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Thread: Egads! Costco can't be serious!

  1. #1
    What's up? drk's Avatar
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    Egads! Costco can't be serious!

    We just got a Costco in the neighborhood. Check out these prices :drop:

    Ovation CR39: $89.99/ pair
    Ovation poly: $99.99/pair
    AR coating: $29.99


    What the #$%% is going on here!? That's below my acquisition cost!

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    WELCOME TO THE JUNGLE!!


    Very Scarry!!!!

    You can thank Essilor for that wonderful price situation.

    I guess all the Essilor lovers will be glad to be "partners" with such a great company that stabs them!



    PS. I would also blame Zeiss, Hoya, Younger, etc if they had advertised prices as low for there brands. I am not only hating on Essilor.

  3. #3
    What's up? drk's Avatar
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    They have to be taking the same "dispensing fee" on these as they do SV lenses!

    I don't see how you can measure and troubleshoot progressives for that little (maybe they don't...)

    I guess with "one progressive for all", there's very little to think about, though.

    Essilor is trying to have it both ways:
    1.) Physio family for independents
    2.) Accolade, Ovation, et. al., for the commercial chains.

    I don't appreciate it, quite frankly.

    As to Costco, holy smokes, what are they trying to do? I mean, I understand underselling the market, but this is an obscene precedent.

    If this catches on, we are going to be Mc'Ticians for sure. How can you cut that many costs?

    We'll see if they survive this concept. I hope they burn.

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    Looks like they've got us on lenses for sure. What do we have that they don't have, hmmmm. Service? Experienced Opticians? Insurance acceptance? Range of products and information? Better frame selection? Yes, to all of those. Oh, and don't forget "atmosphere". Not everyone is so price conscious that they prefer to buy their eyewear in a pole barn.

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    ATO Member HarryChiling's Avatar
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    Quote Originally Posted by drk
    Ovation CR39: $89.99/ pair
    Ovation poly: $99.99/pair
    AR coating: $29.99


    What the #$%% is going on here!? That's below my acquisition cost!
    Now might be a great time to sell better product and to call in your lab rep and see if they are really giving you the best price.
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    Manuf. Lens Surface Treatments
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    Redhot Jumper What the #$%% is going on here!?........................

    Quote Originally Posted by drk View Post
    What the #$%% is going on here!? That's below my acquisition cost!
    drk.........................when Costco opens up next door the local optical retailer suddenly wakes up.

    For the last 4 1/2 years I been saying that the manufacturers do sell to the big ones for a real value price while the independent retailer pays a highly inflated price. They also repackage common products call them another name and sell them for even less here, and in other countries.

    Ask your manufacturers rep for a price list as for example in the Congo and you might see even Costco looking in awe.

    I have said for years that molding a PAL in CR39 cost's peanuts and one in poly is a fraction of the peanuts. But all of you guy's had it made easy by the advertising hype on these lenses for which you actually have been paying dearly and now with the economy taking a major dip and people are looking for bargains you might become the looser.

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    Quote Originally Posted by cocoisland58 View Post
    Looks like they've got us on lenses for sure. What do we have that they don't have, hmmmm. Service? Experienced Opticians?

    Be careful here. I believe that most, if not all, Costco opticians must have a ABO certificate. And actually, some of there opticians have a huge amount of experience and knowledge. Check Optiboard for a member: William Walker. He may be a diamond in the rough, but the likes of him are growing!

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    Optical Chemical Manufacturer
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    Sell something else

    My suggestion is to select a product assortment that is not in Costco, if they are your real competition. If you drive your business on the basis of low selling price you will not pass the test of time. Your product assortment must be different from others, because there will always be some guy out there willing to sell his goods for a ridiculous price.

    A wise fellow taught me something very important a long time ago.

    Retail is the art of buying, not the art of selling. If you buy something correctly you can afford to reduce the price when times get difficult.

  9. #9
    Master OptiBoarder Grubendol's Avatar
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    Quote Originally Posted by drk View Post
    If this catches on, we are going to be Mc'Ticians for sure. How can you cut that many costs?
    This is the way of our modern "free market" society. Free trade is dangerous to the workers and great to the "shareholders"
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  10. #10
    What's up? drk's Avatar
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    Quote Originally Posted by LKahn View Post
    A wise fellow taught me something very important a long time ago.

    Retail is the art of buying, not the art of selling. If you buy something correctly you can afford to reduce the price when times get difficult.
    That is going to need to soak into my head for awhile, but I like it...

