Int'l MKT Research Paper

Running head: DUE NORTH, WARBY PARKER’S FIRST STORE ABROAD

Due North,

Warby Parker’s First Store Abroad:

A Research Paper on International Marketing Strategy

Noah B. Johnson

CAPA: The Global Education Network

1


Abstract

Since its establishment in 2010, Warby Parker and its founders have set out to—thus far

successfully—revolutionize the consumer eyewear industry, as it has been known for the

last half century. “Warby Parker was founded with a rebellious spirit and a lofty

objective: to offer designer eyewear at a revolutionary price, while leading the way for

socially conscious businesses,” reads in bold letters across the top of Warby Parker’s

website, when customers click on the ‘Our Story’ tab (Warby Parker, 2016). This credo,

or mission statement of sorts, is exactly what makes Warby Parker a one-of-a-kind,

entrepreneurial business success story, and one that resonates far beyond the scope of just

the eyewear industry, particularly with today’s millennial, technology immersed

generation. Whether it is the company’s witty, yet subtle, marketing campaigns or its

industry leading devotion to social responsibility, Warby Parker, in just under seven years

has gone from a four person internet startup—literally operating out of one of the

founder’s apartments—to a major and disruptive industry player. Today the privately

held company, headquartered in New York City, is valued at $1.2 billion with nearly 40

bricks-and-mortar locations and roughly 1000 employees (Wall Street Journal (WSJ),

2015). This paper examines Warby Parker’s quirky, while noteworthy approach to

marketing, specifically as applied to its first international retail location in Toronto,

Canada.

Introduction

“Great, big, huge, wonderful news: we're opening our first store in Toronto! Bring

yourself (and your friends) to the grand opening of our newest store, Queen St. West, this

2


weekend. It’s our very first spot in Canada, so you can bet we'll be celebrating! Take a

sneak peek today on Snapchat (username: warbyparker),” (@warbyparker, 2016). This

caption, as seen on Warby Parker’s official Instagram account (yes, that is a thing) below

a quaint photograph of the company’s first foray into the international retail market, is a

perfect example of the company’s millennial-minded, social media savvy marketing

scheme. On August 6th, 2016, at approximately 11:00 A.M. EST, to the excitement and

long awaited anticipation of local Torontonians, doors officially opened at 684 Queen St.

W. —Warby Parker’s then newest retail location (Toronto Life, 2016). When asked in a

Q&A published by one magazine, “Why Canada?” and more specifically, “Why

Toronto?,” Warby Parker co-CEO, Neil Blumenthal, had this to say, “Each province has

so much to offer, but Toronto’s size and reputation as a cultural hub caught our eye. We

love that we can see the CN tower from New York State” (Toronto Life, 2016). David

Gilboa, the company’s other co-CEO, added, “We’re excited to be expanding

internationally for the first time ever. We launched our Canadian website in 2012, but

until now, we didn’t have a retail presence here, and we’re excited that we now get to

meet our Canadian customers face-to-face. From an aesthetic perspective, Toronto is

such a diverse city, which means there’s an incredible range of tastes and styles colliding

in one place” (Toronto Life, 2016). As the 35th addition to Warby’s existing retail

presence, this paper will analyze the company’s unicorn business model and likewise its

first penetration into the global market.

3


Company Background & Business Model

The magic all began in 2010, in Philadelphia, Pennsylvania, at the prestigious Wharton

Business School; graduate classmates and like-minded entrepreneurs, Neil Blumenthal,

David Gilboa, Andrew Hunt, and Jeffrey Raider all shared a vision alongside a unique

business acumen that would prove to pay long-term dividends far beyond what they

could have ever imagined seven years ago. “Every idea starts with a problem” (Warby

Parker, 2016). The narrative today goes that while on a backpacking trip, co-founder

David Gilboa, lost his eyeglasses and was forced to go his entire first semester of

graduate school without them, due to the astronomically high cost to replace them

(Vogue, 2010). Sharing Hunt’s frustration of being unable to find an affordable

replacement, he and his three fellow classmates sought out to establish an alternative to

their nearsighted dilemma. And thus, Warby Parker was founded. After extensive

research and consideration of over 2000 potential names, as well as polling hundreds of

fellow Wharton peers, the co-founders found that neither the words “Warby” nor

“Parker” had any existing negative associations. The names are derived from two

characters, Warby Pepper and Zagg Parker, in the semi-fictional novel, The Dharma

Bums, written by Beat Generation author, Jack Kerouac. The novel is subsequently

given out during training to all Warby Parker new hires, as the founders each identified

deeply with many of the themes and cultural commentary portrayed in the novel.

