Export Plan for Warby Parker - Table of Contents 1.1 Company 3 1.2 Goals 4 1.3 Financial Resources 5 1.4 Non-Financial Resources 8 1.5 Current Trends

Export Plan for Warby Parker - Table of Contents 1.1...

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Unformatted text preview: Table of Contents 1.1 Company ............................................................................................................................... 3 1.2 Goals ..................................................................................................................................... 4 1.3 Financial Resources .............................................................................................................. 5 1.4 Non-Financial Resources ...................................................................................................... 8 1.5 Current Trends and Practices ................................................................................................ 9 1.6 Production Capacity ............................................................................................................ 13 1.7 Export Readiness Assessment............................................................................................. 15 Target Market................................................................................................................................ 17 2.1 Potential Markets (Most promising countries) ................................................................... 18 2.2 Market Assessment (Top 4 Markets) .................................................................................. 21 2.2. A. Japan ..................................................................................................................................................... 21 2.2. B. Germany ............................................................................................................................................. 24 2.2. C. United Kingdom ............................................................................................................................... 26 2.2. D. Canada ................................................................................................................................................. 30 2.3 US exports to other countries in our particular industry of interest .................................... 32 2.4 Best Target Market ............................................................................................................. 34 Economic Overview...................................................................................................................... 36 3.1 Competition......................................................................................................................... 39 3.2 Luxottica: Domestic and Global Competition .................................................................... 40 3.3 Start-up Competitors in the Domestic Market .................................................................... 42 3.4 Competitors in the Target Market ....................................................................................... 43 3.5 Target Market Imports of Eyewear ..................................................................................... 45 3.6 Eyewear Market Trends ...................................................................................................... 46 Distribution Systems ..................................................................................................................... 49 4.1 Transportation ..................................................................................................................... 49 4.2 Domestic Sector .................................................................................................................. 50 Pricing ........................................................................................................................................... 51 5.1 Market Price ........................................................................................................................ 51 5.2 Pricing Strategy................................................................................................................... 52 5.3 Profit ................................................................................................................................... 54 Product .......................................................................................................................................... 55 6.1 Product Characteristics ....................................................................................................... 55 6.2 Product Packaging .............................................................................................................. 58 6.3 Handling.............................................................................................................................. 60 Market Entry ................................................................................................................................. 61 7.1 General Strategies ............................................................................................................... 61 7.2 Promotional Strategies ........................................................................................................ 62 Plan of Action ............................................................................................................................... 63 8.1 Marketing ............................................................................................................................ 63 8.2 Finance ................................................................................................................................ 65 8.3 Business Strategies.............................................................................................................. 66 References ..................................................................................................................................... 67 Appendix ....................................................................................................................................... 71 9.1 Company Export Readiness Analysis ................................................................................. 71 9.2 Warby Parker Financial Report .......................................................................................... 