KUALA LUMPUR, Aug 13 — After securing US$3 million (RM11.99 million) in Series A funding recently, online eyewear retailer GlassesGroupGlobal is now eyeing other markets in South-East Asia and Europe.
The Kuala Lumpur-based company, established in 2013, currently has a presence in 14 countries, including its home base of Malaysia and South-East Asian neighbours the Philippines, Singapore and Thailand.
It has also spread out to Australia, Austria, Denmark, Germany, Hong Kong, the Netherlands, New Zealand, Sweden, Taiwan and the United Kingdom.
According to founder and chief executive officer Christopher Strauch, one of the company's immediate aims is to penetrate the Indonesian market.
“Indonesia is like one of our final missing pieces of the puzzle in our South-East Asia game plan over the near-term,” he told Digital News Asia (DNA) in Kuala Lumpur recently.
The company is also hoping to gain more ground in Europe and by the end of 2016, expects to be in 16 European countries, up from the current six.
For Strauch, the aggressive expansion plan is not just about widening GlassesGroupGlobal’s reach, but about disrupting the global eyewear market — which he said was worth about US$10 billion in revenue.
“Expansion is a big topic for us. We see our business as a global opportunity.
“In the long term, we hope to be present globally in all the core markets. We think that Asia Pacific will be the largest consumer market globally, followed by Europe,” said Strauch, who was formerly the managing director of Zalora and the ex-chief executive officer of Rocket Internet UK.
The need for an Indonesian play
GlassesGroupGlobal’s US$3-million Series A funding was led by Caixa Capital and Nova Founders Capital, as well as angel investors such as Skype cofounder Toivos Annus.
This investment would be used to fuel the startup’s market expansion, invest more in its team, and to build local presences.
Strauch said GlassesGroupGlobal aims to have customised strategies and campaigns for each individual market.
Prior to its Series A, the company – using the US$1.5 million in seed funding it had – had to scale its business with limited resources.
Most of the countries GlassesGroupGlobal penetrated in the early days have one thing in common: A sizeable number of English-speaking consumers.
This meant that it was able to serve a larger group, and also reduced the need to set up dedicated teams for particular markets.
This helped the young startup keep down the costs, but with the recognition that this was not the best way to serve individual markets because, at the end of the day, every market is different in some way.
“We tried to be as centralised as possible, and to build Malaysia as the hub for the entire region so that we could go to more markets to benefit from the scale, while keeping costs flat,” Strauch.
This is also one of the reasons why it did not tackle Indonesia in its early days.
“Indonesia [has] huge potential, but it is not an easy market if you are not present there,” he said. “It is a challenging market.”
With the new funds, one of the company’s immediate plans will be to develop the necessary infrastructure to enter Indonesia. This includes local payment options and basic billing.
Revenue and profitability
Strauch was tight-lipped about the company’s financial performance, but claimed it is recording annual revenue in the “millions of US dollars,” and that revenue has been growing by double-digits month-on-month.
“We are very quiet about our numbers, but we have seen incredible growth since we started,” he declared.
“We are still at the very early stage of what this market can be. Generally, if you look at the [global eyewear] industry, it is at least a US$10-billion market.
“If you look at it from a vertical point of view, you would say it is a niche market — but this is a very big niche market, and it is a market that is growing significantly,” he added.
One growth driver is the fact that eyewear is no longer merely an optical aid, but is becoming a fashion statement, he noted.
In terms of GlassesGroupGlobal’s profitability, Strauch said that it is a “question of choice.”
“Profitability is always a big question in e-commerce. Overall, the industry is very profitable. This is one of the reasons we got into this industry.
“Why are there five optical shops in one mall? That’s because the margins are great and the items are high-value.
“If you look at this market, it is easier to achieve profitability than in other verticals,” he argued.
However, Strauch admitted that it would be hard for GlassesGroupGlobal’s accounts to have black ink at this point in time.
“We have to invest in infrastructure, people and so forth, to scale up. But if you look at six to 12 months down the line, profitability for us will become a question of choice.
“I could say ‘I will stop expanding into new markets and stop investing in existing markets to build scale,’ and the company can then be profitable.
“But the market is too attractive. There is so much potential in these markets and it will be a shame if we stopped there,” he said.
On the surface, GlassesGroupGlobal’s eyewear retail portal GlassesOnline appears to be an online marketplace, where suppliers place their inventory so that consumers can view and purchase their items.
However, Strauch said that GlassesGroupGlobal is “somewhere in the middle.”
“In a typical marketplace like Rakuten, the merchants have the products, they upload [the information], they determine the pricing, and they deliver.
“With GlassesGroupGlobal, our suppliers’ inventory is integrated with our back-end. We are slightly different in our setup as we handle the store. We want to make sure our users have a consistent e-commerce experience.
“This is why we ‘in-source’ the logistics, customer service, content creation, and so forth. This is to maintain full control over the customer experience,” he added.
The company also stocks hot-selling items such as a certain models of Ray-Ban sunglasses, so that customers need not to wait too long.
GlassesGroupGlobal believes that a portal gives customer a wider selection of eyewear. Due to limited space, a typical optical store does not have the luxury to display all models and designs. Some may not even carry a particular brand, as the brand will decide which market or mall it wants to be in.
So for those who know what model they want, but know that this model is not available in their nearest optical stores, “they can come to our website to purchase it,” said Strauch.
“For our suppliers, the website is also a good avenue for them to sell their long-tail products,” he added, referring to the large number of products that sell in small quantities, compared with the small number of best-selling products.
Reshaping the eyewear industry
Currently, the eyewear products GlassesGroupGlobal sells are supplied by Luxottica Group SpA, the largest eyewear group in the world.
The Italian-based eyewear maker is well-known for brands like Ray-Ban and Oakleys. It also has the rights to a wide range of designer brands like Chanel, Prada, Giorgio Armani, Burberry, Versace, Dolce and Gabbana, Miu Miu and more.
Strauch said that the industry is not seeing much innovation partly because the supply side, comprising manufacturing and distribution, is dominated by that one player, Luxottica.
However, on the retail side, the market is made up of many small players.
“If you have a monopoly on the supply side, they have already cornered the market, so there’s not much innovation that needs to be done for them to improve,” he said.
“On the other side, you have a fragmented market where you have the independent shops — they don’t have the money, the power or the ability to innovate,” he added.
But isn’t GlassesGroupGlobal a threat to existing optician stores, and to Luxottica even? After all, if the optician stores’ business is affected, this would lead to less business for the distributor, Luxottica.
“I think in any e-commerce venture, people will ask if you are really stealing away from the existing market, or whether you are attracting customers who previously did not have access to these products,” said Strauch.
“I think it’s a little bit of both. But overall, the pie is still growing with more people having higher incomes, and with more people having access to the Internet in remote areas.
“By working with someone like us, we can penetrate markets other players were not covering,” he added.
For now, GlassesGroupGlobal may be good news for eyewear companies and brands because it is a new sales avenue for them. But it is not good news for local optical shops which may see existing customers opting to buy online instead.
Strauch acknowledged the challenge, but claimed that work is underway to address this.
“Our next target is to optimise and innovate the industry as a whole. Right now, our focus is predominantly on consumers and brands, and how we can help them.
“Our next big step is helping opticians – we can’t reveal too much yet, but this is something we will be announcing shortly. It’s something we have been working very hard on at the back-end,” he declared.
“Ultimately, it’s about delivering value proposition to everyone in the industry – consumers, brands, and opticians,” he added. — Digital News Asia
* This story was first published here.
