If you're thinking about investing in eyewear specialist Warby Parker (WRBY -1.44%), you've come to the right place. In this segment of Backstage Pass, recorded on Nov. 1, Fool contributors Toby Bordelon and Danny Vena discuss the company and its approach to growing its business in a competitive market.
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Toby Bordelon: We are talking about a company I have been aware of for quite a long time, actually: Warby Parker. They've been around, you see here, they've been around for 11 years. I've actually been a customer for years, a good part of that time. Right here, these are Warby Parker products that I'm wearing. They make eyeglasses.
They sell eyeglasses and recently, I think this is just within the last year or so, they started doing contacts online as well. They started with the eyeglasses. They're trying to revolutionize the industry. They're going more of a direct-to-consumer model trying to cut out the middleman. If you ever bought glasses, you know they are absurdly expensive, or they can be.
Danny Vena: Absurdly expensive.
Toby Bordelon: It's awful, especially if you're someone whose prescription changes even just a little bit, every year. You're spending like 600 bucks a year, or every two years. Then you're like, what is this?
Danny Vena: Not only that, but it's not just the glasses, but then they nickel-and-dime you on -- well, do you want the no-line bifocals? Do you want them to be scratch-resistant? Do you want them anti-glare? Each one of those questions that you answered "yes" to, the price comes up.
Toby Bordelon: It does. It's pretty awful. Warby Parker's have much lower price point right, and you might think that comes with a lower-quality and maybe it does. You can actually feel it's not quite as good quality as what I might get somewhere else, but they're so much cheaper. Like frames plus lenses can start around 95 bucks. My first thought was: "If these are just not that good, whatever, I'll buy a new pair every year, even every six months, and I still come out ahead." Turns out I tend to keep them for a couple of years, they're good enough for that.
It's been a success for me, and people love it. You see NPS -- net promoter score -- of 83. The industry average in the eyewear industry is around 30, from what I saw.
They're knocking it out of the park in terms of net promoter score, which is the metric for, you've seen our surveys, "Would you recommend us to another person?"
Danny Vena: I just wanted to jump in here, but one of the things about net promoter score is, if you're not used to it, it's essentially you say, would you recommend or not recommend, and they add those together. You have to have significantly more people say they would recommend you than not in order to get that high net promoter score.
And in fact, one of the things that I have found recently is that if you have a net promoter score of 70 or higher, it's considered world-class. So having a net promoter score of 83 is fantastic.
Toby Bordelon: They do a really good job here. You've probably seen their ads online, they sell mostly online, they do have some retail locations, but interesting, you can't actually buy glasses there. You can go in, you can try stuff on, you can get measured.
You can even have them adjusted if you've already had them, but if you order in the store, all you're really doing is ordering in their website and using tablets their employees have. It's really just a way to route you to their the online channel.
They are offering eye exams in-store, and they're slowly expanding that part of the business. I think you're going to see more and more of that in the future. They took off really fast. When they started, they ended up achieving their first two years' sales targets in about three weeks, which we blew things out the water. It's just been up there from there.
They're calling this a $35 billion market in the U.S., the eyewear market, $140 billion globally. So a lot of potential there. It's pretty fragmented. You see these big chains, like LensCrafters is one, but still today about 51% of sales are independent iShops.
There is a lot of room to pick up some market share and consolidate some of this stuff. One note I will throw out if you look at the next slide here, is that one of the co-founders, Jeff Raider, is also a co-founder of Harry's Razors. You may know that company as well. You've got a good track record of founding some fairly popular companies there.
