A startup that is smarter than Amazon and Flipkart?
Yep! That's Lenskart.
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Selling spectacles online is one of those ideas I wish I'd thought of. It sounds so simple, doesn't it? Just put photos of frames and glasses on a website, and start selling.
That's why I was so surprised by Lenskart.
This is a startup that had to face really tough problems since the beginning. Eye doctors(optometrists) refused to work with them. Big eyewear brands dominated this space. Then came Amazon and Flipkart- if they sold spectacles, why should people buy from Lenskart? And the biggest problem was that people didn't trust them.
Yet, this resilient startup managed to beat all these problems. And in the process, they became a $2.5 billion company with $134 million in revenue and a profit of $2.5 million.
I was curious to know how they did it. So I took a deep dive into Lenskart and discovered 3 strategies used by them to achieve the No.1 position in eyewear.
Let's take a look at all of them🚀🚀
Strategy #1: How to compete with big brands?
Spectacles are expensive. This is a fact of life for most of us. Yet, many of us don't know the reason behind this.
You see, the process of selling spectacles is broken up between different players. Traditionally, 3rd party manufacturers make the spectacles, eyewear brands put their stickers on them, eye doctors(optometrists) tell us what type of glasses we should get, and then 3rd party eye shops sell the spectacles. At every step, the price of the eyewear bumps up because these players have to keep their own margins safe.
These players had formed an "eyewear mafia"- a mafia that kept prices high and competition low. So, they controlled the huge eyewear market- $132 billion worldwide and $3 billion in India.
The only one suffering was the customer. They had no other choice- they had to pay high prices for expensive glasses.
Lenskart saw this was a problem for customers, and decided to fix it.
But it faced tough resistance from the mafia. They saw Lenskart as a threat to their dominance and refused to deal with Lenskart.
Here, Lenskart launched their first strategy: vertically integrating their supply chain.
They started designing their own spectacles, manufactured them in their own factories, and sold them on their own website.
The main benefit of this vertical integration strategy? They were able to make high-quality lenses for cheap. This is a big competitive advantage- if you can give people high-quality stuff at affordable prices, you can easily become the No.1 choice for people.
The fact that there is no middleman involved means the company can pass on the benefit of reduced costs to the customers in the form of almost 70% lower prices.
-Peyush Bansal in an old interview with Vision Mag
With this strategy, the worst fears of the mafia were realized- Lenskart was giving them tough competition in price and quality. But they still had an ace up their sleeve and this would turn out to be a problem for Lenskart.
Strategy #2: Be where your customers are
Strategy #1 was great people appreciated the cheap and good-quality spectacles on lenskart.com But at that time, very few people used the internet- a big part of the company's market wasn't online. Moreover, people trust buying from physical shops, especially in small cities and towns. They want to hold the spectacles in their hands, try them out, and then purchase them. This means Lenskart was missing out on so many customers. This is where the mafia had the upper hand over Lenskart.
So Lenskart expanded into the offline mode- and started Lenskart shops. (Mafia has left the chat)
And this, my friends, is what made Lenskart 100x smarter than Amazon and Flipkart. Both these giants focused only on online selling, so they could tap a very small market that lives in the urban areas. But the majority of the Indian population lives in small towns and villages- so these companies are missing a huge market.
Slowly, other online-only companies are also realizing this fact, and they have started to expand offline. A good example here is Byju's. CEO Byju Raveendran said that fully online education in India is still a few years away. That's why they bought Aakash- to expand into offline education. Another example is the Thrasio-style startups in India- right now they are focusing only on selling online, but they also plan to expand offline in the future.
But instead of launching simple eyewear shops, Lenskart went a step further- they integrated the shops and website and app.
This meant customers would have the same experience, whether they were shopping online or in the shop. The same products, same colors, same designs, same discounts were available both online and offline. This, my friends, is called the "omni-channel" strategy.
Notice how the omni-channel strategy is such a smart move for Lenskart. Usually, companies focus only on one mode- online or offline. Amazon/Flipkart focuses on online mode. Big Bazaar and Surat Central focus on the offline mode. But Lenskart was available both online and offline. This was the right decision for Lenskart- they've expanded at a blinding pace throughout India.
Lenskart currently has 500 stores across more than 120 cities, including in tier II and tier III locations such as Agartala, Tirupati, Siliguri, Raipur, Haridwar, and Varanasi, among others.
Plus, omni-channel dramatically simplified customer acquisition. People just have to walk into the shop. No need to fiddle with the website or the app. The shops allow Lenskart to expand and build customer trust throughout India.
Strategy #3: Changing people's habits
By now, Lenskart had a vertically integrated supply chain to lower prices for customers. And they had opened physical shops to reach customers everywhere. But none of this would work if they didn't convince people to buy spectacles.
This was a tricky problem- people thought of spectacles as a medical device. So they purchased it only after consulting doctors. This introduced lots of hassles in the process of buying spectacles, and people purchased them infrequently.
Lenskart needed to change this habit.
So they applied a strategy that I'm calling the "Warby Parker strategy". Warby Parker is an American eyewear startup, very much like Lenskart. In fact, they are so similar that we should call them soulmates😂. Both were founded in 2010. Both faced competition from big brands. Both have lowered prices by vertically integrating their supply chains.
But Warby Parker's biggest innovation was to portray spectacles as a fashion accessory, rather than a medical one. This completely changed people's viewpoint- and they began buying new spectacles more frequently. That's why people in America see Warby Parker as a fashion brand, rather than a spectacle brand.
Lenskart used the same strategy. They introduced new brands with hifi names like John Jacobs and pulled in celebs like Katrina Kaif to portray Lenskart as a fashion brand.
I think our biggest bet was making consumers see this as fashion and not just medical, and that was a fundamental shift for consumers
-Peyush Bansal to Your Story
This strategy was a huge success- last year Lenskart sold 8 million products!!
The Future: Competitors and new markets
Using these 3 strategies, Lenskart established itself as the No.1 choice for people and disrupted the mafia. But new competitors saw Lenskart's blockbuster success and attacked this market. Some of the competitors are Coolwinks, Titan Eye Plus, Bausch and Lomb, Vision express, Specsmakers, Deals4Opticals, GKB, Lawrence and Mayo, etc.
But Lenskart has kept innovating. They've come up with new strategies to attract customers. You must have seen their “The first frame is free” offer - where customers will pay for only the lens on their first purchase. This is a good strategy to attract first-time buyers.
“Try at home” – where customers can choose a maximum of 5 frames and try them at home before making a final purchase. This has led to more sampling by customers.
Eye checkups by optometrists at home across cities have been introduced. They have been doing 1500 checkups a day and have a conversion of 50%.
If you've gone to their website, you must have seen their 3D try-on feature. This feature will build a 3D model of your face using your front camera, and then put different spectacles on that model so that you can see how each design looks on your face. This feature must have been very hit during the pandemic when people couldn't visit shops.
These strategies are clearly working- their revenues doubled last year, and surpassed their main competitor- Titan Eyeplus.
That's why they are now looking to expand outside India. After they got $220 million in funding last week, CEO Peyush Bansal said they will use this money to expand to South East Asia and the Middle East.
With such smart strategies, Lenskart can easily dominate these new markets. I'm super excited to watch their progress in the coming years🚀🚀
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This wraps up today’s article. I hope you found it informative!
PS: Did you notice an interesting thing about Lenskart’s 3 strategies? All 3 of them were customer-focused, not competitor-focused or profit-focused, or growth-focused. When Lenskart focused on customers, growth, and profits automatically followed!!
Great analysis!! Loved the article!!
Great Analysis! Keep doing a lot:)