Warby Parker Competitors Analysis

Warby Parker is a direct-to-consumer eyewear company. It designs, manufactures, and sells prescription glasses, sunglasses, contacts, and other eyewear accessories like lens cleaning wipes and cases. The company also offers vision tests, eye exams, and free home try-on kits.

Founded in 2010 by Neil Blumenthal, Andrew Hunt, Jeffrey Raider, and David Gilboa, Warby Parker is a multi-platform company headquartered in New York City. It started as an online-only retailer with a home-try-on program but now has 161 brick-and-mortar locations across the United States and Canada. The company’s growth, given its relatively short history, is impressive.

It started with a seed investment of $2,500 through a Venture Initiation Program at the University of Pennsylvania. Later in 2011, it raised $2.5 million in its first round of funding and $12.4 million in its Series A. After ten years and six rounds of funding, the company has raised $640 million. The last round was in 2020, when it raised $245 million, which left the company’s valuation at $3 billion.

A study by Grand View Research estimates that the eyewear market will grow at a compound annual growth rate (CAGR) of 8.4% from 2022 to 2030. If the study is anything to go by, the $157.9 billion eyewear industry is set for explosive growth in the next eight years. This Warby Parker competitors analysis looks at the top five companies competing in the same space and offers insights into their market positions, financials, strengths, and weaknesses.

Bottom Line Up Front

The Warby Parker competitive landscape is a mix of large companies with a long history in the eyewear industry and newer, direct-to-consumer startups. Despite competing in a highly fragmented market, it is a disruptor in the industry. It has a unique business model, a strong focus on social responsibility, and a track record of impressive growth.

Top 5 Warby Parker Competitors

Warby Parker Business Model and Strategy

Warby Parker uses a hybrid business model of online and brick-and-mortar channels. Its direct-to-consumer approach helps it keep prices low, while its brick-and-mortar locations allow customers to try on glasses before making a purchase. It drives revenue directly from the sale of its products and doesn’t rely on third-party retailers or intermediaries.

The company leverages its Buy a Pair, Give a Pair program to drive growth and create social impact. Moreover, its Home Try-On program allows customers to try on five frames for free for five days. Once they decide which frame they want, they can order it online or through one of its retail locations. One of its main competitive advantages is its vertically integrated business model, which allows it to offer high-quality products at a lower price.

Warby Parker Financial Performance and Growth Potential

On September 29, 2021, Warby Parker went public through a direct public listing (DPO) on the New York Stock Exchange (NYSE). Unlike an initial public offering (IPO), a DPO doesn’t raise any primary capital, and existing shareholders sell their shares to the public. The company’s DPO was successful, with the stock closing at $53 per share, up from its reference price of $40 per share.

Despite the strong performance, some industry experts were cautious about the company’s long-term prospects arguing that the company was overvalued at more than $6 billion in market cap. Moreover, it has never been profitable since its founding in 2010. In fact, it had a net loss of $55.9 million in 2020 against revenue of $393.7 million.

However, given the eyewear industry’s expected growth, we believe the company has enormous growth potential. Moreover, Warby Parker has plans to expand its brick-and-mortar locations and further grow its online presence. In 2020 it opened 35 stores and plans to open forty more by the end of 2022.

At the end of FY2021, Warby Parker had 2.20 million active customers, a 22% increase from FY2020. Its revenue increased 37% to $540.8 million in 2021, while its gross profit dollars improved 37% to $317.17 million. However, its net loss increased by $88.4 million to $144.3 million in 2021. The company’s adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $24.9 million in 2021, up from $17.2 million in 2020.

It’s also important to understand that institutional investors hold about 98.6% of the company’s Class A shares, while insiders and employees own 25.4% of its Class B shares. Usually, strong institutional ownership is a positive sign, as it indicates that these investors are confident about the company’s long-term prospects.

See also: Airtable Competitors Analysis

Warby Parker Competitor Analysis

Warby Parker competes for market share in the eyewear industry. Some of its competitors are large, well-funded companies with significant resources. Others are small, niche players with a substantial following among a specific group of consumers.

Below is an analysis of Warby Parker’s top five competitors.

1. Bausch & Lomb Inc.

Bausch & Lomb is one of the world’s oldest and largest eyewear companies. Founded in 1853 in Rochester, New York, it is a global provider of vision and eye health products such as contact lenses, lens care products, pharmaceuticals, and surgical devices. It has its headquarters in Laval, Quebec, Canada.

Before its acquisition by Warburg Pincus in 2007 and later by Valeant Pharmaceuticals in 2013, Bausch & Lomb was a publicly-traded company listed on the New York Stock Exchange (NYSE). It currently trades on the Toronto Stock Exchange (TSX) under the ticker symbol BLCO.