  11. #11
    Master OptiBoarder ziggy's Avatar
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    Quote Originally Posted by drk View Post
    I don't see how you can measure and troubleshoot progressives for that little (maybe they don't...)
    Just a couple of points. I seen a report(60 minuets?) and it said that fewer than 5% of people will ever return anything. They were talking about crap sold on TV with a money-back guarantee. So if no one ever comes back you dint have a problem. If, with your progressive, you shoot for the lens that will fit the most people, such as ovation, you to could offer lower prices. Lastly, put in your own full service lab. That way you can select the lens that will get you the best profit margin and take care of the needs of your patient at the same time.
    Last edited by ziggy; 01-23-2007 at 02:15 PM. Reason: I cant spell
    Paul:cheers:

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    Master OptiBoarder Darryl Meister's Avatar
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    For the last 4 1/2 years I been saying that the manufacturers do sell to the big ones for a real value price while the independent retailer pays a highly inflated price.
    Chris, I realize that this is the start of another one of your tirades against lens manufacturers, but volume pricing is a standard business practice in any industry. And, often, it involves contractual obligations on the part of the buyer, as well. For that matter, the cost of production also goes down with volume. I suggest you compare the prices of other, non-optical products in Costco to comparable products from small retail establishments to see this for yourself.

    I have said for years that molding a PAL in CR39
    And, as I have said for years, this is an ill-informed opinion.
    Darryl J. Meister, ABOM

  13. #13
    Master OptiBoarder
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    I recently read that Costco nets around 2-4% on their products. Whether it be a pair of glasses or 3 bottles of ketchup.
    The profit on their memberships, alone is in the millions!

  14. #14
    Bad address email on file k12311997's Avatar
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    Quote Originally Posted by Darryl Meister View Post
    I suggest you compare the prices of other, non-optical products in Costco to comparable products from small retail establishments to see this for yourself.
    Most other things in Costco are not half to a third of other retailers. To the consumer you buy in bulk a 5lb tub of mayo but not 5 pairs of glasses to recieve the benefits.

    Essilor is having a dinner meeting at Morton's of Chicago in Pittsburgh to convince me and other local opticians to sell Physio . I'm going for the free meal. If I recommend something it is because I've seen it work or, I've read posts on Optiboard and the product is well recieved. The more a product is marketed to me the less likely I'm to use it, if it is so good why the hard sell.

  15. #15
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    Quote Originally Posted by k12311997 View Post
    Most other things in Costco are not half to a third of other retailers. To the consumer you buy in bulk a 5lb tub of mayo but not 5 pairs of glasses to recieve the benefits.

    Essilor is having a dinner meeting at Morton's of Chicago in Pittsburgh to convince me and other local opticians to sell Physio . I'm going for the free meal. If I recommend something it is because I've seen it work or, I've read posts on Optiboard and the product is well recieved. The more a product is marketed to me the less likely I'm to use it, if it is so good why the hard sell.
    Actually you can save big, on just one bottle of wine, one chocolate cake one set of tires, or one pair of pants. Optical is not the only dept. that you only need to buy one to save big.

  16. #16
    Master OptiBoarder Darryl Meister's Avatar
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    Most other things in Costco are not half to a third of other retailers. To the consumer you buy in bulk a 5lb tub of mayo but not 5 pairs of glasses to recieve the benefits.
    Costco buys in bulk, and generally sells in bulk at very low profit margins, "making it up in volume" as they say. While they may or may not have negotiated an unusually favorable price with Essilor, they have a completely different business model than independent eyecare professionals, and have the buying leverage of a mass-market retailer. Although a typical customer may buy only one pair of lenses, the company is still selling them to a lot of customers. And, as far as we know, they could be selling products like eyeglasses at a loss (that is, a "loss leader") simply to get people buy mayo while they're in the store.
    Darryl J. Meister, ABOM

  17. #17
    registeredoptician Refractingoptician.com's Avatar
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    [quote=drk;173710]We just got a Costco in the neighborhood. Check out these prices

    Ovation CR39: $89.99/ pair
    Ovation poly: $99.99/pair
    AR coating: $29.99

    quote]

    Your acquisition cost is tooo high ! Costco is still making money and you can too , renegotiate . They are paying less than they sell for .They are making a gooood profit . :cheers:

  18. #18
    Optiwizard making films Audiyoda's Avatar
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    Quote Originally Posted by Darryl Meister View Post
    Chris, I realize that this is the start of another one of your tirades against lens manufacturers, but volume pricing is a standard business practice in any industry. And, often, it involves contractual obligations on the part of the buyer, as well. For that matter, the cost of production also goes down with volume. I suggest you compare the prices of other, non-optical products in Costco to comparable products from small retail establishments to see this for yourself.
    Couldn't have said it better myself. Costco is a membership club. You pay a fee ($45 or $100) for the ability to make purchases at their facility. Paying that membership fee gurantees members a 'near' wholesale price. My wife and I shop there weekly - their optical has a decent selection although fairly basic. Their opticians are knowledgeable and the work I've seen from Costco looks good.

