Direct-to-consumer (D2C) eyewear retailer Warby Parker laid out plans to vastly expand its offerings and market share in the coming years, as it tries to move beyond simply selling glasses and into a full-scale eye care company.
“We are evolving from a glasses-only company to one that meets the holistic vision care needs of all our customers,” Chief Financial Officer Steve Miller told analysts on a conference call on Friday (Nov. 12). “And as we do so, we believe our customers will become even more loyal over time.”
Related news: All Eyes on D2C Darling Warby Parker as Trading Opens Amid Wide Losses
Key areas of growth are contact lenses, which typically make up 20% of an optical retailer’s business but are only 5% of Warby Parker’s, and vision testing, which makes up an average of 10-15% of most optical retailers’ business and helps drive the majority of sales, but currently only contributes a small percentage to Warby Parker’s revenue.
Warby Parker currently has 99 stores with eye doctors where customers can get a comprehensive eye exam, up from 49 stores two years ago.
Miller said the company is also investing heavily in telehealth in an attempt to make it easier to renew prescriptions from home. Warby Parker launched a new vision testing app in July and plans to add new features in the coming months to enhance the customer experience.
“If there’s been any silver lining from the pandemic, it’s that a lot of the barriers to telehealth adoption have been lowered, both from a consumer adoption standpoint and from a regulatory standpoint,” Co-CEO Dave Gilboa said on the conference call.
Co-CEO Neil Blumenthal noted that the Vision Council, a trade association, estimates that the U.S. optical market is at about $42 billion, with expectations for “robust growth at a rate greater than GDP.” Warby Parker represents only 1% of the market.
In its first earnings report since going public via direct listing in September, Warby Parker said it achieved over $137 million of net revenue in the third quarter, up 32% year over year. Active customers reached 2.2 million, up 23% but still a fraction of the 200 million U.S. adults who require vision correction.
Additionally, the company said its net loss increased by nearly $50 million to over $91 million, mainly because of $66 million in stock-based compensation expenses and $24 million in direct listing expenses.
See also: Warby Parker’s IPO Filing: Red Ink, and a Vision for D2C Eye Care
Warby Parker is also facing increased competition from Walmart and Sam’s Club, which earlier this month launched a new collection of eyewear with Elton John. The eyewear line’s Foundations Collection includes 60 frames: 36 frames unique to Sam’s Club and 24 frames sold only at Walmart. They will retail between $95-$100 — the same price as Warby Parker’s eyewear collection.
Sam’s Club will also sell two collections that reflect Elton John’s confidence and self-expression: The Capsule Collection, designed for collectability, showcases his musical journey; The Master Collection recreates and reissues his most iconic looks, which are signed and numbered.
Read more: Sam’s Club, Walmart Launching Elton John Eyewear Collection
Growing the Physical Presence
Though eCommerce represents 42% of Warby Parker’s business and 70% of customers interact with the company’s website or mobile app before placing an order, Miller said the priority is an omnichannel experience that includes brick-and-mortar locations.
“Purchases that start online might end up in-store, and vice versa,” he said. “And given that, we strive to make customer experiences as seamless as possible across our stores, website and apps.”
In the third quarter, Warby Parker opened nine new stores and entered five new markets, including San Antonio, Texas and Princeton, New Jersey, bringing the total store openings to 28. The company expects to open seven more stores by the end of the year, which will bring the total number of locations to 161.
“Our stores serve as an integral complement to our website and apps in creating a holistic and seamless omnichannel customer experience,” Gilboa said.
He added that a study commissioned by Warby Parker concluded that the company could open as many as 900 stores at the same level of productivity based on its current customer and product profile, “so significant white space remains for our retail expansion.”
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