Should Amazon set its sights on 1-800 Contacts?
In an Interview with Third Bridge Forum, the specialist said 1-800 Contacts is succeeding in integrating and aligning its acquired businesses Ditto and 6 Over 6. They told us these acquisitions will help the company deliver “the entire package” in B2B and B2C services.
The specialist said 1-800 Contacts’ technological capabilities both on the supply and logistic side enable it to secure volume discounts. This has created “a moat” between it and similar lens D2C competitors such as Warby Parker and Lens.com, which they believe could be difficult for them to breach.
However, large retailers like Walmart and Costco are a different animal, according to the specialist, with these companies’ price point, brick and mortar stores and D2C option giving them an “advantage”. Click here to read more insights on Costco.
If 1-800 Contacts is to take on larger retailers, the specialist said it needs to play to its strengths, including the premium quality of its product and its full customer journey.
In the Interview the specialist also discussed 1-800 Contacts’ international expansion plans. They said English-speaking countries should be targeted first, with European states second. Acquiring 6 Over 6 was a “smart play” that has given 1-800 Contacts a foot in the Israeli, Middle Eastern and European markets – the latter of which has lower barriers to the US, we were told.
On future M&A activity, the specialist said 1-800 Contacts would be a “great fit” for an e-commerce company like Amazon. They told us it would complement Amazon’s recent healthcare acquisitions of One Medical and PillPack, adding an end-to-end experience. Partnering with an ophthalmologist could also be “huge” for 1-800 Contacts, the specialist added.
The current macroeconomic environment is a headwind for 1-800 Contacts and the lens market as customers cut costs by wearing glasses, we were told. 1-800 Contacts is to some extent insulated from this pressure, according to the specialist, due to selling glasses as well as lenses. However, deteriorating economic conditions are likely to favour the likes of Costco, according to the specialist, which can offer more competitive pricing.
Nevertheless, the specialist said as the online lens market grows, all eyes should be on 1-800 Contacts, adding that if they were to “bet” on any online lens player, it would be it.
Click here to access all the human insights in the Third Bridge Forum Interview “1-800 Contacts and the D2C Online Contact Lens Market – Core Business Analysis and Competitive Positioning”.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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