Reference no: EM131039207

WARBY PARKER

War by Parker is an online eyewear retailer that was founded in 2010. The idea for the company was conceived when the firm's founders (MBA students at the time) observed that glasses-uncomplicated, easily breakable, and mass-produced-were typically quite expensive ($500 or more, for example). Significantly, the founders were convinced they knew the reason why glasses cost so much. They perceived the optical industry as an oligopoly, meaning that a small number of companies dominate the business and are making large margins. Consider, for example, Luxottica (www.luxottica.com), based in Milan, Italy. This company owns Lens Crafters, Pearle Vision, Sunglass Hut, Ray-Ban, Oakley, and Oliver Peoples, in addition to the optical shops in Target and Sears. In addition, as a result of a series of license agreements, Luxottica manufactures eyewear for more than 20 top brands, including Chanel, Burberry, Prada, and Stella McCartney.

War by Parker's founders realized that Luxottica had "created the illusion of choice," when in fact they practically monopolized the industry. War by Parker devised a strategy to compete with Luxottica. The company uses the same materials and the same Chinese factories as Luxottica. It then sells its glasses at a lower price because it does not have to pay licensing fees, which can amount to as much as 15 percent of the $100 wholesale cost of a pair of glasses. In addition, because War by Parker markets and sells its products directly to its customers, it does not have to deal with retailers, whose markups can double prices. War by Parker's business model allows customers to test the company's retro-style glasses via a mail-order, try-it-at-home program. The glasses (including prescription lenses) cost a mere $95, and customers may test up to five frames at a time. In addition, the War by Parker Web site enables shoppers to upload photos and "try on" frames virtually. Such large-scale individualized shopping experiences have attracted a devoted following among young, trendy professionals.

This business model has made the firm aommercial success. By mid-2013, War by Parker had sold more than 100,000 pairs of glasses. The company raised $1.5 million from investors in May 2011, and in 2012 it raised an additional $37 million. It has 113 employees, and it opened a 2,500-square-foot store in New York City. In addition to enjoying great commercial success, War by Parker has a social mission. For every pair of glasses it sells, it provides subsidies to help someone in need to buy a pair-although not one of War by's creations. The company's success is inspiring competition from more established eyeglass retailers. For example, discount fashion site Blue fly (www.bluefly.com) has introduced Eye fl y (www.eyefl y .com), which sells custom, vintage-looking glasses for $99. Another competitor is Ditto (www.ditto.com), where shoppers use a computer webcam to record a video of their faces and create a virtual, three-dimensional "you." Then, shoppers can virtually try on different frames, look side to side, and blink.

They can also solicit feedback from friends on Facebook by sharing shots of their virtual selves wearing different frames. Google wants to avoid making users of its Google Glass product look like an actor in a science fiction movie. As a result, the company is working with War by Parker to design more fashionable frames for Google Glass. Sources: Compiled from S. Rodriguez, "Google in Talks with War by Parker for Its Glasses," The Los Angeles Times, February 21, 2013; D. Primack, "War by Parker Raises $37 Million," CNN Money, September 9, 2012; A. Pack, "War by Parker's Vision for Growth," CNBC, June 11, 2012; L. Sanders, "Ditto Lets You Try on Glasses via Webcam," San Francisco Chronicle, April 27, 2012; D. Muse, "The New Startup Scene: From Silicon Strip to Silicon Mitten," Forbes, December 19, 2011; S. Berfield, "A Startup's New Prescription for Eyewear," Bloomberg BusinessWeek, July 4-10, 2011; D. Mau, "War by Parker vs. Eyefly," Fashionista, June 6, 2011; H. Elliot, "The New Model for Retail: Buying Glasses Online," Forbes, January 17, 2011; N. Per lroth, "Name You Need to Know in 2011: War by Parker," Forbes, November 22, 2010; www.warbyparker.com, www.eyefly.com, accessed February 18, 2013.

Questions

1. Provide two examples of how War by Parker uses information technology to support its business model.

2. How might War by Parker further use information technology to counter large competitors who want to copy their business model? Be special