600 on line stores for ECP's set up by Essilor.......................................

[Geirskogul]

The mentality is wrong. Online there are many places racing to the bottom, but there are also online shops striving for customer service and quality.

Don't think everyone who is trying to open or thinking about opening an online glasses store wants to race for rock bottom prices. At this point they'd get lost in the $4.99 glasses shop noise. Instead, they're starting to poise themselves a cut above the rest with lower but not unreasonably low prices.

This is standard growth in any industry where a middleman is cut out (which online tends to do). Study what happened when refrigerated boxcars and frozen foods (peas) happened. Same thing. Rush to the bottom of prices, market saturation, then slow rise back up as manufacturers AND food shippers put quality (slightly) higher than sheer quantity. The similarity is uncanny.

[MichaelP]

That's definitely our strategy. We can't compete with $8.00 pairs, and the service and quality hit we'd have to take to be able to sell that cheaply isn't worth it. Online doesn't necessarily mean lowest prices, just lower prices.

[Chris Ryser]

I think it would be foolish for any ECP to sign up for this. The only sales that it'll generate will be to your existing customer base. ..........................

What this does do is condition your customers to buy online. It also gives Essilor direct access to your patient data. Ever since Varilux was introduced they've been into direct consumer branding and marketing, and it seems only a matter of time until they sell directly to consumer......................

............................ At the very least I wouldn't be ignorant of Coastal Contact's $20 million of (rapidly growing) eyeglasses sales last year, nor of 1800Contacts' success.

By being owner of Frames Direct, (right now the largest) they also have the largest direct consumer market.

Coastal does not seem to be a venture any more, and there could be some Essilor action over the next 12 month which would sew up the North American market for them.

[KStraker]

As others have said, it would be pretty easy to match those lens prices and do the work in house.

[Chris Ryser]

As others have said, it would be pretty easy to match those lens prices and do the work in house.

As the editor of "EyeCareProfessional" writes in this month edition:

" It may seem like a cliche', but you can't say it enough - differentiate !" Promote anything the that the chains don't do as :

"We repair your frame, we remove your scratched AR coating on the spot, we put new lenses in your current frame, ect."

Much of this work can be done yourself, without breaking your patients budget, and hopefully they will reward you when the economy really turns around.

Source: Rx for the Recesssion

[kcount]

If you were to go back and look at the retail power industry and the deregulation that happened there you can find some interesting points. In a paper from 2001 by Paul J. De Martini, Partner, ICF Consulting, Mr. De Martini discusses how the deregulation of the power industry did not result in the increased profits predicted at its on set. That the the liquidity of the markets and the observed behavior of the participants and the markets bias towards the "status quo" combined in the failure of the system. In effect reducing the number of power suppliers to four or fewer after 2 years.

Mr. De Martini goes on to describe the situation as it can be described in Game theory.
The retail markets fell pray to a phenomena called Winners Curse. In simplified terms, Winners Curse is when a number of bidders compete for product/commodity. The bidding for a commodity continues until one player has bid above the actual value of the product. Yes the player won the bidding but now has an overvalued product.
Status Quo Bias is when a retailer begins to make decisions based not on value or price but an aversion to losing the sale. Thus an incumbent bidder in the Winners Curse phenomena is more likely to reduce their margins on the sales side to reduce the risk of losing the customer. Although this sounds like a winning position for both supplier and consumer the results of this tactic place the supplier at risk due to an unstable financial situation and the consumer at risk due to unstable suppliers.

Game theory would suggest that retailers will place themselves into poor pricing strategies in order to secure customers in newly opened markets. We can see this in online eyewear today. Yes there are several large suppliers and 'players' in this new game. As in infinite number of players rush in to the new market, prices will drop as margins are cut in order to gain larger market share. In a 1996 paper by J. Scott Armstrong, Marketing Professor at Wharton School at the University of Pennsylvania and Fred Collopy of Case Western Reserve University summarized a host of studies showing that "competitor-oriented objectives such as greater market share to achieve greater profitability, is a harmful myth." In reality what companies end up with is a greater share of a market that has little or no ROI (Return On Investment). An example of this can be seen in the 'Video Game Wars' between Microsoft with the Xbox and Sony with the Playstation. Both companies fought for greater market share resulting in an over valued product. Sony is reported to be losing $240+ per Playstation 3 it sells (per 2006 numbers). In this battle for market share Nintendo, who wasn't even in the race, came out the winner selling a modest game system that was inexpensive to produce and easy to use. Nintendo with the smallest marketshare is actually the most stable and has the greatest possibilities for growth.

The thing to understand is that business is not a sporting event. If one company wins another doesn't lose. The key is to play your strengths and recognize your limitations. Yes, online eyewear is a threat but,in this arena we would all be best served to sit on the sides and let those foolish souls rush in. Our businesses are based on brick and mortar, face to face meetings. The virtual optician is not our domain. We, or at least I, will be better off fixing the problems of on-line patient and then presenting quality and service along with the only aspect in the equation not to be commoditized... me.