So, for a bit of background on the eyewear industry and why the co-founders came up

with the vision to interrupt a seemingly less than glamorous industry, enter: Luxottica.

Luxottica is the world’s largest eyewear company, and has been for much of the last 55-

4


years since its establishment in 1961, based out of Milan, Italy. Exceeding revenue of

$9.5 billion in 2015, it is the parent company to nearly all of the leading eyewear

companies across design, manufacturing, retail, and even insurance providers—including

EyeMed, the second largest vision insurance provider in the United States (Luxottica

Annual Report, 2015). These subsidiaries and brand licensees include numerous

household names in consumer eyewear such as Lens Crafters, Sunglass Hut (the leading

sunglass retailer in the world), Target Optical, Ray Ban, Oakley, Persol, and many, many

more. Effectively a global monopoly, the industry giant dominates the market, keeping

prices artificially high—similar to the likes of controversial companies like DeBeers in

the diamond industry, and Monsanto in agricultural markets. Today consumers—not

shopping with Warby Parker—can expect to pay as much for their glasses as they would

for a new iPhone, on average $300-$700 for frames and prescription lenses. These high

prices come as a direct result of the business model perfected, for lack of a better word,

by companies like Luxottica. And so in a $75-billion-dollar per year industry globally, of

which approximately one-third comes out of the United States, which has seen little to no

innovation with continually rising prices, Warby Parker’s founders saw a massive

opportunity (Bloomberg, 2015). Warby Parker designs and brands their own frames in-

house, works directly with their suppliers and manufactures, and ultimately sells their

product direct to customers in order to avoid middle man licensing fees, which are often

10 to 15 percent, according to Blumenthal. In turn, Warby then passes its savings on

directly to its customers, offering high quality prescription eyewear starting at just $95.

While this circumvention of traditional cost-driving markup roadblocks may seem like an

5


innovative business model in and of itself, the Warby Parker founders didn’t just stop

there. In a continually growing dotcom atmosphere, lead by perennial powerhouses such

as Amazon and Alibaba, the consumer goods and retail market has consistently shifted to

online and mobile shoppers over the past decade. Back in 2010, the company’s founders

took a closer look at the existing e-commerce landscape and found that accessories such

as shoes and jewelry were already being sold online at about a 10 to 15 percent market

share relative to traditional bricks-and-mortar retailers (Columbia Business School,

2015). However, online sales of eyewear accounted for merely less than one percent of

the total market share (Columbia Business School, 2015). With this in mind, they

decided to launch their company as an online only portal where customers could view

various styles, and even try them on virtually right from their computer screen. After

extensive research of the trends in eyewear as well as current business practices, one of

the major conclusions that the founders came to was that current selling practices were

lacking attention to customer experience and satisfaction. Specifically, many retailers

would display, on average, anywhere between 700 and 1000 different styles in a single

showroom; to paraphrase Blumenthal (2015), large variety in selection may attract

customers but can often cause conversion and bookings to suffer. Likewise, Warby

Parker launched with just 27 styles in two to four different colors each, aiming to

encompass a variety of different face shapes and sizes, without overwhelming their

customers. (Fun fact: One of Warby’s original frame styles, Roosevelt, which is still

offered currently, is named after a local Philadelphia pub where the company founders

first began the conception of the company). In February of 2010, just before the official

6


public launch of warbyparker.com, major fashion and lifestyle magazines GQ and Vogue

both published features on Warby Parker’s glasses alongside designer labels Tom Ford,

Ralph Lauren among others. GQ even dubbed the company the “Netflix of Eyewear”

(see: home try-on program). Almost immediately following the articles, the company

reached its first year sales goals in an astonishing three weeks and sold out of their top 15

styles in just four weeks. One of the company’s niche offerings, unique to their online

model and hence the nod to Netflix, is their home try-on program where customers can

choose up to five different frames to be shipped to them for a free trial, shipping covered

both ways. Within 48-hours of their website launch, the program had to be suspended

due to an unanticipated depletion of inventory. Over the proceeding nine months, Warby

had up to 20,000 customers on their waiting list for glasses (Business Insider, 2013). Still

in school at the time, the founders were handling customer service needs directly from

their laptops, sometimes while sitting in lectures even, recounts Jeff Raider. In an

unmitigated dedication to their early adopters’ customer experience, many of those on the

waiting list received free glasses as an apology for their extended wait time. Amidst the

early chaos due to the unexpected boom in sales, the company still managed to not lose

sight of one their main objectives (and one of 10 company “Core Values”), do good.

