In The Press

MyBusiness Magazine, December 2007

An eye on the market
By Nicola Card

Optical e-tailer GlassesOnline has weathered more than a few storms attempting to dock in the competitive prescription glasses market, but founder and Managing Director Kevin Reece remains steadfast in his resolve to supply cut-price glasses.

Over the past three years Kevin Reece has focused on pioneering sales of prescription glasses online at a fraction of the price available elsewhere through his company GlassesOnline. Despite attracting more than a few detractors and a copy cat or two, his vision and determination remain as strong as ever.

The proverbial David versus Goliath battle has occupied significant slabs of his time, yet Reece has managed to keep his eye on the main game by putting more than a scratch on Australia's $1.5 billion prescription glasses market, having already saved consumers nearly $1 million.

Launching GlassesOnline in February 2006, the first six months of starting up was a case of "finding our feet and our value proposition," Reece said. "But the past six months in particular has seen exponential growth, and we continue to gain a growing proportion of the market of 4.5 million glasses sold to the 50 per cent of the population wearing glasses."

Although Reece would be pleased to capture just one per cent market share by selling 40,000 pairs annually, he says better still would be "two to three per cent of the market, and we could easily cope with that level of demand."

Were such figures to be achieved, consumers would be $9 million better off, given the mark-ups on glasses. A pair of glasses identical to those supplied by an optometrist for $300 is sold for around $65 at GlassesOnline.

It's this price differential that sparked his interest.

With a background in corporate IT research and consulting, Reece was confident he possessed the necessary technical and business expertise to establish his own business. His plans crystallised after his wife spent $300 on a pair of reading specs.

"I felt that was rather a lot for a bit of metal and glass so I set about researching the optical industry and sourcing lower prices for glasses," he said.

"It involved a fair bit of digging - I phoned all the suppliers who made the lenses and found the costs weren't high. Glasses that sell for $300 typically cost around $40 to make. I realised I could make and sell glasses for 70 per cent less."

Four months before GlassesOnline went live, Reece quit his full-time job to devote his efforts "full time into developing the GlassesOnline website in conjunction with website builder, Surry Hills based 4mation, which I found on Google."

Online customers enter details of their prescription - which must be no older than two years - and select a frame. "Eye tests are usually covered by Medicare and by law, optometrists must supply their customers with a copy of their prescription upon request," Reece explained.

Australian laboratories make up the prescription lenses on a contract basis and then the GlassesOnline team of Optical dispensers carry out quality control measures as required under law.
The measurements of all frames on offer are listed on the website and the frames themselves (mostly manufactured in China) are sourced from suppliers which also stock mainstream retailers such as Paris Miki. The process from ordering to receiving the glasses takes no more than two to three weeks.

In a bid to drive sales via heightened awareness, Reece has commissioned PR agents to get the message out via email marketing campaigns and has just engaged a marketing agency to profile customers to enable better targeted campaigns.

"Anecdote tells us our customers are aged 35 to 55 who have been wearing glasses for a few years and who need to update their prescription. We also have a lot of rural customers, but we want to find out more."

Ongoing website optimisation enables GlassesOnline to be at the top of natural listings but Reece also invests in Google AdWords. Supplementing organic growth and word-of-mouth are strategic partnerships Reece has also forged.

"We've linked in with some partners such as bank reward programs and many ophthalmologists refer people to us as we took the initiative to write to them about our cost-saving prescription glasses."

It's said there's no such thing as bad publicity and ruffling a few feathers while carving a share in the market has generated significant media interest.

Making a spectacle
Reece was forced to take legal action when an optical dispenser posing as a customer attempted to sabotage GlassesOnline relationship with a key commercial partner through spurious allegations. Rightly claiming the moral high ground, Reece won the case and maintains that partner's confidence and business.

But unwilling to share their territory and unhappy about the exposure of mark-ups of up to 1000 per cent, other industry competitors - optometrists and optical dispensers - have dug in their heels by pressuring the Optical Dispensers Licensing Board to investigate GlassesOnline.

Although that turned into a fruitless exercise, the rival forces reunited following significant GlassesOnline publicity, once more prompting the Board to approach the company, this time about their processes and business model. Again, nothing.

One PR agency has colourfully dubbed the fiasco 'Specs whistleblower a pain in the glASSes for big optical retailers'.

"The large optometrist groups see me as a threat and have been trying to shut me down because we undercut their prices. I've had threatening calls from optometrists and have had to change suppliers three times due to pressure put on them from large optometrist groups not to supply us," Reece revealed.

The main fallout has been industry giant Luxottica which controls much of the eyewear market Through their retailers OPSM, Budget Eyewear, Laubman & Pank, Kays Optical, Precision Eyewear and others, the Italian company dominates 40 per cent the Australian market Luxottica is also a major manufacturer and wholesaler and owns (or owns the license to) more than 15 well-known designer names including RayBan, Prada, DKNY, D&G, Versace, Chanel, and Mui Mui. Despite wholesaling frames to the rest of the market, Luxottica has refused to supply GlassesOnline.

Other setbacks have been copy cat businesses in Australia caught nabbing images from GlassesOnline.
If rival groups continue their dirty tricks, the all-Australian GlassesOnline may be forced to look overseas for frame suppliers. But bravely casting it in positive philosophical terms, Reece says "The attention [by the industry] is flattering and we refuse to be intimidated by the big parties.
"Having said that, we have the backing of happy and satisfied customers across Australia, many of whom send us letters of support and encouragement Their feedback is great and support is appreciated and that has kept us going. Without that public support we'd maybe doubt ourselves.

"So this is just a bump in the road. Twice we have been tested and given the all clear. Everything now is in place for us to grow. In a few years we'd like to be mainstream - front of brain and first port of call by consumers - but we don't envisage going into retail via shopping malls etc mainly because that would impact on the cost of goods sold.

"As an online business, we can pass on the significant savings in retail rentals to consumers" says Reece, who wants people to "change their buying habits by purchasing spare pairs of [affordable] glasses - one for the office, one for car, or for home etc."

To cater for burgeoning business, the staff of five has moved to larger offices in inner Sydney's Crows Nest So far self funded, the way ahead, Reece says is to gain financial partners. Capturing a slice of the New Zealand market too could "work well," Reece foreshadows. There may however be one little hurdle to overcome: in a case of evil foresight Luxottica has already registered the equivalent domain name in New Zealand.

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