Zenni Optical prides itself on its low price points, with prescription glasses starting at $6.95 (the finished pair of glasses, not just the frames). And despite selling 25 million pairs of glasses since its inception in 2003, the e-Commerce retailer has kept a relatively low profile. But with its average customer already owning five pairs of Zenni-manufactured glasses, the retailer seeks to expand its clientele further and to capitalize on a growing online eyewear market, as it nears $200 million in 2018 revenue.
In an exclusive Q&A with Retail TouchPoints, Bai Gan, Chief Product Officer at Zenni Optical, and Sean Pate, Brand Communications Officer, explained:
- How the retailer achieved 30% year-over-year revenue growth, powered by a vertically integrated manufacturing and supply chain production system that produces 14,000 glasses a day;
- How virtual try-ons continue to drive the online experience, especially with 3D technology on the horizon;
- Why a digitally native brand like Zenni decided to host its first ever pop-up after retailing online for 15 years; and
- The company’s mission of driving down the cost of high-quality, affordable prescription eyewear.
RTP: What’s it like operating in a field with fast-growing digital competitors such as Warby Parker and EyeBuyDirect?
Bai Gan: Warby did a great job in fashion, branding and storytelling, and we actually started much earlier than them — to date we’ve sold 25 million pairs of glasses. I don’t think any of our online competitors have reached anywhere close to our scale. On average, Warby’s glasses are 5X the price of ours, starting at $95. So their prices are similar to a brick-and-mortar retailer, and we’re not quite the same.
Sean Pate: People have come to Zenni over the years for the financial relief, that “I cannot afford to buy glasses elsewhere. I’ve got to find a third party.” But the price-sensitive shopper is only one segment of the public. We’re going to be attractive to a mass audience that can afford to spend a few hundred dollars on glasses, but doesn’t need to. If they’re going to spend $400 on glasses, they’d create a whole wardrobe, which isn’t unlike any other piece of clothing in your closet. That’s not financially possible for some people, but it is when you shop at Zenni.
Gan: When looking inside the business, we have at our core a vertically integrated business model, and we have close to 3,000 styles. We’re actually about catering to the masses — young kids, progressive users, older audiences and Millennials.
Regardless of competition, our growth has been spurred by habit. How comfortable were we buying glasses online 10 years ago? It’s going to become easier as technology improves, but the value proposition continues to be our ownership of manufacturing, which gives us this tremendous control of quality. This is something that’s very hard to do if you’re trying to scale, so it’s not a common strategy that every online company shares.
RTP: Your company has already shown remarkable growth. What are the prospects for expanding the business even further?
Gan: One of the biggest challenges — or ongoing opportunities where we can grow — is that online prescription eyewear only comprises 10% of total prescription eyewear sales in the U.S. But I think this market overall can grow to 30% or 40%.
Growth to 30% wouldn’t even require much change from us because of the affordability factor. Further down the road, technology is going to aid shoppers to smoothen the experience. For example, we currently have a 2D virtual try-on, but the next phase is going to be a 3D video-based try-on, where you can look at the glasses on your face from every angle. We are working with top technical talents in the Bay Area to implement these capabilities.
More importantly, because of mobile and AR technologies, and the growth of imaging departments, we can do virtual measurement very accurately at a particular distance. Down the road, we could even do frame recommendations by recognizing the shape of your face — a new trial will be coming out very soon.
We’re reducing a lot of the friction typically experienced by online purchasers. Our price is already one-tenth of the brick-and-mortar price, and there’s going to be more of a reason for people to save hundreds, if not thousands, of dollars for a family of five.
$200 for prescription glasses is probably the cheapest you can pay in a brick-and-mortar store. Out of that $200, less than 5% is manufacturing cost. That’s being generous. Why are shoppers paying that much? There’s really no good reason. We’re using the same kind of designers and manufacturers, but a lot of it is marketing and monopolistic power that some of these companies have.
RTP: How has scaling as a vertically integrated business benefitted Zenni?
Gan: We have a large factory near Shanghai that is nearly one million square feet, so we manufacture everything there. The global supply chain is much more complex, because we have machines from Germany and Italy, and our software is based in Ireland, Israel and Spain. All the servicing machines are from logistics services provider Schneider and optical manufacturer Satisloh. We are deeply connected with the whole optical industry, and we are one of the very few players not subject to outside control.
Prescription eyewear is a regulated medical device, it’s not an off-the-shelf product. This is not Amazon. Every pair — close to 25 million sold to date — is custom made and created after the order is delivered. This is all based on your prescription, your needs and choice of frame. To cater to this, we need all our manufacturing and distribution capabilities under one roof.
We function like 1,000 brick-and-mortar stores combined — nearly 15,000 pairs sold per day, whereas the average store sells anywhere between 12 and 15 per day. We are a factory of 1,000 stores. If you’re looking at a large national chain, the cost to scale across 1,000 stores is huge.
Using this leverage, we can work deeply across industries. For example, we work with Mitsui Chemicals in Tokyo to develop blue-blocking lens technology, which is designed to block high-energy visible blue light and UV rays. This is something that traditionally takes much longer to develop a use case for, but because we own the vertical chain all the way from manufacturing to distribution, we are able to work with chemical research capabilities, talk directly, shorten the product cycle and bring that to market much faster. Currently, we’re selling 2,000 pairs of blue-blockers per day. This is the kind of fun, valuable thing we can do with this scale. If there’s a consumer need, we can quickly work with a source to bring it to market.
RTP: Why did Zenni decide to open pop-up stores after 15 years as a pureplay retailer?
Pate: The company is in a transition phase, from really being an online entity focused completely on the core to one that focuses on brand as well. Zenni hasn’t given people the opportunity to touch and feel the product and engage with it as much as possible. Zenni is never going to be a brick-and-mortar retailer, and that’s not part of the vision that the founders have, but from a brand marketing standpoint, it’s important for us to give people an understanding that we are not some chic Internet retailer that is giving you a chintzy pair of glasses. You can find as much fashion, quality and style that you could get at any of the high-end brand distributors at Zenni with the same look at one-tenth of the price.
We’ve been doing pop-up shops at music festivals this summer into September, such as Panorama in New York or Kaaboo in San Diego or Life is Beautiful in Las Vegas. We’re trying to touch as many consumers as we can in high-volume areas. We are doing pop-up shops in San Francisco — an Eyewear Lounge — and New York, where we present our collections. We’ll never touch the masses that we feel we’d get online, but it’s really an opportunity to spread through word-of-mouth, which gives us a great reason to put ourselves out there.
Gan: Online-to-offline is an interesting topic for a lot of e-Commerce companies. For me, the question of what we’re trying to achieve ultimately comes down to trust and comfort.
People who trust their experience translate to more trust of the brand as well, so we’re being very mindful of the core competencies being delivered, which is this super-affordable, high-quality experience.