    Here's a good comparison - I picked up a Vizio 43" plasma HDTV from Costco for $1100. The best retail I found locally was $1400. Now I remember from my holiday gig at Best Buy that margin on HD products was around 12-15%. If you figure 15% on that $1400, you've got %1190. I know prices have gone down since I had my holiday gig at Best Buy and margin I'm sure has gone up a bit, but I'd be willing to bet that $1100 I paid is within 3-5% of actual cost.

    For what it's worth - I don't consider Costco competition - I actually refer our most price conscious patients to them over Wally-mart, LensCrafters, Pearle, and/or DOC.

  19. #19
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    Also remember that Costco sells thousands of pairs of glasses everyday. They have their own labs and are able to produce lenses at a much lesser cost to their retail outlets than what any of us pay. Let's say they have $50 into a pair of lenses by the time it leaves their lab. They'll wholesale it to their retail for $60. We probably have to pay $100 for that same lens. They'll retail it for $75 and you and I want...well...you know what you want.

  20. #20
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    Costco Wake Up Call

    Really, why are we so surprised? Is it because we believe that optical should be insulated against big business/mass merchandisers?

    Our industry is not immune to the advance of big retail, just 50 years behind the times. Remember the Mom & Pop grocery stores? (some of us "ancient ones" do). They have been usurped by supermarkets and replaced by 7-11/Circle K convenience stores.

    I agree with others on the board. Buy right/sell right. Mass merchandisers today buy progressives for the value of their design and material range and don't pay a penny extra for marketing hype (about 80% of the cost of basic progressives/maybe 98% of the cost of "fr**form"). They also have highly efficient labs, uniformity in their systems/processes/sales methods and, of course, volume.

    Oh, and don't underestimate the consumer's interest in what's "fair" or a "good value." There's a reason why a consumer would want to pay $99 per pair instead of the $300 per pair for the same thing from their local ECP. Do they trust Costco? Consumer reports thinks so. See:

    http://www.consumerreports.org/cro/p...erm=eyeglasses

    What should you do about it? Don't pay for marketing hype or depend upon "spiffs" to drive your progressive lens business. Find the best lens designs that will suit your customers and negotiate with your labs to get the best prices. Many of the "bargain" or "house brand" progressives from labs out there are as good or better than the "name brand" progressives with all the hype. Generate volume through marketing, and don't chase your customers away with overinflated prices.

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    Optical Chemical Manufacturer
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    Anyone can do it

    If you want to buy a similar number of pieces to Costco, the lens vendor will give you that similar price. The solution is easy, change your assortment away from the Costco assortment. The customer can not price compare if your products are different. For that matter why would you want to sell what everybody else sells? The most successful merchants are uniquely different.

    Costco use its size to its advantage. But, programs are slow to change. Use your small size and change rapidly focusing on the most current styles for example. Change assortments often.

    To compete one maintains a few units based on price point and everything else is sold on fashion, trend and style.

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    Very interesting!! I told my essilor rep about some products I had seen optical warehouses offer and he blantenly told me that Essilor only sales to private individual optical offices. Hmmm...something doesn't sound write?! I think I might need to have a one on one chat with my Essilor sales rep.

  23. #23
    Master OptiBoarder Darryl Meister's Avatar
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    I told my essilor rep about some products I had seen optical warehouses offer and he blantenly told me that Essilor only sales to private individual optical offices.
    Are you sure you're not referring to the "Varilux" brand? Essilor has been selling to retailers for decades, so I would find it surprising that one of their reps was unaware of that fact.
    Darryl J. Meister, ABOM

  24. #24
    What's up? drk's Avatar
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    That's a lot o' mayo:finger:

  25. #25
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    Quote Originally Posted by drk View Post
    We just got a Costco in the neighborhood. Check out these prices :drop:

    Ovation CR39: $89.99/ pair
    Ovation poly: $99.99/pair
    AR coating: $29.99


    What the #$%% is going on here!? That's below my acquisition cost!
    DRK, Just keep doing what you're doing, You'll be fine. I freaked out when Wally went in down the street 8 years ago. My numbers did not take a dip. I have 2 Costcos with 20 miles.

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