6 Things Warby Parker Did Differently that Led To a $1.8 Bln Valuation in Less than a Decade
Warby Parker is now a household name but in 2008 when the co-Founders were at Wharton completing their MBAs they started discussing an idea that has turned into a multibillion dollar business. Investing their life savings the four co-founders started Warby Parker with $120,000 and have built a company that has disrupted the eyeglass industry. The growth and success of the business can be traced back to a number of strategic moves that set Warby Parker apart from other competitors. From effectively solving an existing real-world problem to giving back to society, see what sets Warby Parker away from the rest.
1. From the beginning, Warby Parker filled a gap in the market by solving a real-world problem. New and older businesses considering launching new products and services are often given the same advice – solve an existing problem. But many businesses fail to do so. Before Warby Parker entered the market, fashionable prescription eye glasses were expensive. When one of the founders lost his $700 prescription eyeglasses on a trip before MBA school he did not want to pay a hefty price to replace them. Instead he spent his first semester of MBA school squinting his way through his classes and talking with his Co-Founders for a year and a half about how they could offer prescription eyeglasses at a fraction of the price charged by existing brands.
Warby Parker’s stylish prescription eyeglasses start at $95 which solved the problem of having access to cheap prescription glasses that also look great. Warby Parker is able to offer lower prices than other brands by designing its glasses itself, avoiding licensing fees, cutting out the middleman and removing any unnecessary mark ups by selling directly to consumers. Given the popularity of the brand it is clear that millions of consumers were also looking for a way to see, and look fashionable on a budget.
2. Without a large marketing budget at their disposal Warby Parker leveraged the platform of established brands in order to build its own. It did this by relying on PR to generate an audience when its website first launched. Since Warby Parker considers itself a fashion brand it decided it would be best to be featured in the best women’s and the best men’s fashion publications to generate buzz about its business. To achieve this goal it hired a PR company which successfully pitched profiling Warby Parker in GQ and Vogue. Both magazines ran stories on the brand on February 15, 2010 the day Warby Parker’s website launched. Based on the buzz generated from both of those publications, Warby Parker’s website ended up crashing after launch. But Warby Parker was able to meet its first year sales target within three weeks and within four weeks it sold out of its top 15 most popular styles leading to a 20,000 person waiting list for its eye glasses.
Getting found online when you only have an online presence is tough for even the best direct to consumer brands. Leveraging the credibility of other well-known brands to drive traffic to Warby Parker’s website was one of the main reasons it was able to get off to such a great start. Warby Parker credits its ability to land this type of PR to timing as well as having a unique offering. Speaking about getting Vogue to even notice the startup, Neil Blumenthal, Co-Founder and Co-CEO of Warby Parker, said: “I think founders and CEOs often take credit for being the smartest people in the world, but so much is serendipity and timing. We were one of the first of these vertically-integrated brands, so the story was novel.” Warby Parker’s story was novel for several reasons including it was one of the first vertically integrated direct to consumer brands, it offered a unique home try on program where customers could try on five glasses at home for free and it had a great social mission.
3. Having a mission that focuses on giving back is often a key ingredient of success. Blumenthal said that in the early days of building the business the founders said to themselves: “what kind of business do we want to build? "We wanted to build a business that was going to have a positive impact on the world where we were going to be excited to come to work every day.” Bringing down the prices of prescription glasses so dramatically is a social good in itself but the founders decided to go farther. For each pair of Warby Parker glasses sold, one pair is given to a person in need. While Warby Parker glasses are considered to be cheap for certain demographics there are nearly a billion people around the world that need glasses that can’t afford them. Undoubtedly there are customers that are drawn to the company’s socially minded mission and want to help others through by buying a pair of eyeglasses.
4. Warby Parker’s eyeglasses home try on program is like an online retailers version of free in-store samples. Customers are given the option of trying on five pairs of glasses at home which Warby Parker sends to customers free of charge. If a customer does not like any of the glasses then can send them back for free. For direct-to-consumer eCommerce retailers programs such as this can help to increase sales as they allow target customers to try the product before purchasing it. This was especially important for Warby Parker when it did not have stores and only sold glasses online.
An added an perhaps unexpected benefit of this program is that it created viral user generated content with people sharing on social media pictures of themselves in Warby Parker glasses, asking their friends and family which pair they should purchase. There is even a hashtag called #WarbyParkerHomeTryOn. Warby Parker has said that since launch of the brand word of mouth has been the number one driver of its sales. In the past the company has said that more than 50% of its website traffic is driven by word of mouth. The viral nature of the program made it easy for customers essentially created free marketing for the company.
5. Warby Parker is also known for having best-in-class customer service. It especially takes customer service via social media seriously. The company responds to all tweets from customers. Then if a question posed by a customer is too complicated to be answered within a tweet, Warby Parker creates a short video with an answer to the question and sends a tweet with the link to the video on YouTube. Warby Parker has published more than 2,000 of these videos. According to Warby Parker Co-Founder and Co-CEO, Dave Gilboa: “customers were so blown away that we are going to these lengths to meet their needs that they tweet about it and tell dozens of other people.”
Another example of how effective their customer service via social media is can be found in a story told by Blumenthal: “our social media team flagged a tweet [saying] that this customer was in love with one of our customer-experience associates because she had helped him so much. She then recorded a short video on YouTube and sent him the link through Twitter. We thought it was just going to be this quick, special thing, but it kept getting retweeted. That video has over 30,000 views”.
6. Many of the retail businesses that have grown dramatically in the past decade started out with a direct-to-consumer business model. Some of these retailers include: ThirdLove, Kylie Cosmetics, Away Luggage, Allbirds, Farfetch, Glossier and Casper. Warby Parker’s choice of a direct to consumer model has been a key to its success. While now it seems obvious that it choose to do this at the time Warby Parker launched there weren’t nearly as many direct to consumer businesses as there are today. Warby Parker could have chosen to simply design glasses fashionably and cheaply and sell them through a third party. Instead it took the risk of vertically integrating and going direct-to-consumers. The benefit of a direct-to-consumer model is reach. Being able to reach consumers directly in an efficient way is why all of these high growth direct-to-consumer businesses are able to scale so quickly. Without the ability to easily sell products using tools such as Shopify or being able to market to the world at large through social media, it would be hard for anyone to even notice the best value proposition and mission in a timely manner. Direct-to-consumer businesses are one of the fastest segments of eCommerce and it is easy to see why.
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