October 14, 2011

Online vision care products change market

Posted in Between Us column, Business, Health, Women at 11:25 pm by dinaheng

My sister Linda wears both contact lenses and eyeglasses, and the prescription for her contacts seem to change every six months. She loves her optometrist, and always bought her vision care products from him until this year.

“When he charged me $100 for a three-month supply of disposable contacts, I decided to look online,” Linda says. “I discovered 1800Contacts.com, and the price was much cheaper. With a discount offer, I was able to get a three-month supply for $66.98. My optometrist didn’t say anything when I switched, but I’m sure he realizes there’s much better pricing online.”

Being a comparison shopper, Linda also tried ordering from Coastal.com, which offers contact lenses and eyeglass frames at discounted prices, and in some cases, gives the frames away for free through various promotions.

The cost for a three-month supply of contacts was slightly higher with Coastal.com, which charges a handling and insurance fee that 1800Contacts.com does not. Still, Linda was happy with the quality of the contacts and service she received.

Customer service, convenience, and lower prices are causing more and more shoppers to go online rather than to the nearest brick-and-mortar outlet, with eye care products being among the latest offerings.

Roger Hardy, CEO of Coastal.com, was working for a contact lens company when he noticed the large pricing disparity between what optometry shops paid for lenses and what they charged consumers.

“We would sell a box of contacts to an optometry shop for $12.50, and consumers were paying $80 a box,” Hardy says. “So my sister, Michaela Hardy, who’s a chemical engineering graduate with an MBA, and I built our website with a one-room shop, a phone, and contact lenses. It started out bare bones, and today, the business has really grown. We will make about $185 million this year.”

Hardy says suppliers were initially resistant to selling to Coastal.com, a Canadian company, because it was disruptive to the eye care industry, but as the entrepreneur notes, any industry that’s not already been dramatically transformed by the Web soon will be.

“You need to serve customers in the way they want to be served,” Hardy says. “Getting contacts from your optometrist is a difficult process because rarely does anyone have all the lenses in stock. We work with four contact lens manufacturers and 20 suppliers of eyeglass frames, so we have it all.”

Coastal.com, headquartered in Vancouver, British Columbia, invested $15 million in building a state of the art laboratory so that it can custom-make eyeglass lenses, while selling branded frames and its own designer brand of frame.

Its typical customers are women, 20 to 30 years old, who are busy with careers and have little time to shop. Most have children at home, and cost savings is a priority.

“This whole category of vision care products is being driven by women buyers,” Hardy says. “A family that’s been paying $400 to $500 for glasses can get it for $100 with us. We’re buying $20 million worth of product, and can build up to 10,000 eyeglasses a day, where the average optometry shop sells four to five eyeglasses a day. We source products from around the world, so there’s no middleman cost for us.”

The company also has no brick-and-mortar real estate costs, instead operating out of two distribution centers while doing its own manufacturing in-house.

“We now sell 20 percent of the contact lenses sold in Canada, and our European subsidiary, Lensway, has 30 percent market share of the contact lens category in Sweden, Norway and Finland,” Hardy says. “We’ve been more of a global player, and are now focusing on the United States market.”

Coastal.com donates a pair of eyeglasses to someone in need for every pair of in-house designer glasses that a consumer buys, partnering with organizations that distribute the donated glasses to users in Third World countries.

“The online category’s doubling every year, so customers are voting with their feet and wallets,” Hardy says. “Smart optometry shops are trying to figure out how to work with suppliers like us.”

As my sister Linda noted, it’s nice to have the convenience of placing an order online, rather than driving to the store to buy something.

“As long as things are undamaged and cheaper online, I’ll buy them that way,” she says.   “Getting my contacts online saves a lot, but the key is being able to return them if they’re defective. It doesn’t happen often, but if a contact is defective, I want to be able to get credit for it.”

In other words, whether you’re buying something online or in a store, look carefully at everything before you buy. Price alone doesn’t always determine the best deal.

Dinah Eng is a freelance columnist in Los Angeles, and can be reached at betweenustwo@earthlink.net.

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