Bausch & Lomb has a diversified product portfolio with a strong focus on eye care. In 2021, it generated revenue of $3.77 billion, a 10.35% increase from 2020. Its net income was $182 million in 2021, compared to a net loss of $144.27 by Warby Parker.

As of July 12, 2022, it had a market cap of $7.304 billion and an enterprise value of $2.08 billion. The company’s geographical distribution plays to its advantage, with 60% of its revenue coming from the Americas, 30% from EMEA, and 22% from Asia-Pacific. Moreover, it’s the market leader for consumer eye care products in India and China, with over 100 million customers.

While we could say Warby Parker is a ‘David’ to Bausch & Lomb’s ‘Goliath,’ the latter’s size, resources, and geographical diversity make it a tough competitor. However, analysts believe that Warby Parker is more favorable than Bausch & Lomb because Warby Parker has a consensus price target of $32.20, compared to Bausch & Lomb’s $23.33, suggesting a potential upside of 137.29% and 48.15%, respectively.

2. CooperVision

CooperVision is part of the larger Cooper Companies, which also includes CooperSurgical. It’s a leading global manufacturer of contact lenses and related products, with its headquarters in San Ramon, California. Founded in 1958, the Cooper Companies went public in 1983; today, it trades on the NYSE under the ticker symbol COO.

The CooperVision segment develops, manufactures, and markets a full range of corrective contact lenses, including spherical, toric, multifocal, and silicone hydrogel lenses. It competes with Warby Parker in the daily disposable, monthly replacement, and multifocal contact lenses market.

In 2021, Cooper Companies generated revenue of $2.922 billion, a 20% increase from 2020. At the end of the fourth quarter of 2021, CooperVision contributed revenue of $564.8 million, an increase of 12% from the previous year. The CooperSurgical segment generated revenue of $194.3 million, an increase of 11% from the fourth quarter of 2020.

These financials bring out two key points. Firstly, the Cooper Companies are much smaller than some of Warby Parker’s competitors. Secondly, a significant portion of its revenue comes from its CooperSurgical segment, unrelated to Warby Parker’s business. Therefore, while Warby Parker may be a competitor to CooperVision, the latter isn’t as significant a threat as some of the other companies on this list.

However, CooperVision still has some competitive advantages. For example, it strongly focuses on the disposable contact lens market, the fastest-growing segment of the contact lens market. It also has a wide range of products, including daily disposable, monthly replacement, and multifocal contact lenses. Warby Parker must be aware of these strengths as it looks to expand its market share.

3. EyeBuyDirect

Founded in 2005, EyeBuyDirect is an online retailer of prescription eyewear headquartered in Austin, Texas. The company sells a wide variety of frame styles for both men and women, as well as sunglasses. It offers a virtual Try-On feature, allowing customers to see what specific frames look like on their faces before making a purchase.

One of the critical differentiators that EyeBuyDirect has is its pricing. It offers a much more comprehensive range of affordable options than Warby Parker, with frames costing as low as $6. Additionally, the company provides a 15% discount to first-time customers.

EyeBuyDirect and Warby Parker compete in the online prescription eyewear market. As a private company, EyeBuyDirect doesn’t disclose its financials. However, industry experts estimate that the company generates annual revenue of about $100 million. This figure is significantly lower than Warby Parker’s revenue, which was $540.8 million in 20201.

While EyeBuyDirect may not be as big of a competitor as some of the other companies on this list, its pricing strategy is a significant threat to Warby Parker. The company will need to find a way to compete on price without sacrificing profitability. Moreover, it’ll need to continue to invest in marketing and customer acquisition to maintain its market share.

See also: Tonal Competitors Analysis

4. Johnson & Johnson Vision

Johnson & Johnson Vision is a subsidiary of Johnson & Johnson, one of the largest healthcare companies in the world. The company’s headquarters are in Jacksonville, Florida, and it operates in over 60 countries. Johnson & Johnson vision care products include contact lenses, lens care solutions, and ophthalmic instruments.

Johnson & Johnson is a much larger company than Warby Parker, with a revenue of $93.8 billion in 2021. However, the vision care segment accounted for $4.7 billion, representing a 19.6% year-over-year increase. Still, the revenue generated by Johnson & Johnson Vision Care is more than double that of Warby Parker.

Johnson & Johnson has a wide variety of products, including daily disposable, monthly replacement, and multifocal contact lenses. It also offers a wide range of lens care solutions. In addition, the company has a strong presence in both the U.S. and international markets. Warby Parker will need to be aware of these strengths as it looks to expand its market share.

The biggest threat that Johnson & Johnson poses to Warby Parker is its size and scale. As a large company, Johnson & Johnson has the resources to invest heavily in marketing and customer acquisition. Its economies of scale can also offer lower prices than Warby Parker.