Leveraging the international development pedigree of one of their co-founders, Gilboa,

and his experience working with VisionSpring, Warby Parker introduced the “Buy a Pair,

Give a Pair” program. VisionSpring is a non-profit organization that specializes in

providing affordable eyewear to the less fortunate. It is estimated that over 700 million

people worldwide lack access to corrective lenses, an 800-year-old invention mind you,

7


which are proven to have the ability of increasing an individual’s productivity by up to 35

percent and their monthly income by up to 20 percent (Warby Parker, 2016). The way it

works is that at the end of every month, Warby tallies the total number of glasses its sold

and then makes a cash donation directly to VisionSpring, which covers the cost of

sourcing that number of glasses. The non-profit then trains women and men in

developing nations to perform basic eye exams, sell eyewear at an affordable price and

most importantly to spread awareness and make eye care available to their communities

(Warby Parker, 2016). The reason Warby Parker, alongside VisionSpring, has decided to

sell the glasses at an affordable cost rather than simply donating them is based around the

reality that oftentimes handouts trickledown into a culture of dependency and lack long-

term sustainability. Also, this practice gives locals an opportunity to earn their own

living while helping out their communities. To date, Warby Parker is proud to say its

distributed over 2 million pairs of glasses around the globe. Fast forward to 2015, where

the company earned around $100 million in revenue—triple its 2013 numbers—Fast

Company Magazine named Warby Parker the most innovate company, ahead of even

likes of Apple and Google (Fast Company Magazine, 2015). With big wig investors such

as Mickey Drexler, CEO of J. Crew, Apple board member and business mogul, joining its

movement, Warby has managed to achieve noteworthy marks in retail metrics in areas

such as sales per square foot in their bricks-and-mortar locations and net promoter scores

—used to analyze overall customer experience. In New York City, its store pulls in sales

per square foot greater than Tiffany Co. and scalable only to Apple (Gilboa, 2016).

8


These are just a couple of the many examples that make Warby Parker the successful

company that is today.

Marketing Strategy

When it comes to Warby Parker’s unique approach to marketing, the company holds

itself to high standard of positive customer experiences, continual innovation, as well as

great looking and affordable, high quality eyewear, all while leading the way for socially

responsible businesses. As Kumar (2014) notes, innovation is not only the cornerstone of

growth, but it can also affect entire industries.

In regards to customer experience, the company puts its customers first at every step of

the way, as customer loyalty can be influenced by positive interactions with employees

(Ozuem, Thomas, & Lancaster, 2015), emphasizing that good service can have positive

outcomes for the brand. This idea has proven to be paramount for Warby; according to

one of the company’s co-CEOs, over half of the customer traffic both in retail and

online/mobile comes in as a direct result of a referral (Gilboa, 2015). “We do our best to

remain experience focused and medium agnostic,” says Blumenthal (2015). The

company currently is proud to maintain an average net promoter score (a data metric

gathered from customer experience surveys reflecting their likelihood to recommend the

brand/product to a peer) of 85 percent, which is by and large unheard of in retail (Forbes,

2016). Some of the steps that the company has taken to ensure their customers’

satisfaction include a maximum six-second response time when dialing their stateside,

highly vetted CX (customer experience) support team, as well as offering a no questions

asked free of charge returns and shipping policy. While developing a brand that must

9


constantly be cognizant of marketplace copycats in the realm of Internet startups,

Blumenthal (2015) says that he and his colleagues have always tried to remain “in the

mindset of founders rather than CFOs.” In a data and information era, where the rise and

fall of a company can develop more rapidly than ever before, the Warby Parker founders

have continually found that the key to sustaining their brand firstly and expanding it

secondly, is maintaining authenticity (Gilboa, 2015).

On the innovation front, as mentioned earlier with the endorsement of Fast Company

Magazine, Warby Parker is second to none—especially in retail. While the company was

still in its infancy stages, operating primarily online, customer support teams began to use

social media, namely Twitter, as a means of communicating directly with customers.

