E-commerce, The Race for Market Share (Part 1)

It is estimated that six percent of all retail purchases are completed online. Amazon currently has over 130 million active buyers and it is estimated 79 million tablets will be in the marketplace by 2015. The reality is that the average consumer loves the convenience of online shopping and all markets are forced to quickly adapt. The optical industry is no exception and lends itself well to online sales.

What effect is e-commerce having on the optical industry?

While to date there has been little market share for e-commerce players within the prescription eyeglass business, most of the large players in the industry have recently entered the market or plan to do so in the near term. It is widely believed that the early entry companies that capture market share will have a substantial advantage over their competitors who wait until the market matures.

Contact Lens vs. Prescription Eyeglasses

Contrary to the prescription eyeglass business, the e-commerce contact lens business has been thriving for years and currently represents a substantial portion of the market. However, the prescription eyeglass business is not as simple when compared to contact lenses and should not be viewed as an over-the-counter commodity. For all purposes, the pure play e-commerce companies have a logical path to selling prescription eyeglasses. They have a pre-established customer base and virtually no barriers to entry once they establish the appropriate supply chain. Especially in the value model, these companies may reasonably be expected to succeed in capturing market share by leveraging their existing customer base.

Premium Brands vs. Value Model

There is likely to be a distinction as to how premium market share is developed as opposed to more price sensitive sales. Premium brands will likely format a different approach to entering the online market. The rationale is simple. A consumer is much more comfortable trying an e-commerce purchase if the sale is under $100 and priced below competition. The marketing of an online purchase for a digitally surfaced lens, with premium coating and a name brand frame will likely focus on service, convenience and selection, as opposed to price.This will lend itself to ECP support for brand, direct to consumer sales and enhanced follow up sales for retailers, even in the premium sector. One thing does seem to be clear: the consumer follow up purchases are almost always a higher average selling price when compared to the original purchase. Once a level of trust is developed for quality, the consumer seems to be willing try a more premium product.

Next month, in Part 2 of this series, we'll discuss in detail how a wholesale laboratory can benefit and grow from E-commerce.

—Hunter T. Puckett is Vice President and General Counsel, HPC Puckett & Company. Based in San Diego, Calif., HPC Puckett & Company specializes in mergers and acquisitions of companies in the optical sector. You can send comments or questions about this article or any other Dollars & Sense articles to Hunter T. Puckett at hpuckett@hpcpuckett.com.

LabTalk Art Contest to Turn Lab Trash Into Treasures

Don't throw those finishing pads away. Turn them into works of art and enter LabTalk's Trash to Treasure Finishing Pad Art Contest. Past entries have used finishing pads to create sculptures, mosaics and paintings, all out of used finishing pads.

To enter, package up your creation and mail to: Jobson Publishing: Attention Finishing Pad Art Contest, 100 Avenue of the Americas, 9th Floor, New York, New York, 10013.

First prize is a $500 American Express Card; 2nd Prize is a $200 American Express Card; 3rd Prize is a $100 American Express Card, and honorable mention is a roll of SecurEdge Finishing Pads. All artwork will be photographed in the Jobson studio. Photos of the winning entries will be published in LabTalk and entries will be displayed at Labapalooza. Artwork will not be returned but can be picked up at the Labapalooza event at the OLA/International Vision Expo West in Las Vegas. The deadline is Aug. 19, 2011.

The Trash to Treasure contest is sponsored by DAC Vision, Saint-Gobain, and LabTalk magazine. For questions, contact LabTalk editor, Christie Walker at (909) 866-5590, or cwalker@jobson.com.

Classic Optical Laboratories Launches New Website

Classic Optical Laboratories in Youngstown, Ohio has launched its newly designed website, classicoptical.com. The new site features a blog, provider newsletters, videos, links to social media sites and a secure provider portal for the thousands of ECPs Classic serves from Maine to California. According to the company's COO, Dawn Friedkin, the site was created with an improved architecture and fresh graphic enhancements to be more appealing and user-friendly for customers and visitors alike to ensure easy access to the information they need. The redesign incorporates bold colors and graphics and completely new navigational tools.

"Our online visitors will now experience a more vibrant and seamless view of Classic and its deep online resources," stated Friedkin. "With our new marketing effort, we intend to spread the word about our lab's robust production capabilities and fully integrated information technology resulting in a partner model to best meet the eyewear needs for members of managed vision care organizations, governmental agencies, and correctional institutions, as well as direct service to ECPs and their patients."

Essilor Closes Duffens Optical Branch in Hannibal, Mo.

Duffens Optical, a branch of Essilor Laboratories of America in Hannibal, Mo. closed its doors July 29, after 63 years in business. Orders are being processed by Duffens Optical branch in Topeka, Kan.

Precision Optical Group's Mike Tamerius

By Judith Lee

How does an optical lab help independent retailers compete with the "big box" optical stores?

Provide a quality product, quickly and at a great price.

That's the mission of Precision Optical Group (POG), and it's simplified every decision the company makes.

"The business becomes very simple when you make every decision based on how it's going to improve one of those three areas," said POG president Mike Tamerius.

The Creston, Iowa lab has concentrated on improving workflow and material handling. A complete conveyor system, track free tray carts and automatic lens retrieval units place orders in surfacing within 10 minutes of its arrival.

POG has the same challenge as all optical labs: implementing common manufacturing processes while producing a custom product.

They've found that about three to five percent of jobs must be pulled out of the automated process for more traditional evaluation and specialized production. The challenge-within-a-challenge is correctly identifying those jobs when they come in.

Tamerius noted that continuous improvement is the key overall, which means working at finding the smallest of improvements daily: "We question every procedure and process to find out if it still works for us."

POG's workforce drives the continuous improvement process with a dedication that Tamerius called "amazing."

"Our workers are very demanding on each other and enjoy the challenge of getting better daily. We have seen some incredible gains in our jobs-per-man-hour over the last 18 months," Tamerius said.

POG is thinking in broad strokes as well. The lab donates two dollars to a local cancer center for every pair of lenses coated with its Courage scratch-resistant coating, and intends to expand the giving to other charities.

One POG business unit is reaching out to other optical labs, providing payroll, accounting, purchasing, sales and marketing services.

"We love to help all of our business partners grow and prosper," Tamerius said. "And when we do, they reward us with great loyalty."

LabTalk Spotlight

How to Become the Artisan of the Modern Lab

By Judith Lee

Like the fine art of creating stain glass, drilled rimless is the intricate art of the optical world, fitting together small, intricate pieces to create the final vision. Even though automation can streamline the process and reduce waste, every pair of rimless frames are unique, created step-by-step with painstaking care. Independent labs report that drilled rimless represents 10 percent or less of their business, but more specialized labs are fabricating higher percentages of drilled rimless, and a leading equipment maker pins the market segment at 25 percent and growing.

"There is a custom-made, one-of-a-kind trend seen recently in fashion, cars, and jewelry," said Frank Balestra, technical director for Santinelli International. "The use [of drilled rimless] will increase further because of high tech equipment enabling customization and unique designs of rimless."

Smaller labs and retailers who do their own finishing might also see drilled rimless as an ideal niche to maintain their independence.

"Large chains like to process rimless in central labs, and that adds to the processing time. In contrast, the smaller stores and franchises can provide quick turnaround and better service if they bring rimless in-house," noted Steve Boudreau, president of Tabco Optical, which makes the Smart Drill. "If you are going to invest in finishing equipment, your setup should include a rimless drill."

To find out more about the art of creating rimless eyewear, visit labtalkonline.com and go to the FEATURES section where you will find this complete article.