96 2 Warby Parker est. 2010 1.1 Company Warby Parker was founded by Neil Blumenthal, David Gilboa, Jeffrey Raider and Andrew Hunt two years ago. They were students at The Wharton School in Philadelphia when they became close friends and the idea of selling eyeglasses on-­‐line was born. The four of them complained about prescription eyeglasses being so expensive, and they decided to create their own eyeglasses and sell them on-­‐line. Since Neil Blumenthal had previous experience working for a non-­‐profit organization that gave eyeglasses to people in need, he knew that eyeglasses were not that expensive to manufacture, but optical shops and licensing companies increased costs and prices. Warby Parker founders not only wanted to create affordable glasses but to make them from high quality materials and with trendy, hip, and vintage inspired styles. The founders have had previous business experience, in either eyewear design knowledge, or working in this industry before. Their experience, hard work, and unique concept have helped the company grow very rapidly. Today, Warby Parker is a successful company that not only focuses on profitability, but also on helping. For every pair of glasses purchased, they provide a pair to someone in need1. They have been able to provide these charitable services through their ongoing partnership with the non-­‐profit organization VisionSpring. This concept is unique and its intention motivational. This fledgling company offers eyeglasses at affordable prices without sacrificing style and offers an altruistic aspect to their customers. Its rapid success is not founded on greed, but generosity. Ideals well established in the company’s goals. 1 -­‐good/#buy-­‐a-­‐pair-­‐give-­‐a-­‐pair 3 1.2 Goals The intention of this export plan is to set tangible goals for Warby Parker, so that they are able to set a path and a platform for their success now and in the future. Warby Parker is a foundling company, started only two years ago. This is usually a setback when considering exporting a product but this has proven not to be a major problem. Warby Parker’s rapid success and ongoing growth in the domestic market has shown that this plan is not premature. Warby Parker is looking towards the future growth of their company and setting goals. Their main focus should be to capture a larger customer base in North America. They should plan to do this by expanding their operations into Canada. To expand operations in the Canadian market they need to create a physical presence (Brick and Mortar Stores) not just an online presence. This will be achieved by building relationships/partnerships with Canadian companies that sale a similar lifestyles; expanding the home try on service to Canadian customers, and establishing a warehouse/home base in Canada to support these actives and . After they accomplish these goals I believe that they can have a successful future in Canada and the rest of North America After the company has attained these goals we believe that they will be more equipped to cross the Pond into the European market and focus their attention on Warby Parker’s ultimate goal of selling their eyeglasses internationally. The company has been interested on exporting since the beginning. In fact, in July 19, 2010, one of the cofounders, Neil Blumenthal, was interviewed by Men’s Flair magazine, and this topic came out. During this interview, Blumenthal confirmed that they were in the process of making eyeglasses 4 available for order and shipping outside the United States2 because the demand for these affordable vintage eyeglasses was rapidly increasing. Currently, Warby Parker exports to Canada. On their website, they provide a phone number and an email account available for Canadian consumers who have questions or inquiries. Warby Parker offers a simple flat-­‐rate shipping fee for all international orders3 , and the company utilizes the services of an “international shipping company” called FiftyOne, which delivers the product and processes the payments4. We consider that the company needs to reinforce and to increase its exporting efforts in North America before exporting to other countries. Since Canada has similar business characteristics then the United States, the knowledge obtained from this experience can be applied to exporting the product to other nations. Initially, we thought that the United Kingdom would be a good option to export Warby Parker eyeglasses because the optical industry is expensive in Europe, and because Europeans are characterized as being stylish. However, after making further research, we concluded that Warby Parker has plenty of room to exploit the Canadian market. For this reason, we chose Canada as our target market, and further information to justify this exporting decision will be provided in the following pages. 1.3 Financial Resources According to PrivCo’s report, Warby Parker has generated over $11 million in revenue. However, this positive outcome is the result of good planning, hard work and well 2 3 -­‐03 4 -­‐04 5 thought decisions. In order to grow, the company had to invest on the business. For this reason Warby Parker had to accrue some debt. The following chart illustrates Warby Parker funding activity. The following PrivCo’s VC/Funding Activity table for Warby Parker displays the venture capital rounds, angel investments, debt or other funding raised by Warby Parker5. FUNDING ACTIVITY Date Investor Round Investor Type Jul. 2011 First Round Capital Seed Venture Capital Jul. 2011 SV Angel Seed Angel Investor Group Jul. 2011 Lerer Ventures Seed Venture Capital Total Round Seed $1,500,000 Sep. 2011 Tiger Global ManagementLLC A Hedge Fund Sep. 2011 Menlo Ventures A Venture Capital Sep. 2011 First Round Capital A Venture Capital Sep. 2011 Lerer Ventures A Venture Capital Sep. 2011 Thrive Capital A Venture Capital Total Round A $12,000,000 Total of Funding Shown Above $13,500,000 In total, Warby Parker borrowed $13,500,000 in 2011. They needed this money to increase their production and to be able to supply their rapidly growing demand. This was beneficial in two ways. First, the money was invested into the company maximizing their manufacturing process, and second, they started a credit history that will help them get 5 -­‐company/warby-­‐parker 6 more loans in the future. In fact, Warby Parker will need to be financially strong or get more loans before starting the exporting process because it requires time and money to do it effectively. Specifically, they will need money to advertise the product in Canada and to supply the Canadian demand. Personally, I think that Warby Parker is going to be able to payback the loans that the company acquired in 2011; acquiring investment capital is an ongoing process that is very important for new companies looking to expand. Warby Parker obtained these loans to strengthen their performance in the domestic market. This money was mostly used to hire new employees and to build a more