutwonder,however,ifthecompanyculturewouldchangebytheendof2012whentheteamsizewasexpectedtoreach100employees.Thefoundersalsoponderedonotherchallengesthathadcomewithgrowthliketheneedtomovefromawordofmouthstrategytoamoreintentionalmarketingeffortandtoincreasethecompany’smanufacturingpartnerbase.Attheoutsetof2012thefoundersknewthatthecompany’slongtermstrengthwouldrelyontheirdecisionsfollowingthemomentumcreatedbyWarbyParker’sfirsttwoyears.Conceiving“ANewConceptinEyewear1”InSeptember2008,NeilBlumenthal,DavidGilboa,AndrewHuntandJeffreyRaidermetattheRooseveltPubneartheWhartonSchool,whereallfourwerestudents.(SeeExhibit1forfounderbackgrounds).Gilboahadlosthiseyeglassesand,inseekingoutanewpair,hadfoundhimselfappalledatthehighretailcostofdesignereyewear—around$400.Raidersharedasimilarexperience;hetoohadbalkedatthepriceofstylishglasses,anddespiteafive-yearoutdatedprescription,couldnotbringhimselftopurchaseanewpair.AstheformerDirectorofanonprofitthatdeliveredeyeglassesindevelopingcountries,Blumenthalhadwitnessedfirsthandthegapbetweentheeyewearindustry’smanufacturingcostsandretailprices.Asthefourdiscussedthesearchforlower-costoptions,Huntposedanaptquestion:howcomeglasseshadnotjoinedotherconsumerproductcategoriesinleveragingecommerceasasolution?Theyquicklyrealizedthattheyhadstumbleduponaviablewaytosolvethis“tangibleconsumerpainpoint”byprovidingeyewearatafractionofthecostthroughonlinedistribution.EachreturnedtoclassthenextdayeagertoFortheexclusiveuseofD.ZhangThisdocumentisauthorizedforuseonlybyDaZhanginBranding&MarketingCommunications2014taughtbyS.Long-TolbertfromMarch2014toMay2014.413-051WarbyParker:Visionofa“Good”FashionBrand2reconnectafterasleeplessnightmullingovertheidea.BetweenclassesatWharton,theywentontospendthenext17monthspreparingtolaunchWarbyParker.Preparationstartedwithindustryresearch.Eyewearwasamulti-billiondollarmarketlargelydominatedbytwovertically-integratedcompanies:LuxotticaGroupSpA(LUX)andEssilorInternationalSA(EI).Onlinepenetrationwaslowrelativetootherretailcategoriesandgrowing(Exhibit2).Consolidationactivityamongtraditionalplayers–manufacturers,wholesalersandbrickandmortarstores—hadfurtherstrengthenedtheroleofthetwosectorleaders.Luxotticaheldeyewearlicensestomostmajorfashionbrands—includingRalphLauren,ChanelandPrada—andownedopticalbrandslikeOakley,Ray-Ban,OliverPeoplesandPersol.They’dalsoacquiredlargeopticalretailchainslikeLensCrafters,SunglassHutandPearleVision;2andownedthesecondlargestvisioninsuranceplanintheUS,EyeMed.3In2011,thecompanywasthelargestplayerintheUSopticalbrickandmortarretailindustryholdinga29.9%marketshare,andthesecondlargestplayerintheopticalwholesalingindustrywitha7.2%marketshare.4WithLuxotticadominatingtheframeportionoftheopticalindustry,EssilorwasthelargestopticallenswholesalerintheUS,holding11%ofthewholesaleopticalindustry.Essilorproducedlensesandcoatings,sellinglensesdirectlytoopticalretailersalongwithlabservices(cuttingandinsertinglensesintoframes)throughthemorethan70USlabsithadacquiredasof2011.5Thetwocompanieswerealsotryingtonavigatetheonlinespace:Luxotticaenteredintoamulti-yearpartnershipwiththesecondmostimportantonlineopticalretailer–VisionDirect—in2009,andin2010soonafterWarbyParker’slaunch,EssiloracquiredamajoritystakeinthecompanythatoperatedtheFramesDirect.comwebsite,thefourthmostimportantplayerintheUSopticalonlineretailindustry.6InnovationintheEyewearIndustryThefoundersofWarbyParkeridentifiedtheopportunitycreatedbythelackofbranded,highqualityandlow-priced