I LOVE PITCHDECKS
In this tutorial you will learn how to create an online pitch deck. We won’t be going into any specific details about how to design the deck, or how to do the basic HTML and CSS required, but we will be showing you how to implement the simple jQuery plugin we built to run the pitch deck…
Warby Parker v. Luxottica: The 4-eyed David v. Goliath Story, and its economic implications
Glasses – why does it cost $300 to buy a pair of chunky plastic glasses with a little logo on them? The answer is Luxottica, the biggest monopoly you’ve never heard of.
Why Luxottica is a monopoly
Italy-based Luxottica owns and manufactures luxury sunglasses brands such as Ray-ban and Oliver Peoples, in addition to owning retail chains Sunglass Hut, Lenscrafters and Pearle Vision. It even owns a vision insurance business, EyeMed Vision Care. As you can see, Luxottica has all its bases covered.
For comparison, the vertically integrated monopoly is nearly 4x the size of its next biggest direct competitor, Safilo SpA, and is the only one publically traded in the US. So far no competitor of the same caliber has emerged to unseat the firm’s impressive 80% share of the high-end eyewear market. And while hipster glasses upstart Warby Parker grew nearly 500% in the past year and made approximately $23.7 million in sales, Luxottica pulled in nearly $9.17 billion in the same period.
Luxottica’s continued financial success will depend on the willingness of consumers to pay hundreds of dollars for a pair of glasses. Its extensive chain of physical retail outlets and heavy branding are a strategy that works in the meantime, but if tastes change and consumers become disillusioned with branded product, Luxottica may find itself highly vulnerable in the face of an emerging e-commerce renaissance.
In recent years, consumer goods-focused startups built on a direct-to-consumer business model and delivered via an e-commerce sales platform have begun to gain traction – Bonobos in menswear or Warby Parker in eyewear, to name a few.
The Warby Parker value proposition is such: vintage-inspired glasses at $95 per pair. And by selling exclusively through its website and limited physical outlets, the startup is able to keep retailing costs low and pass generous cost savings along to consumers. Moreover, for every pair of glasses sold, Warby Parker also donates a pair of glasses to someone in need, à la TOMS Shoes, another consumer goods company in the “conscious capitalism” vein.
Why we should care about $300 glasses
According to Warby Parker’s website, “almost one billion people worldwide lack access to glasses.” Most of this underserved population is located in developing countries, which is where most of the growth is projected to occur in the coming century. And even though companies like Luxottica are racing to move into emerging markets, they’re targeting the upper crust of the population there, not the segment of the population that will be buying and needing glasses the most.
This is precisely why the developed half of the world should care: we’re potentially losing out on untold amounts of economic surplus because the global growth engine can’t see. Put into economist terms: the marginal benefit of introducing better vision care to people who have no access or limited access exceeds the marginal benefit of continuing to sell $300 sunglasses to people who have access to a variety of options. From a business viewpoint, we’re also missing out on a potentially lucrative consumer segment.
E-commerce could go a long way to alleviating this need: with increasing Internet penetration globally and cheaper shipping costs, the direct-to-consumer model is viable and scalable to reach consumers in the developing world. Thus, it remains to be seen if Warby Parker’s business model will be adapted or expanded to fill that need.