Entrepreneurs

Warby Parker: How to limit risk when you try to double your size

Fashion eyewear business Warby Parker seeks to nearly double its retail presence across the country in 2016.

Co-CEOs Neil Blumenthal and Dave Gilboa recently walked through their aggressive expansion plans on CNBC's "Follow the Leader."

Their next destination is Brooklyn, New York, which is expected to be Warby Parker's 34th store when it opens. The company hopes its presence in the borough will help reduce congestion at its two downtown Manhattan locations.

It's a move that suggests that even when a business begins as a digital brand as Warby Parker did in 2010, in order to stay competitive, it pays to get physical.

Warby Parker co-founders Neil Blumenthal (L) and Dave Gilboa.
Source: Warby Parker
Warby Parker co-founders Neil Blumenthal (L) and Dave Gilboa.

Other web-based brands that have later ventured to the streets include Bonobos, Piper Lime, Rent the Runway and Birchbox, whose CEO and co-founder Katia Beauchamp also was featured on "Follow the Leader" recently. Beauchamp said her beauty company's move to Manhattan's trendy SoHo neighborhood was a way to enhance the brand's visibility with pedestrians and tourists. It also lets consumers experiment with fragrances, lotions and makeup as they've been accustomed to for generations: in a store with the help of a sales associate.

Warby Parker is a relative newcomer to the global eyewear industry that's largely dominated by the established Luxottica Group — the makers of Oakley, Ray-Ban and designer-labeled eyewear. The Italian conglomerate generated net sales of over $10 billion last year.


But expansion can be risky. The company has raised tens of millions of dollars to support brick-and-mortar growth. Add stores too fast and the business can drown in debt. Grow too slowly and competitors can swallow you up. The pressure is on, as the company has been valued at more than $1 billion. And while the business wouldn't release numbers, the founders told reporters last year that the Warby Parker had yet to turn a profit.

To mitigate risk, the company is taking advantage of its massive online customer database to better understand the geography of its demand. Based on the number of customers with addresses in say, Brooklyn, Warby Parker can more properly assess if a move there actually makes sense.

An online feature called "favorites" is also being tested as a way to relieve the overcrowdedness at its retail stores. The idea is to have customers browse WarbyParker.com to mark their favorite frames on the site. Once in the store, they can then refer to the list quickly and reduce the time it takes to find frames and make a purchase. It also would, in theory, help Warby Parker close sales faster and keep the flow of customers moving.

The move illustrates that while growth is currently focused on building out its physical footprint, the company ultimately seeks harmony between its two worlds.

"We really think of ourselves as experience designers," said Gilboa. "We're looking for opportunities to create the best possible experience for customers, regardless of whether they want to shop online or offline."

Farnoosh Torabi is the host of CNBC's "Follow the Leader," which airs Wednesdays at 10:30 p.m. ET/PT. You can follow her on Twitter @Farnoosh.

(CORRECTION: An earlier version of this article misstated the number of stores Warby Parker would be operating when the Brooklyn store opens. The co-CEO's name was misstated in one reference.)