Warby Parker — a successful disruption story through digital retailing
This is an analysis of Warby Parker’s business model using the V.A.R.S framework, constructed by Dr. Deepak Somaya.
The V.A.R.S framework:
Developed by Professor Deepak Somaya at University of Illinois Urbana-Champaign, the V.A.R.S framework provides a comprehensive view of a business model and the aligned business strategy. V.A.R.S is defined as:
V = Value proposition.
A = Activities, capabilities, and resources
R = Revenue Model (or realized values).
S = Scope of the firm.
Warby Parker, founded in 2010 by four MBA students at Wharton School of Business, is the leading online retailer for prescription glasses and sunglasses. Through its “Home-Try-On program”, the company prompts its customers to select five frames from the website, which they receive and try on at home within a 5-day period, free of charge. Recently, Warby Parker introduced through its app an option to let customers upload a photo and try on frames virtually. In 2019, Warby Parker celebrated the milestone of donating five million pairs of glassed through its “Buy A Pair, Give A Pair” program to those in needs. In 2020, Warby Parker closed a round of $245 million in funding after being valued at $3 billion. In this analysis, I will present my complete analysis of Warby Parker through the lens of VARS framework.
1. Value Proposition:
Warby Parker’s winning value proposition is its product — fashionable high-end, boutique-quality glasses at an affordable price. Coupled with the convenient, risk-free 30 day returns policy and free shipping, the company was offering a simple solution to the masses, who were wary of traditional expensive prescription glasses.
Warby Parker’s mission is “To offer designer eyewear at a revolutionary price, while leading the way for socially conscious businesses.”
The company’s entry-level frames are priced $95, with prescription lens included. This price point was truly revolutionary in 2010, in which prescription glasses typically cost several hundred dollars. The company started selling exclusively online, direct-to consumer, which helped reduce the operation cost compared to traditional brick-and-mortar model. Due to its rapid growth and success, the company has expanded its presence with 125 stores across U.S and Canada (TechCrunch, 2020).
2. Activities, Resources, and Capabilities:
One of the main reasons for Warby success is Home Try-On program on its e-commerce platform. This program was designed to replace the need for customers to try on glasses in a physical store.
Customers have 5 days to try 5 frames before sending them back. If they choose a frame and submit orders online, they will receive their glasses in the mail. The order can be returned or exchanged within 30 days with no shipping costs to the customers. The complete combination of the try-on service, free shipping, and generous return policy is Warby’s recipe to provide a satisfactory customer experience.
Warby Parker has grown beyond e-commerce and now operates 125 retail stores across North America, which offers in-store experience and additional services by licensed opticians. Its stores were booming, averaging $3,000 per square foot of retail space (Fast Company, 2015). In 2019, Warby successfully launched a virtual try-on feature through their app that uses augmented reality to allow customers to see their selected frames on their own face.
To stay true to its mission to do good, Warby Parker has partnered with nonprofits such as Vision Spring to donate worldwide one pair of glasses for each pair sold to those who lack access to glasses. Warby Parker claims to be the only 100% carbon-neutral eyewear-brand in the world. The company also works with Verite to ensure fair labor practices and happy employees in its factories (Warby Parker, 2019).
3. Revenue Model:
Originally known for its revolutionary direct-to-customer model, Warby Parker has become one of the most successful e-commerce brands of 2010s.
Like its online sales channel, Warby Parker’s library-inspired stores continue to provide the best customer experience. The company has established vertical integration by designing its frames in house, manufacturing the acetate frames in the same Chinese factories as its competitor (Luxottica) and polishing and inserting lens into frames in domestic optical labs. Throughout the whole process, Warby Parker is able to keep cost low by negotiating directly with its partners.
4. Key Enterprise Scope:
Warby Parker appeals to younger generations who are tech-savvy, socially conscious and in the market for a lower-priced, yet fashionable eyewear alternatives.
In its ten year of existence, the brand has done very well due to its revolutionary e-commerce model, low-cost structure through vertically integrated supply chain and its donation program.
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Resource:
· Lisa. (2015, December 12). Warby Parker: Disrupting the Eyewear Industry. Technology and Operations Management; HBS Digital Initiative. https://digital.hbs.edu/platform-rctom/submission/warby-parker-disrupting-the-eyewear-industry/#_edn8
· Chafkin, M. (2015, February 17). Warby Parker Sees the Future of Retail. Fast Company. https://www.fastcompany.com/3041334/warby-parker-sees-the-future-of-retail
· Jordan, C. (2020, August 27). Warby Parker, valued at $3 billion, raises $245 million in funding. TechCrunch. https://techcrunch.com/2020/08/27/warby-parker-valued-at-3-billion-raises-245-million-in-funding/
· Warby Parker. (2019). Warby Parker. https://www.warbyparker.com/culture