Ref:
http://www.icfi.com/Publications/doc...etailPower.pdf
http://knowledge.wharton.upenn.edu/a...articleid=1645
http://www.ewyorker.com/archive/2006...printable=true

[Chris Ryser]

We, or at least I, will be better off fixing the problems of on-line patient and then presenting quality and service along with the only aspect in the equation not to be commoditized... me.

.........a very nice post making a lot of sense, and also the conclusion is well stated. Any comments ?

[Laurie]

+111111111111111111

to the third order.

: )

[Chris Ryser]

+111111111111111111

to the third order.

could we maybe have a little more comments Laurie ?

[Speed]

They have merged the OLA with the Vision Expo now. I guess the big E realized they were spending much $$$ sending their employees to the OLA to look at equipment that they sell and paying a lot of $$$ to rent space to sell equipment to themselves. :bbg:

[Drwells]

You are very perceptive! Brick & mortar vs on-line--- the fight is on.

[kcount]

You are very perceptive! Brick & mortar vs on-line--- the fight is on.

Actually my stance is that On-line is a red herring. I don't battle with it because I am not looking for the on-line purchaser as a customer. If one comes in to my office I will help them with whatever concern they have. Hopefully my service and skill set will bring them over to buying from my store. In the end I am not looking for the 'Price shopper" as they are not loyal or reliable. Rather I am looking for clients that value service and quality. These people are loyal to a providor and become fans and supporters. To quote Seth Godin, "In every tribe there are insiders and outsiders." On line customers are outsiders, they dont understand or value what I sell. As such I do not value their patronage.

[Chris Ryser]

These people are loyal to a providor and become fans and supporters. To quote Seth Godin, "In every tribe there are insiders and outsiders."

..........................On line customers are outsiders, they dont understand or value what I sell. As such I do not value their patronage.

As in our time we are living right now, I wonder if the outsiders today have become such by choice or forced to become one by economic conditions. As the total unemployement is around 10% that would put these outsiders to about 31/3 millions in the USA. That represents an awful lot of glasses to be sold over the next few years.

There has to be a fair amount of people among them that were not born to be so called outsiders but have been put there by the recent circumstances.

Hoe are you going to help them ?

[uncut]

How are you going to help them?

Unfortunately Chris, they can't be helped. It will not change until the north American values turn away from:

1) Aspiring to mediocrity.
2) Mass marketers stop pitching the buy cheap, save money pitches(a false economics).
3) Consumer wisdom increases, and demand for quality products rises.
4) False advertising is dealt with, seriously.
5) Education of the masses returns to "leaving child behind".
6) Corporate greed reduces, and production/pride in craftsmanship returns to the North American continent.

[Chris Ryser]

It will not change until the north American values turn away from:

1) Aspiring to mediocrity.
2) Mass marketers stop pitching the buy cheap, save money pitches(a false economics).
3) Consumer wisdom increases, and demand for quality products rises.
4) False advertising is dealt with, seriously.
5) Education of the masses returns to "leaving child behind".
6) Corporate greed reduces, and production/pride in craftsmanship returns to the North American continent.

As any of above points are most probably not going to change in the near future, we can watch the European countries slowly turning towards the North American System as an economic example.

I just watched a computer technician working for 2 hours last Sunday, on one of my computers. He was working for Symantec USA, but located in Northern India working on my computer in Naples FL, at a cost of US $ 130.00.

Are we on the way of becoming a modern 3rd world country ?

[Jubilee]

We have a local doctor who will do anything and pitch anything to make a buck. He has a fairly upscale dispensary.. but took a group of closeouts, value priced frame lines (casino, capri) and used those to create a website for those wanting to something cheaper. Basically all stuff purchased in the actual office/store gets full warranty and service. Looking to save a buck? Place the order yourself (with different product than what's in the store) online and they aren't responsible for any issues except out right defects in materials.

I am sure many other offices has a similar set up in mind. Much more limited service, or a fee for service model instead of the global "dispensing" fee covering adjustments, minor repairs, etc that we currently do.

[Laurie]

Chris,

Glad to see you are well, back on board and in sunny, chilly Florida : )

You wrote:

"could we maybe have a little more comments Laurie ?"

I would just be re-writing my comments on the other thread where I added a bunch of stuff...you can check out the 'consumer beware' thread...

Hope you are having a nice holiday,

Happy New Year 'Boarders!

: )

Laurie

[rdcoach5]

Actually my stance is that On-line is a red herring. I don't battle with it because I am not looking for the on-line purchaser as a customer. If one comes in to my office I will help them with whatever concern they have. Hopefully my service and skill set will bring them over to buying from my store. In the end I am not looking for the 'Price shopper" as they are not loyal or reliable. Rather I am looking for clients that value service and quality. These people are loyal to a providor and become fans and supporters. To quote Seth Godin, "In every tribe there are insiders and outsiders." On line customers are outsiders, they dont understand or value what I sell. As such I do not value their patronage.

