The Right Business Model for the Right Market

Anonymous

Warby Parker cofounder Jeffrey Raider recently announced the launch of his next venture, Harry’s, an online, direct-to-consumer, “boutique” for shaving equipment.  Effectively, the “Warby Parker of shaving”, Harry’s creates its own supply chain (designing, manufacturing, and distributing its own product) to be able to offer consumers a superior product at a lower price.

In Internet terms, Warby Parker is (so far) a runaway success, not just creating a growing business with a loyal following but innovating on business model to spur an entire category of copycats in different verticals, most notably apparel, with bigger players like Everlane and Bonobos and an entire wave of smaller entrants.  They have become the poster child for the future of ecommerce convincing many in Silicon Valley that it is only a matter of time before we see a vertically integrated, brand driven player in every vertical.

I wonder if the secret sauce was ever a true business model innovation.  Warby Parker is considered disruptive because they were one of the first online-only players to own their supply chain but this is a proven model we see everywhere in the traditional retail world from brick and mortar retailers who almost only sell their own wares like J. Crew and the Gap to the private label products we see at Target and Walmart sitting on shelves side-by-side with brand names.  I think giving Warby Parker credit for a supply chain innovation is a little bit of a stretch.  If that is the case then what is the real innovation of Warby Parker and can it be applied to similar businesses?  Sure, the product is beautifully designed, there is a great customer experience, and the branding of the business goes a long way.  A pair of Warbys makes me feel like a do-good hipster but these are qualities of the business which I think could be replicated.

What I think differentiates Warby Parker, the brilliance of the business that ultimately might be the limitations of the success of the model in other categories is market selection.  Warby Parker was a first mover against a monopoly.  By targeting eyewear, a category essentially owned by Luxottica, they were able to unlock compelling value in an industry that was otherwise completely constrained.  You don’t see these same market dynamics in apparel or even other accessory verticals.  Which categories are low hanging fruit while which will be harder, if not impossible, for a Warby Parker to break through and sustain an advantage?  When applying the online-only, direct-to-consumer model, I think the market you choose to go in to will matter just as much if not more than your product, branding, and experience.