Yep, it’s true. I’ve officially started my 2nd company. Personally, I would have preferred to spend the last 10 years starting numerous companies and traveling the world promoting The MouseDriver Chronicles, but it just didn’t turn out that way. But patience perseveres and I recently launched a new company, Rivet & Sway, that sells prescription eyewear to women. Just like MouseDriver, I’m getting pinged left and right from folks wanting to know why I started an eyewear company (I only wear reading glasses) that only sells to women (I’m not a woman…nor do I wear women’s frames). This post is all about how I approached this opportunity and ultimately decided to make Rivet & Sway my next venture (or MouseDriver Part Deux to many of you).
- Size the Market Opportunity: When Steve Anderson of Baseline Ventures first approached me about looking at the eyewear space, we both already knew that eyewear was a pretty big category. At the time, we were looking at a US $16B market for prescription eyewear alone. Yep, it’s a massive market. What we didn’t know was that a huge disparity existed between what was sold at retail ($15.7B) and what was sold online ($300M). When you see a massive gap like that one, you instinctively know something must be going on. We continued to dig deeper into secondary market research (yeah, we paid for some of crazy-priced research reports), learned as much as we could about the eyewear industry and concluded that a HUGE opportunity existed to manufacturer and sell eyewear directly to consumers, using an ecommerce platform as our initial, and potentially primary, sales channel.
- Research Competitors: Next step was to look at the competition. We looked at both offline and online competitors when we entered this stage of our research, but we put more emphasis on online competition, given that’s where we knew we wanted to play. What we noticed about all the existing players out there was that every company was targeting both men and women with their frames. And what we noticed with all of the recent online players in this space was that they were not only targeting but men and women, but they also appeared to be targeting the same demographic (18-26 year olds) with a <$100 price point. In fact, I think there must have been 5 new entrants in this space over a 6 months period in 2011, all of whom looked remarkably similar to Warby Parker. So, we knew that if we came into this space, we would either have to offer something so dramatically different or we’d need to find a way to offer our frames a lower price point. Competing on price is pretty much an immediate no-go for me, and we didn’t think we could differentiate enough on technology or on the offer, so we decided to look for other opportunities to segment the market.
- Market Segmentation: We had a hunch that there might be an opportunity with women, so we structured all of our research efforts around better understanding women and their eyewear purchasing experience. After we interviewed/surveyed over 400 women (thanks to my wife Rhonda for all of the unbelievable support here!), conducted 8 focus groups and had countless conversations with optometrists, opticians and others in the eyewear industry, we came to the following conclusion: For the most part, women feel that the prescription eyewear shopping experience absolutely SUCKS! And if you compare shopping for eyewear with shopping for shoes or a handbag, it doesn’t even register on the map. For a number of different reasons, women view the prescription eyewear shopping experience as a painful errand…not a fun, rewarding, shopping experience. Once we had this information, we were almost, but not quite, convinced that we had our target segment. [Note: that woman make up the bulk of online shoppers and are more inclined to Word-of-Mouth was not lost upon us as we began researching this segment]
- Test Pricing: Before moving forward, we wanted to make sure we could build a business with strong, profitable margins. And of course, your pricing strategy is a critical component in whether or not you sustain a profitable business. So we asked all of the same women who we’d just conducted research with to tell us what they’d be willing to pay for prescription eyewear online. We tested a number of different price points and multiple offers and basically came to this conclusion: women in a certain target segment who had been spending $300 – $800 on prescription eyewear didn’t want to spend <$100 on their next pair. They weren’t willing to sacrifice the lens and frame quality that they’d been getting and they simply didn’t believe that they could get a premium service for a <$100 price point. These women wanted to see lower prices, but they wanted to see more premium services and more quality than what a <$100 price point could offer.
- Defined the offer: After we finished all of our research, we quickly realized that we had a phenomenal opportunity to build a profitable brand from the ground up for time-strapped women who had been spending way too much on prescription eyewear. Our entire offer….frame styles, frame colors, frame names, site layout, editorial content, packaging, all-inclusive pricing, Fedex 2 day shipping, drop-in-the-mail USPS Returns, automatic hi-index upgrades, 60 Day Return Policy, etc….was based solely on what women in our target segment told us would make their prescription eyewear shopping experience easy, fun and even illuminating! And given that we knew we had a very specific target segment to go after, we started thinking about how we could craft/build a brand that could support our goals and vision of building a profitable, sustainable business over the long-term.
I knew that the market was big and that opportunities existed to create an eyewear brand via an online channel. But once I realized that a targeted segment with a very clear and painful need not only existed, but was also willing to pay a higher price point than what most online competitors were already offering, I knew we had an opportunity to build a brand over time. And building a brand is fun for me. It allows me to continue to motivate and inspire, to engage with customers, and ultimately, to make people happy.
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