5. EssilorLuxottica

Luxottica is an Italian eyewear company founded in 1961. The company designs, manufactures, and distributes a wide range of optical and sun wear products. Its brands include Ray-Ban, Oakley, Persol, Oliver Peoples, Vogue Eyewear, and Arnette. Additionally, Luxottica is licensed to produce eyewear for several designer brands, including Chanel, Prada, Burberry, and Versace.

Luxottica merged with Essilor in 2017 to create EssilorLuxottica, a French-Italian multinational corporation. The merger combined Luxottica’s manufacturing and distribution expertise with Essilor’s optical lens technology. As such, the new company is the largest eyewear company in the world, with a market capitalization of $64.966 billion as of July 12, 2022.

EssilorLuxottica is a much larger company than Warby Parker. In 2021, its revenue was 19.82 billion Euros, while Warby Parker’s revenue was $540.8 million. The company has a strong presence in the eyewear industry’s manufacturing and retail sides. Also, its brands are some of the most recognizable worldwide.

Warby Parker competes for customers with EssilorLuxottica’s retail brands, such as Ray-Ban and Oakley. However, the company’s biggest threat is its economies of scale. As the largest eyewear company in the world, EssilorLuxottica can offer lower prices than Warby Parker. Moreover, its manufacturing and distribution expertise gives it a competitive advantage regarding product availability.

Warby Parker SWOT Analysis

Below is a SWOT analysis of Warby Parker.

Strengths

Low-cost business model – Warby Parker has a low-cost business model that allows it to sell its products at a lower price than its competitors
Vertically integrated – Warby Parker is a vertically integrated company that controls the entire process, from product design to manufacturing to distribution
Strong online presence – Warby Parker has a solid online presence, with a website that’s easy to navigate and a wide selection of products
Innovative marketing – Warby Parker’s marketing is innovative, with a heavy focus on social media and viral marketing campaigns
Strong brand – Warby Parker has built a strong brand associated with quality, affordability, and social responsibility
Strong financials: Its cash and cash equivalent for 2021 was $ 256.4 million
Increasing customer base: The Company had 2.2 million active customers as of March 17, 2022, a 22% increase from the previous year

Weaknesses

Unprofitability: Warby Parker isn’t profitable, with a net loss of $144.3 million in 2021
High customer acquisition costs: Warby Parker’s customer acquisition costs are high, as it spends heavily on marketing and advertising
Heavy reliance on the U.S. market: Warby Parker is heavily reliant on the U.S. market, with more than 90% of its revenue coming from the U.S

Opportunities

Expansion into new markets: Warby Parker has opportunities to expand into new markets, such as Europe and Asia
Launch of new products: Warby Parker can launch new products like advanced eyewear, contact lenses, and prescription glasses
Acquisition of other companies: Warby Parker can grow through acquisitions, such as buying a competitor or an eyewear company

Threats

Competition from larger companies: Warby Parker faces competition from larger companies like EssilorLuxottica and Johnson & Johnson
Competition from online retailers: Warby Parker also faces competition from online retailers like Amazon and Walmart
Changes in consumer tastes: Warby Parker’s products may become less popular if there are changes in consumer tastes

Warby Parker Competitors Analysis (FAQs)

Question: Who is Warby Parker’s biggest competitor?

Answer: Warby Parker competes in a highly fragmented industry with many competitors. As a hybrid company, its main competitors are online retailers and brick-and-mortar stores. However, Warby Parker’s biggest competitor is EssilorLuxottica, the largest eyewear company in the world. Others include Bausch & Lomb, CooperVision, and Charmant Group.

Question: What is Warby Parker’s competitive advantage?

Answer: Warby Parker has several competitive advantages. Its low-cost business model allows it to sell its products at a lower price than its competitors. Moreover, it has quite a robust online presence and an expanding brick-and-mortar network. Its strong focus on customer service and experience sets it apart from many of its competitors.

Question: Who is Warby Parker’s target market?

Answer: Warby Parker mainly targets millennials looking for stylish, high-quality, affordable eyewear. However, its products are also popular among baby boomers and Generation Xers. Warby Parker’s key target markets are the United States and Canada.

Conclusion

The eyewear industry is very competitive, with several large companies vying for market share. Warby Parker carved out a niche as a hip, affordable eyewear brand. However, it faces stiff competition from well-established multinationals such as EssilorLuxottica, Johnson & Johnson Vision, Bausch & Lomb Inc., and other startups such as EyeBuyDirect.

Warby Parker’s main competitive advantage lies in its low prices, online presence, and customer service. Its focus on style and experience resonated with millennials, its key target market. While Warby Parker has successfully grown its business, it must further innovate and differentiate itself to stay ahead of the competition.

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John Hughes

John Hughes is a seasoned expert in digital marketing strategy, business model analysis, and financial insights. Possessing a robust background in finance, his expertise extends into deciphering complex business models, conducting comprehensive SWOT analyses, and staying attuned to the latest market trends.