On Wednesday I introduced a fascinating company, EyeBuyDirect. While interviewing the CEO, Roy Hessel, I noticed some similarities to another company we profiled several weeks ago – Valley Forge Fabrics.
Valley Forge shook up the fabric industry by deciding to circumvent established fabric traders and go directly to weavers. EyeBuyDirect is basically doing the same thing in the optics industry.
Most eyeglass retailers source their products through several complex layers of suppliers stretching across the world. This process is then passed off to the consumer in the form of high-priced eyewear. EyeBuyDirect saw this as an opportunity and decided to short circuit this established system by owning its own supply line. This allowed the company to differentiate itself in several meaningful ways.
First of all, Hessel maintains it allows his company to respond more quickly to customer demands. Like Valley Forge Fabrics, EyeBuyDirect can customize eyeglasses more precisely to the buyers’ exact desires and deliver these more quickly. Its competitors, meanwhile, must work through a patchwork of suppliers, and suppliers of suppliers, which slows them down. The traditional route also complicates customization and forces the customer to choose from what is available while paying for all the overhead associated with the multiple supply chain.
Second, by building the “unorthodox path” to supply, EyeBuyDirect is able to significantly cut costs. The company was able to reduce its inventory by 80 percent, which dramatically decreased overhead. In fact, EyeBuyDirect sells prescription glasses on its website for as little as $7.95. The company adopted a low-margin, high-scale strategy while its competitors use expensive supply chains and seek high margin sales to cover the costs.
“We had two options when we entered the optics world. We could go the same path and the status quo as the rest of the optical retailers, which required us to adopt a multilayer, very complicated supply chain with high margins,” explains Hessel. “The other option was to challenge that status quo and take advantage of it – to design a supply chain to cut the costs of manufacturing.”
This is pattern number #30: Take the unorthodox path.
Innumerable companies have built successful and disruptive businesses on this concept, including Dell and Avon. Developing their own path allowed them to control their direction and future.
Ask yourself the following questions to see if you can find a new path for your company.
1. What if I abandoned my industry’s accepted supply network, and instead, I cut out the middle man?
2. Could I differentiate my company if I owned the supply chain?