TRADITIONAL EYE CARE MARKET UNDER SIEGE: The Threat Is Real and Changes Are Coming!

It’s a national problem: Soaring eyeglass costs should be a part of the country’s overall healthcare debate since millions of people simply can’t function without corrective lenses.

And yet, eyewear is a near-monopolistic, $100 billion industry dominated by a very small number of companies. That’s why 1,000% markups for frames and lenses are commonplace.

The average cost of a pair of frames is $231, according to VSP, a provider of employer eyecare benefits. The average cost of a pair of single-vision lenses is $112, but progressive, no-line lenses can cost twice that amount.

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Courtesy: UCLA Anderson

It’s been reported that for private practice optometrists, 62% of their salary comes from the sale of prescription eyeglasses and contact lenses. Moreover, the person helping you pick out your frames is likely being paid on a commission basis.

Clearly, it’s time for a radical departure for the old business models, which favor mega-corporations over the customers. With technology tools available and the ability to shop from our smartphones, there’s no need to overpay and be limited in our selection of eyewear products anymore.

Technology is changing quickly – and one business is leveraging technology to transform the eye care market to make it more customer-friendly, and therefore much more profitable in the long run.

The company to watch in this space is Kits.com (TSX: KITS), and with its market timing, Kits.com’s e-commerce platform is enabling transformation across the $35 billion American eyewear category.

Kits.com operates in one of the last multibillion-dollar categories dominated by a shrinking number of small independent shops – a market segment that’s ripe for technological disruption.

Through the company’s auto-ship feature and subscription business model, Kits.com has been able to keep its customers coming back again and again.

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The two charts here show just how much growth occurred in 2020. We’re looking at 13x annualized growth in new auto-ship subscribers over the first three fiscal quarters of 2020, pointing to the vast impact of the subscription model for Kits.com!

Kits.com should be positioned to lead the transition into online sales with the company’s branded and KITS-label offerings, which focus on delivering what customers want at affordable values.

With the Kits.com platform, customers get a vastly different and greatly improved experience compared to the outdated traditional brick-and-mortar store experience:

• The full convenience of shopping from home
• Incredible value and quality
• A broad selection of third-party and owned brands
• Full collection of online vision tools
• Vertically integrated to maintain quality, speed, and value
• No legacy overhead from retail locations

The focus on quality has led to astounding 69% repeat customer revenues and a subscription business that’s growing by leaps and bounds. For 2019, Kits.com posted more than 600,000 active customers, resulting in $50 million in revenues and $81 million in run-rate revenues.

Along with that was a 100% quarter-over-quarter growth rate in the number of pairs of glasses sold from Q2 to Q3 of 2020!

The profits won’t stop as long as Kits.com continues to leverage its forward-thinking business strategies – it’s what’s best for the company, the stakeholders, and best of all, the loyal customers.

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