During a seminar given to graduate students at the Columbia Business School, Gilboa

recalled the struggles of providing quality feedback in 140 characters or less. As a

workaround, the idea was conceived to reply to customers’ inquiries with short, 30-

second long videos. Originally the founders had imagined that these videos would be a

fun, quirky way to engage with a niche audience; maybe customers would watch the

videos once or twice and move on. Instead they found that, on average, the response

videos were being watched anywhere from 60 to 80 times and generating sizable web

traffic. Also it just their beginning phases, the founders wanted to release their first

annual report so that stakeholders could have some further insight into the growing,

trendy brand. As you can imagine, sticking to Warby Parker fashion, the annual report

came out and was not in the form of traditional stacks of financial reports. Rather they

decided to use info graphics to make the viewing experience more concise,

10


comprehendible and enjoyable (see an example below).

In the three days following the release of their annual report, the company saw its highest

consecutive sales days to date (Gilboa, 2013). Warby Parker also makes use of other

social channels such as Instagram, mentioned earlier, Snapchat and Tumblr to promote

not just their product but also their lifestyle brand. Most recently, over this past summer,

Warby used its social media forums to announce its “Summer Sound Sessions.” A quick

blurb from the company blog explains: “Summer’s all about the right summer

soundtrack. (O.K., it’s about way more than that, but the soundtrack is pretty important.)

To kick things off, and keep them going all season long, we’re putting on a series of

concerts at a whole bunch of our stores. Introducing our Summer Sound Sessions: 10

weeks, in 10 cities, with 10 local artists that we love” (blog.warbyparker, 2016). Another

11


unique and surprisingly well received marketing campaign that the company ran, and

continues to utilize, is the Warby Parker School Bus. When Warby’s founders first

decided that they were ready to expand into the bricks-and-mortal retail sector, they

wanted to do so the right way and while minimizing risky overhead costs. So by utilizing

the existing online data from where their highest concentration of shoppers were located,

they launched the school bus—a gutted out and revamped yellow school bus transformed

into a 45-foot-long eyewear showroom on wheels. The bus traveled to 12 cities in 12

months and proved to be a great way to scout out future retail locations. Warby Parker’s

approach to marketing is truly a one-of-a-kind, multifaceted example of how to captivate

a wide range of consumers. By using abnormal techniques such as these, the company

has already paved the way for numerous adopters of their practices including Tuft &

Needle mattresses, Away luggage and others.

International Expansion

Staying in tune with their highly calculated and astute approach to retail, Warby Parker

cut no corners whilst making its international debut last August. The company chose the

trendy West Queen West neighborhood in its Canadian neighbor to the north, Toronto—

or to millennials, who may prefer, “The 6.” Warby’s retail scouting team took into

account every inch and detail when selecting the location, such as southern facing

windows as to let natural light in, terrazzo library inspired flooring and even bookshelves

lined with Toronto and Canadian authors (Chatelaine, 2016). As with each of their new

retail stores, the company also released two exclusive frames, sold only in the Toronto

location, to commemorate the opening. Toronto artist, Micah Lexier, was also

12


commissioned to design and create a series of three newsprint books, free to customers,

made in collaboration with Canadian artists Maggie Groat, Mark Laliberte, and artist

collective VSVSVS. The retailer also teamed up with artist Jason Polan on an illustrated

map of the best places to sit and read in the Toronto neighborhood (with limited-edition

glasses cloths printed with the map available to the store’s early customers this weekend).

To top it all off, @warbyparker on Snapchat even created location-based “geo-filters” for

its store (Strategy, 2016). Given these factors, Warby Parker took sort of a hybrid

approach to its internationally tailored branding campaign. Elements such as the

standardization of the store layout are ethnocentric on the surface, but by including local

art and literature, it still managed to particularize its global product to a local market

(Matusitz, 2010). As Ozuem et al. (2015b) explain, cross-national differences prevent the

use of blanket marketing strategies. Likewise Backhaus, Muhlfeld and Van Doorn

(2001) state, companies pursue a policy of standardization to reduce costs and gain

efficiency. At the same time, doing so prevents image confusion and customer irritation

(Backhuas et al., 2001; Cayla & Arnould, 2008). Although expanding into Toronto may

not seem to be a huge leap for Warby Parker, it could become a stepping-stone into other

Canadian major cities like Vancouver or Montreal. If it gains enough momentum in

those markets, it might also consider opening further international stores in Europe and

Asia. If that happens, Warby Parker could surely lay down the groundwork to

legitimately challenge Luxottica—which doesn't have much meaningful competition at

the moment—in the future.

