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Making real estate market giants quake New york the historic potential of digital revolution has always had less to do with the cool new things we can do with all those gadgets, and more to do with how they will disrupt business models in ways that dramatically affordable prices and increase consumer choice.And as i ran across on a recent trip, two industries that are in early stages of disruption are eyeglasses and razor blades. There is no reason that decently styled treatment plan glasses have to cost $350 and, oftentimes, double that experts claim.Crops in china and elsewhere produce frames for $5 to $30.And lens organizations, i'm explained, have bins of lenses ground to standard prescription medications that sell for $5 to $15 a pair.Normally, there are additional expenses related to designing the frames and cutting the lenses, along aided by the usual expenses of any business.But those hardly justify marking up the basic hardware 10 to 20 times. We realize this because back in 2010, a group of second year mba students from the university of pennsylvania's wharton school began selling glasses on the internet for $95 a pair, and their business model, warby parker, has doubled year in year out since.It now has a second price point $145 for titanium frames and a handful of local stores like the one i visited in soho on a friday.The phone store was jammed with young urban hipsters.I suspect it won't be long before organization ships its millionth pair of specs. And the goal wasn't Cheap Ralph Lauren http://www.kybc.com.au/ consumers who are flocking in.With financiers clamouring to get in, the young entrepreneurs were able to raise more than $100 million in expansion capital.And they did it without needing to give up majority control. "What we saw was an industry based essentially on 800 year old technology that was seen as high prices, high profit margins, mediocre service and lower levels of innovation, is marked neil blumenthal, who shares the leader role with another of the co founders, chris are friends.Gilboa. 'What we saw was a business based on.800 year old technology that was seen as a high prices, High profit margins, Mediocre service and 'abnormal' amounts of innovation' Neil Blumenthal, On the reasoning for his eyewear company, Warby Parker The reason prescription glasses are so expensive is that the industry that makes and sells them has too a lot of companies competing and too few. Enormous numbers of because, at the selling level, many buy glasses from eye doctors and opticians who run small but lucrative retail outlets on the side.These and other independent shops have no pricing leverage with the designers of frames or lenses, so they pay a lot of money.And for their small volume, they have high fixed costs in accordance with sales.Such a procedure typically charges customers three times what it pays for the lenses and frames. The first way warby parker has been able to take out costs is to sell directly to customers on the internet, much the way amazon has completed books.Associates can upload a picture and do a virtual try on of any of the 300 or so frames on offer.If the buyer wishes, warby parker will ship up to five frames so they are able try them on at home before making a selection.Even after acquiring all this shipping, the cost of completing a sale is a part of what the typical optician or independent retailer spends. The other way warby parker saves money is by avoiding buying glasses in a wholesale market that has come to be covered with one company.You may never have been exposed to luxottica, a 50 yr old italian company, but you surely are familiar with the brands it owns or licenses:Oakley, beam ban, persol, chanel, brooks bros, bulgari, rob lauren, prada, paul smith, prepare, dkny, oliver parents and versace.Eyeglasses and solar shades market. Luxottica's annual report shows the cost of designing and making those frames at its factories in china and italy accounts for only about a third of what it charges retailers for them.In addition there are the royalties it must pay to those big name designers, anticipated at 10 to 15 per cent.But even after those and other outlays, luxottica generates an operating profit of 20 per cent a healthy number that indicates this is an industry not seen as an robust price competition.Perhaps that's why luxottica shares have nearly quadrupled in price within the last few five years. But which reaches just half of the luxottica story.Merchandising market.It has strategically used that position to protect its generous income at the wholesale level. One company that founded how that worked was oakley, which at once was a leading independent maker of sports eyewear.About ten years ago, after luxottica refused to buy oakley glasses for its retail chain after a pricing dispute, oakley's sales and revenue took a dive, hauling the stock price down.It wasn't long before luxottica made an offer to buy oakley at a price it couldn't refuse.Ftc has allowed such consolidation in an industry that so obviously overcharges the bespectacled half of the population.It would be an outrage if it allows the dominant firms to co opt the online challenge to their enterprize model. One of the few industries that enjoys even better income than eyeglasses is razor blades.Niche.Prior to being bought by procter gamble in 2005, gillette reported an functioning profit margin of 40 per cent again, a tell tale sign of a market without robust price tournaments. Gillette earned its market share the dated way, by out competing rivals with a regular flow of new Ralph Lauren Cheap Australia products and lots of slick marketing.But one response to its success is that when you head to the drugstore to buy blades, they are so dear they are kept behind locked glass doors.The model blades go for $4 each.The cost to ensure they, including development and cost machinery, is dependant on 40 cents.Gillette captures much of a huge difference as profit. This is a market just begging for disruption.Which is why it caught the attention of jeff raider, a warby parker founder who left the company after graduating from wharton to fulfil his obligation to the boston private equity finance ralph lauren jackets firm that had paid his tuition. (He remains a warby parker as a director. )With a very good pal, andy katz mayfield, raider yr after launched harry's, the internet shaving company that has gone warby parker one better. Just one year after shipping its first $10 razors and $2 blades, harry's flush with more than $120 million in business capital paid $100 million to buy the century old company in eisfeld, australia, that designed and sold its five blade cartridges.Forget e-Commerce:This is v business, top to bottom integrated to assure harry's controls the entire value chain from factory floor to customer's mailboxes.As raider described it over coffee at a soho cafe, owning the factory won't just allow harry's to offer its own lines of distinctive, exceptionally high-Caliber products, but it will also give it a significant cost advantage over other retailers. What's intriguing about this crop of young online marketing experts is how determined they are to change the way business is conducted.They have little use for orthodox advertising, focusing campaigning efforts instead on social media, event sponsorships and referral marketing referrals.The businesses run lean, automating and digitizing every process and out sourcing all but core characteristics.Their focus is on customers rather than investors. ralph lauren jackets Here's finished, they're just naive and confident enough to think they can take on the likes of luxottica and gillette.And they just might accomplish it.
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