A vision for e-commerce success
Inside Lenskart’s reinvention from D2C upstart to fully integrated eyewear powerhouse.
There was this viewpoint that we’re an internet company, and internet companies should not get into manufacturing.
SearchMyCampus was 2 years old and up to around 30 employees when Bansal read that between 600 and 700 million Indians needed eyeglasses, yet only around 1 in 4 of them could afford a pair.
“I thought, why not solve this problem,” Bansal says. He assigned an intern the task of building a test website. They opened pop-up stores in malls and people had their eyes examined by optometrists working out of vans outfitted with measuring equipment. “We started getting traction and we started getting interested,” Bansal says. “It seemed like the impact of this one could be very big.”
Venture investors seemed to agree, including one willing to risk $4 million on Valyoo Technologies, the parent company the co-founders had created. But the VCs placed two preconditions on their investment. Bansal and team had to pull the plug on SearchMyCampus. And they had to move beyond eyeglasses and into luxury goods. “They wanted us to build a full accessories business,” Bansal says. In a nod to Flipkart, they named their eyewear company Lenskart, and within six months of launch, they opened Jewelskart, Watchkart, and Bagskart.
On one level, the expansion worked. The four websites brought in more than $100 million in annual sales. Yet the company posted heavy losses in every category but eyewear, which was generating a healthy profit. Selling jewelry, handbags, or watches meant competing head-to-head with giants such as Amazon and Flipkart that had already mastered sourcing, logistics, and other essentials, says Khurana, who is now Lenskart’s head of product and technology. “There was no real impact we could have in those areas,” he adds. They closed their jewelry, watch, and handbag businesses and made the decision to focus exclusively on eyewear.
“We always wanted to serve large numbers of people so we needed to be about large volumes,” Bansal says. “That meant unpeeling the layers and going deeper and deeper to really understand how to make a great pair of glasses.”
Internet company or manufacturer?
Initially, Lenskart had relied on the eyewear supply chain to fulfill orders they received either through their website or through the small storefronts the company started opening around India. That’s what most others in the industry do. One exception is the Franco-Italian industry giant EssilorLuxottica, which operates LensCrafters, Pearle Vision, and Sunglass Hut stores, and manufactures frames for designers including Chanel, Armani, and Versace while also producing house brands like Ray-Ban and Oakley. The 180,000-employee giant generated approximately $23 billion in sales in 2020, just short of 15 percent of the global eyewear market.
But the outsourcing model quickly showed cracks. Lenskart had a no-questions-asked return policy, but its suppliers rarely took responsibility for shoddy work. As the number of returns grew, the company began thinking about making both frames and lenses. “Relying on other players wasn’t the way to deliver a great product to people,” Khurana explains.
Relying on other players wasn’t the way to deliver a great product to people.
To Bansal, the ample room for improvement on price seemed evident. “Nobody knew why the price was so high, except that the manufacturer knew if you could sell progressive lenses for $500, even in India, then they could get away with charging $250,” he says. “That was a lot of the logic of bringing it in house—to really democratize these new age technologies, which are sitting out there only for the privileged.”
The next step in Lenskart's integration came in 2017, when the company began making its own lenses at a small factory in northern India, not far from their headquarters in Delhi. That would have multiple benefits for the company, says Ashwani Agarwal, the company’s chief supply chain officer. “Because of the geographic location and labor availability and the lowering of all the other associated expenses when items are coming from overseas and going through an Indian port, we can reduce both our costs as well as our time to market,” Agarwal says.
Two years later, Lenskart moved into making plastic frames. This time, the company partnered with an established maker in China. Using subsidies provided by the Chinese government, Lenskart and its partner were able to secure and open a factory in a remote village.
As it turned out, frames proved even more challenging than progressive lenses because of the many parts and processes they required, from screws to soldering and finishing. “There’s at least 20 unit operations in making a frame,” says Puneet Bahl, the Lenskart vice president who oversees the company’s supply chain.
The benefits of bringing manufacturing in-house
We can reduce both our costs as well as our time to market.
A list of other dividends from Lenskart’s integration have become equally important. Manufacturing has helped build a moat around Lenskart’s business that a potential competitor would be hard-pressed to challenge. Meanwhile, forecasting has become more accurate. That translates into more customers happy they are receiving an order within two days of placing it, either online or at a store. “Relying less on third parties means we can be more agile and much faster to market,” Agarwal says. Supply chain worries haven’t been completely eliminated but they’ve been greatly reduced. “We still depend on suppliers for the raw materials, but controlling the semi-finish products means much greater control in our hands,” he says.
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