13


Conclusion

Despite all of its success thus far, Warby Parker and its founders still have their work cut

out ahead of them in regards to their ultimate goal of being able to break down the

monopolized eyewear market that exists today. The good news is that in just seven years

since its establishment, they haven’t done too shabby along way. Charles (2007) cited in

Ozuem et al. (2015a) states that when a company operates customer-centrically, it

receives a positive return on investment, satisfied shareholders and stakeholders from

business and the community, and a sustainable business future. That is exactly what

Warby Parker has done and will continue to do for the foreseeable future. Warby Parker

consistently puts its customers and employees, along with their local and global

communities, first by delivering high quality glasses at an affordable price, providing top

notch customer experiences, maintaining a carbon neutral footprint, and making millions

of pairs of glasses available to those without them around the world. It is companies like

this that pave the way for the aspiring and socially conscious entrepreneurs of tomorrow.

14


References

Backhaus, K., Muhlfeld, K., & Van Doorn, J. (2001). Consumer Perspectives on

Standardization in International Advertising: A Student Sample. Journal of

Advertising Research, 41 (5), 53-61.

Bahrenburg, G. (2010). In Focus: Warby Parker Eyewear. Retrieved October 27, 2016,

from http://www.vogue.com/871222/vd-in-focus-warby-parker-eyewear/

Cayla, J., & Arnould, E. (2008). A Cultural Approach to Branding In the Global

Marketplace. Journal of International Marketing, 16, 86-112.

Chafkin, M. (2015). Warby Parker Sees the Future of Retail. Retrieved October 27, 2016,

from https://www.fastcompany.com/3041334/most-innovative-companies-2015/

warby-parker-sees-the-future-of-retail

Denning, S. (2016, March 23). What's Behind Warby Parker's Success? Retrieved

October 27, 2016, from

http://www.forbes.com/sites/stevedenning/2016/03/23/whats-behind-warby-

parkers-success/#4738e7dc6395

Funds Think Warby Parker Is Worth $1 Billion. (n.d.). Retrieved October 27, 2016, from

http://www.bloomberg.com/news/articles/2015-03-04/warby-parker-said-to-draw-

fund-interest-at-over-1-billion-value

Grant, J. (2016). Warby Parker is opening a Toronto store this summer. Retrieved

October 27, 2016, from http://torontolife.com/style/shopping/warby-parker-is-

opening-its-a-toronto-store-just-in-time-for-summer/

Kumar, V. (2014). Understanding Cultural Differences in Innovation: A Conceptual

15


Framework and Future Research Directions. Journal of International Marketing,

22 (3), 1-29.

Lutz, A. (2013, February 25). Warby Parker Has Gained the Ultimate Ally. Retrieved

October 27, 2016, from http://www.businessinsider.com/mickey-drexler-invests-

in-warby-parker-2013-2?IR=T

MacMillan, D. (2015). Eyeglass Retailer Warby Parker Valued at $1.2 Billion. Retrieved

October 27, 2016, from http://blogs.wsj.com/digits/2015/04/30/eyeglass-retailer-

warby-parker-valued-at-1-2-billion/

Matusitz, J. (2010). Disneyland Paris: A Case Analysis Demonstrating How

Glocalization Works. Journal of Strategic Marketing, 18 (3), 223-237.

(n.d.). History | Warby Parker. Retrieved October 27, 2016, from

https://www.warbyparker.com/history

Ozuem, W., O'Keeffe, A., & Lancaster, G. (2015a). Leadership Marketing: An

Exploratory Study. Journal of Strategic Marketing, 23 (1), 1-25.

Ozuem, W., Thomas, T., & Lancaster, G. (2015b). The Influence of Customer Loyalty on

Small Island Economies: An Empirical and Exploratory Study. Journal of

Strategic Marketing, 1-23.

Singh, H. (2016). Warby Parker opens up shop in Canada. Retrieved October 27, 2016,

from http://strategyonline.ca/2016/08/02/warby-parker-opens-up-shop-in-canada/

@. (2016). 5 reasons to get excited about Warby Parker's new Toronto location -

Chatelaine. Retrieved October 27, 2016, from http://www.chatelaine.com/style/5-

reasons-to-get-excited-about-warby-parkers-new-toronto-location/

16

Int'l MKT Research Paper

Documents

Transcript of Int'l MKT Research Paper