How much do you help them? Do you provide help in ordering online? PD's? seg height help? My Dr has taken the stance - no help if purchased online. No checking Rx or adjustment either.

[kcount]

As in our time we are living right now, I wonder if the outsiders today have become such by choice or forced to become one by economic conditions. As the total unemployement is around 10% that would put these outsiders to about 31/3 millions in the USA. That represents an awful lot of glasses to be sold over the next few years.

There has to be a fair amount of people among them that were not born to be so called outsiders but have been put there by the recent circumstances.

Hoe are you going to help them ?

Chris, Yes of the 31.3 Million people unemployed there would be a goodly number of eyewear purchasers if not for one small issue. They're ALL UNEMPLOYED! These people are not buying glasses now and won't be in the market until 1. the eyewear thay have breaks or is lost. 2. They get a new job.

If the eyewear breaks they will want to go cheap and reuse the lenses if possible. If they need a complete pair they'll make that purchase. If the price is too high they'll go to For Eyes or Costco or some other discounter. As a whole these peole are putting off new eyewear for as long as they can. They always have a choice of purchasing from a B&M or virtual store. being unemployed doesn't change this. It's going to come down to what that person values in the purchasing process.

[kcount]

How much do you help them? Do you provide help in ordering online? PD's? seg height help? My Dr has taken the stance - no help if purchased online. No checking Rx or adjustment either.

No PD's I don't give them out and won't take them for people. Period the end. This is easy for me as I don't have a doctor in house and would be amazed if someone actually asked me for the info.

Adjustments? Sure, happy to help and while they're here I'll say, "By the way Ms. Smith have you seen these beautiful sunglasses I just commissioned? Thats right its one of my own designs..." The reality is that by doing the adjustments for free since openening last year I have garnered many a good customer and sale and alot of goodwill. I don't care where you buy your product, I will help you.

Your Doctors stance is comendable but what is the difference between buying a frame on-line and asking for an adjustment, and buying a frame from a big box retailer and then asking you for an adjustment? The Answer, nothing. Both instances give you the opportunity to make a new fan and from fans come customers.

[drk]

Jubie: Said local doctor is violating Indiana's dispensing law, and is liable. "Hoosier Dr.", no doubt.

[RT]

As the total unemployement is around 10% that would put these outsiders to about 31/3 millions in the USA.

That's not what 10% unemployment means. The population of the US is 308MM people, but not all of them are in the employment market. There are kids, seniors, disabled, students, etc. who are not counted as part of the "employable" population. According to the Bureau of Labor Statistics, the November unemployment rate was 9.3%, representing about 14.2MM people. Certainly that's a lot of people, but it's a lot less than the 31MM you assume. http://www.bls.gov/cps/

Chris, Yes of the 31.3 Million people unemployed there would be a goodly number of eyewear purchasers if not for one small issue. They're ALL UNEMPLOYED! These people are not buying glasses now and won't be in the market until 1. the eyewear thay have breaks or is lost. 2. They get a new job.

KCount: Other than parroting a bogus stat from Chris, this is a really perceptive comment. You need to tailor your business to the 90.7% of the population who are employed, rather than the 9.3% who are not. And as a (long ago) Mathematics major who has actually taken courses in Game Theory, I thoroughly enjoyed your earlier post. Thanks.

[Chris Ryser]

According to the Bureau of Labor Statistics, the November unemployment rate was 9.3%, representing about 14.2MM people. Certainly that's a lot of people, but it's a lot less than the 31MM you assume. http://www.bls.gov/cps/

............you have made a good point, however I learned that once the un-employement by the governent stops, these still unemployed people are not counted as un-emplyoyed anymore. They are now on welfare, foodstamps and any other help they can get.

So therefore counting these people on top of the offical figures sees to be just normal and the figures are up again. Andf most of them will take a long time to get employed again.

Your middle class jobs with any of the larger corporations have been and are still shifted at the moment mainly to India. Just ask anybody you talk to on the phone where they are located and you will get the surprise of your life. From the telephone company to American Express service employees they are all in India. And this applies for Canada as well as the USA.

[For-Life]

If your unemployment ends, you can still be counted. As long as you are actively seeking work, you are in the labour market.

[eye2]

As any of above points are most probably not going to change in the near future, we can watch the European countries slowly turning towards the North American System as an economic example.

I just watched a computer technician working for 2 hours last Sunday, on one of my computers. He was working for Symantec USA, but located in Northern India working on my computer in Naples FL, at a cost of US $ 130.00.

Are we on the way of becoming a modern 3rd world country ?

I hate to say it but were already there as a 3rd world country or fast becoming one.
Look at our infrastructure and all the social programs. Three things that caused the fall of the Roman empire was 1. Infrastructure started to fail. 2. Government more concerned about welfare projects then the empire itself. 3. Army that was was bought and not really interested in protecting the empire. Sound familiar!