New Private Wholesale Lab

[PNKansas]

I know someone who's considering opening up a privately owned wholesale lab within the year. Does anyone have any words of experience, caution, or votes of reassurance they'd like to offer? This would be opened up with a 20 year veteran in the wholesale lab industry, with extensive customer care, and private OD support experience. He is a strong force to be reckoned with in his geographic area in the US, and has the budget to open up his own full-service lab, including most frame repairs in-house.

Thoughts?

[Johns]

I can't imagine the amount of capital it would take, nor the amount of accounts you'd have to already have on board to even begin. I don't know that side of the business like I do retail, but there's got to be a reason why, when Essilor is buying up all the independents, they are not paying top dollar for them.


Best wishes to him!

[mervinek]

Essilor is buying up all the independents
Best wishes to him!

Things aren't what they used to be.. Best of luck!

[PRECISIONLAB]

As a retired lab owner, I would say proceed with caution. When I first entered the market in 2000, I had promises of support from ODs and Opticians who grew frustrated with the service level and quality of the existing local labs (1 ELOA , 1 ELOA partner and 1 independent). It took 2 years to grow market share and become profitable. During my 15 year run, the other independent closed as did the ELOA partner lab leaving just me and ELOA in the entire state.


Things to consider: Is there need for another wholesale lab in the market? The 3 big players Essilor, Hoya and Zeiss have the resources to service, market and gain share in any given city

I underestimated brand loyalty. In the beginning I offered products from all lens vendors (Essilor, Younger, Vision Ease, Zeiss etc) but quickly realized Varilux and Crizal brands dominated the market. It took years to eventually become a distributor and a serious player in the market.

Of importance as well was becoming a VSP provider. To my benefit, when the other two labs closed this allowed for VSP contract lab approval after year 2. This accounted for 35% of revenue and 100% growth in the market. Other plans soon followed.


We were a full service lab having both conventional surfacing and finish in house. In 2010 I could see the future of technology...DIGITAL..fast approaching and did not want to reinvest in the lab. I still offered digital lens via outsourcing but obviously profits were marginal. I believe in order to be competitive and considered a modern lab both digital and AR must be available in house.

In short if I had to do it over I would having enjoyed great relationships with the doctors and opticians who supported my lab through the years. Unfortunately loyalty was not true for others and we were only as good as our last job.

[Paul Smith LDO]

This business arena is no different from any other. The big fish have an appetite and are looking for smaller things to eat. That being said, this industry has room for people that are more then competent, if they can provide grade A service and offer the right product there is room for them to succeed.

[Don Gilman]

I know someone who's considering opening up a privately owned wholesale lab within the year. Does anyone have any words of experience, caution, or votes of reassurance they'd like to offer? This would be opened up with a 20 year veteran in the wholesale lab industry, with extensive customer care, and private OD support experience. He is a strong force to be reckoned with in his geographic area in the US, and has the budget to open up his own full-service lab, including most frame repairs in-house.

Thoughts?

Speaking from 40+ years running a lab, but no more, my answer is NO NO NO NO NO Big bucks to start and constant labor and government headaches.

[Lab Insight]

I know someone who's considering opening up a privately owned wholesale lab within the year. Does anyone have any words of experience, caution, or votes of reassurance they'd like to offer? This would be opened up with a 20 year veteran in the wholesale lab industry, with extensive customer care, and private OD support experience. He is a strong force to be reckoned with in his geographic area in the US, and has the budget to open up his own full-service lab, including most frame repairs in-house.

Thoughts?

Take the investment required and run to the casino. The odds at the casino would provide a better ROI.

[LENNY]

Unfortunately loyalty was not true for others and we were only as good as our last job.

Love it!
He really need to know something new to open up and survive in this market....

[Don Gilman]

On our order forms we had three boxes Cheap, Fast, Accurate....circle one of the above.

[other_bill_fea]

First question is: Why? Is there a specific need in the area that he thinks he can fill? With the way shipping is today, labs on the other side of the country can still ship jobs for the next day.

To stand a chance at being competitive, I'm assuming he'd have to have free-form and AR coating facilities in house. And if he wants to do wholesale, he's not going to want the small machines that do those, so he's going to need to drop at least $1 million on that equipment. There's also a question of getting sufficient people involved that know what they're doing, as he's going to need people running those machines that understand them. So there's also the personnel costs and facilities to worry about.

Is he just looking to service a small geographic area? Is there a customer base he's confiend about? What happens if he starts up and six months later a certain company goes into his largest account and buys the business? Is your friend out of business?

As mentioned, does he plan to do insurance/big brands (varilux/zeiss/hoya)? If so, Can he ensure distributorship before buying everything, only to find out he's not approved after all?

[Johns]

I'm glad everyone else chimed in. I didn't want to be the wet blanket, but I can't imagine opening a lab today.

[mervinek]

I'm glad everyone else chimed in. I didn't want to be the wet blanket, but I can't imagine opening a lab today.

I agree with you...makes me sad. I had some very happy times working in the lab!

[rbaker]

If I had an imperious urge to get involved in an ophthalmic laboratory and a few hundred thousand bucks of money I think that I would just buy stock in Luxottica or one of the large optical conglomerates. No hassle with regulators, bankers, suppliers, employees, customers or anyone else. Mainly however, you would not have to put in 80 hour work weeks.

Just sit by the pool and either make a pile or lose your shirt.

[LENNY]

First question is: Why? Is there a specific need in the area that he thinks he can fill? With the way shipping is today, labs on the other side of the country can still ship jobs for the next day.

To stand a chance at being competitive, I'm assuming he'd have to have free-form and AR coating facilities in house. And if he wants to do wholesale, he's not going to want the small machines that do those, so he's going to need to drop at least $1 million on that equipment. There's also a question of getting sufficient people involved that know what they're doing, as he's going to need people running those machines that understand them. So there's also the personnel costs and facilities to worry about.

Is he just looking to service a small geographic area? Is there a customer base he's confiend about? What happens if he starts up and six months later a certain company goes into his largest account and buys the business? Is your friend out of business?

As mentioned, does he plan to do insurance/big brands (varilux/zeiss/hoya)? If so, Can he ensure distributorship before buying everything, only to find out he's not approved after all?

Agree, but I think the way you put it it will be more then $1M....
Virtual lab might work out also!

[other_bill_fea]

Certainly could be more than a million, depending on your volume. We have a few smaller labs where we do some/all of their work for exactly this reason. They can't afford the cost to upgrade to newer equipment and stay competitive. We work with them to make it possible so they can get uncuts cheaper than doing it themselves. The main point of this is that they can focus on what they are good at - selling and building relationships with their customers.

[Speed]

On our order forms we had three boxes Cheap, Fast, Accurate....circle one of the above.

Two?

[Speed]

You need at least $700,000 to $1,000,00 for a serious run. Best of luck.

[Johns]

You need at least $700,000 to $1,000,00 for a serious run. Best of luck.

...and that's not considering the marketing and the operating capital.