Warby Parker: Too Good to Sustain?

In April 2015, T. Rowe Price, an American publicly owned investment firm valued Warby Parker (WP), a designer and retailer of prescription glasses, at US$1.2 billion. WP was founded in February 2010 by four classmates from Wharton Business School who wanted to find a way to provide relatively affordable, stylish eyeglasses and sunglasses. To make this possible, it devised an innovative business model. Deviating from the conventional retail model for eyeglasses, WP opened an online retail store, thus cutting out the intermediaries and reducing pricing. It set a price point of US$95 for its eyewear, which was one-third the price point of incumbent retailers. Moreover, it had also added a social dimension to the model. For every pair sold, WP gave a free pair of glasses through its partner VisionSpring (buy-one-give-one model), a nonprofit which made affordable eyewear accessible to the needy in underdeveloped and emerging countries.

Started in a small apartment, it took only 5 years for the start-up to enter into the league of the Unicorns . This leap gave WP access to a new round of funds worth US$ 100 million. WP co-founder and co-CEO, Dave Gilboa (Gilboa), said, “Over the past five years we’ve experienced significant growth...