efficient the manufacturing process. The need for Warby Parker to borrow money was important because the demand for their eyeglasses were more than what was originally expected. I think that the company needs to borrow money not only to meet the high demand, but also to invest in other parts of the business that will generate profit in the long run such as marketing. The company has made good use of low cost marketing tools. They have effectively used social media in advertise the product and have also made their presence known through word of mouth, which has generated a large amount of referrals. Marketing is essential, and it should be a priority for a fledgling company. I understand that Warby Parker wants to keep their costs low, but when you are launching a new product, you need to have an effective marketing campaign to let your target market know about your product and generate brand awareness. After this is accomplished, the marketing budget can be decreased because the consumers have been already informed about the product. In addition, marketing is extremely important when exporting a product. Since Warby Parker is going to be an unknown brand for the majority of costumers in Canada. I 7 think that the company needs to borrow money to pay for an effective advertising campaign. In short, the company needs to get more founding before starting this exporting venture. They will need more financial resources to manufacture enough eyeglasses for two markets, to pay for marketing, and to have a positive cash flow, which is needed to react promptly to any domestic problems or needs that may arise. 1.4 Non-­Financial Resources The founders of Warby Parker represent a valuable source for the company because they bring experience and expertise to the table. Neil Blumenthal knows the industry. For five years, he was the director of a non-­‐profit organization called VisionSpring, which gives free glasses to poor people who need them. Jeffrey Raider has excellent leadership skills; he has a penchant for bringing people together6. Andrew Hunt has studied eyewear design in more than 40 countries7, and David Gilboa’s adventurous attitude gives uniqueness to the company. Another strong resource is their business approach. Warby Parker is a socially responsible company that gives back to the community. With their “Buy A Pair, Give A Pair” campaign, they give a pair of glasses to someone in need for every pair purchased. Because they are not merely focused on profitability, they are able to increase their customer base. Warby Parker sells not only to consumers who care about price, or consumers who like trendy styles, but also to consumers who care about others and share the same values as Warby Parker. This is beneficial because they refer more people. Since 6 -­‐the-­‐founders 7 -­‐the-­‐founders 8 Warby Parker relies on word of mouth to promote their brand, this approach increases that type of promotion. In addition, the company’s current exporting experience with Canada represents a non-­‐financial resource because the company can analyze and learn from this experience. By making the required changes, the company can become more effective. Although, their current presence in Canada is not as strong as in the United States, this experience can be a useful source of information .Even though Warby Parker is already exporting to this country, we have decided to focus on this market because it has a lot of potential. Warby Parker can utilize this previous experience, and it can dedicate more time to this venture to obtain greater benefits. Lastly, since Warby Parker is a web-­‐based company, they make exhaustive and effective use of social media to advertise the product and to communicate with consumers. This successful media usage provides useful statistical information about customers’ taste, suggestions and opinions. This gathered information can be utilized to make changes to the product, to improve its customer service, to create more appealing campaigns, and to rapidly catch up with new trends. 1.5 Current Trends and Practices Warby Parker is a relatively new company that started its business operations in February of 2010. Ever since, the company’s sales have been increasing every quarter. In fact, “the young company hit its first-year sales target in three weeks, sold out of its top 15 styles and had a wait 9 list of 20,000 customers after a month in business”8. Warby Parker didn’t expect such a high demand for their product, and subsequently were not prepared to satisfy the high demand. They acted promptly and were able to deliver the product to every customer who ordered their eyeglasses. Even though, many new companies meet or surpass their sales expectations after the product is launched for the first time, not all of them are able to maintain a positive sales trend for a long time in the same way Warby Parker has done it. Warby Parker has had a positive sales trend since they started two years ago. This positive trend is best illustrated in a chart. The first graph, obtained from the company website, shows last year’s positive sales trend by quarter; and the second graph, obtained from PrivCo’s report, illustrates Warby Parker’s revenues for 2011, which increased by 75%. Having a positive sales trend demonstrates not only that the company’s revenue is growing but that it has the potential to keep growing based on past sales patterns. Because Warby Parker is doing better than what was anticipated domestically, and it is likely that the company will do well in Canada too. Canada and the United States have similar characteristics such as culture, language, communication systems and transportation methods, which increases the company’s chances of being successful in that country too. 8 10 -­‐report-­‐2011 This chart illustrates the company’s success. In 2010, the company had revenues of 2.85 million, and just one year after the company was launched, their revenue increased to 11.4 million. The founders of this company did not expect such a high volume of sales, however, they reacted rapidly and effectively to this unexpected change. The volume of sales has been growing ever since the company started, they can expect similar results in the target market. -­‐company/warby-­‐parker 11 However, “at the moment Warby Parker is more focused on expansion than driving margin”9. The company wants to gain as much market share as possible. They understand that profits are very important, but they want to focus on creating an extensive customer base first. After they have acquired a significant part of the market, they will focus on maximizing their earnings. In addition, because the company is socially res...
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