. In the recent governmental data under the North American industry classification system, the optical good stores under the classification code of 44630, there were 13149 number of these establishments and 5,398, in the United States. This code includes retailing and fitting and grinding prescription eyeglasses and contact lenses on premises. According to national healthcare expenditure account, which is officially estimated by Centers for Medicare and Medicaid Services (CMS), in 2008 ophthalmic products sale had reached 26.
6 billion, excluding the service of the optometrists. Despite the global economic recession that occurred in 2008, the global market for eyeglasses is expected to reach US $95. 66 billion by 2015. This trend is expected to continue with an annual compound annual rate of 4. 4 and 2. 4 percent, in the world and United States respectively. According the American Optometrist Association 2008 report, privet optometrist’s practices account for the largest share of the market with 44. 8% of dollar volume sale, followed by 30.
1% by chain stores and large merchandisers. Most of these private practices are often in rural areas serving smaller populations and have established relationships with their patients, but often do not like to spend on new technology. Based on the data from Jabson Optical Research and MBA survey, sales during 2011 grew at somewhat faster rather than overall revenue among independent optometric practices. These private practices often only focus on building on personal relationships and providing core services without much regard to the importance of appearance.
On the other hand, large practices that often locate in larger population centers invest in attractive displays and modern equipment since they have an organized marketing strategy, to gaining credibility in the eye of their customers. The glass fitting technology is mainly a new industry that is currently focusing on virtual technology in order to continue to attract customers in to E-commerce. One of these online eye wear retailor such as Ditto Inc. allow shoppers to create a 3D version of themselves using the webcam recording, which allows online customers to put on different frames before making a purchase.
According to their online customer representative, the company was created seven months ago which did not allow her to make a prediction on the life cycle of the industry or seasonal trend of this new company Although, currently there is no direct competitor to our product, there are emerging trends that could negatively impact our market. The most prevalent trend, that needs to be taken into account, is the impact of the internet and more specifically online shopping on brick and mortar retail businesses. Research shows that the brick and mortar retail industry is on decline while the ecommerce industry is growing at a significant rate.
Online sales are now approaching $200 billion a year in America. Their share of total retail sales is creeping up relentlessly, from 5% five years ago to 9% now. Websites that specialize in selling prescription eyeglasses currently are able to sell glasses at deep discounted rates, which could be up to 70% off. This is often due to the fact that on-line stores do not have an overhead cost like physical stores do. The main advantage that physical eyeglass stores have over on-line retailers is their ability to give customers in person experience with trying on different sets of eyeglasses and fitting them according to customer specifications.
Our product attempts to improve this costumer experience by making the glass fitting experience more convenient and pleasant by introducing new technology. This in person experience, which our product relays on, is only a temporary advantage over on-line retailer. While buying a pair of eye glasses is a very personal purchase, some eye glasses sites are able to give customers similar shopping experience virtually. Sites such as Ditto and applications such as the iPhone 4 m-commerce application are able to identify a face and applies virtual glasses, allowing the user to move about, and see how the glass fits.
As these virtual technologies advance in the near future, the in person experience might not play a significant factor in customer choices, which will have a significant effect on our product. The current industry forecast for on-line eyeglasses and contact lenses was $347,700,000 and it is expected to reach $530,300,000 by the year 2017. This trend is not unique to the eye glass industry. The business model of BestBuy and Borders, which heavily relied on their physical store presence, has forced them to significantly scale down or go out of business, due to the price competitive advantage that on-line stores, such as Amazon.
com and other on-line retailers have. At this growth rate, it might pose a challenge for our product, which would be used in physical stores, as these businesses continue to see their revenue decline while the on-line industry continue to rise in its popularity. One of the environmental threats that can have a major effect on the purchasing decision on optometrists is the current health care reform climate that some suggests has created an atmosphere of uncertainty in the health care industry.
Right now, standalone vision plans such as VSP vision care, MESVision, and Eyemed, are not included in the insurance exchange plan while vision plans that are owned by health plans such as Spectra and March Vision are included. Considering 100 million Americans used stand-alone vision plans which provide 90 percent of the vision insurance in the United States, this might have a significant effect on their business capital improvement decisions.
According to the 2012 edition of Management and Business Academy (MBA) report for eye care professionals, independent optometric practices receive 52% of revenue payment from health and vision insurance plans, 15% from Medicare and 33% directly from patients. In 2009, the VSP board chair and the incoming board chair ran an op-ed about how health care could impact optometry. In it, the chairman expressed his skepticism that families with vision plans will face the choice of either maintaining two separate vision plans or moving all of their coverage to what will/could be an eye examination-only medical plan.
They fear that patients will be forced to see a primary care eye doctor before they can visit their local optometrists, which will cause a decrease in utilization of these eye care services. Currently the frame component of the eye glass sale account for the 20% of total practice revenue according to the MBA report. The median practice had 850 frames on inventory, valued at $240, 240, and reported dispensing of 1,534 complete pairs. This is the industry that will be the focus of the on-site fitting technology that our product tries to market to.
Two growing trends that can have a negative impact on this industry is the growing popularity of Lasik eye surgery and eye contact industry. According to Ophthalmic Laser: A global Industry outlook report, the global market for Ophthalmic lasers will rise from $591. 5 million in 2011 to $804 million by 2015 worldwide, at compound annual growth rate of 7. 65 percent. Also, the worldwide contact lens market is now estimated at $6. 8 whole the U. S market is estimated at $2. 6 billion with an adjusted growth rate of 3-5 percent worldwide in 2012.
Although both of these scenarios might be a threat in the distant future, a small yet growing number of those with the Lasik surgery are starting to experience complications with their operation which might discourage more people from deciding to embrace it as one option. And although eye contacts can replace eye glasses, currently, nearly all contact lenses patients wear eyeglasses during a normal week and need a pair in their current prescription according to the MBA report. There is currently no other direct competitors to our product, but the cost of quickly entering our market is relatively not difficult.
Although our product can be patented, there are various other patents that are currently still active with similar features, which have made their product only slightly different in order to acquire a patient license. This would means our focuses of limiting completion should be based on making our product the industry standard that most optometrists would like to have, through maintaining a quality product that is user friendly and easy to maintain by making the application easy, mobile, and providing product tutorials and technical support.
Also, there are multiple part suppliers to our product, such as camera and video recording device manufacturers, which will help us drive down cost by finding the best cost effective wholesale supplier among many. Our initial target market will be independent optometric offices, mainly located it metropolitan areas to test the market first and possibly make improvement, before reaching major production stage. Once product test has being performed in these small independent offices, our company should focused on marketing to large chain stores that provide both prescription eye and sunglasses, without major time gap.
According to the MBA report, the average eyewear Rx generate a gross profit of $138 and a gross profit margin of 61% which is equivalent to a mark-up of 2. 6 times cost of good. A median of only 10% of patients who purchase eyewear in independent optometric offices buy more than a single pair during an exam visit and only one-third of eye glass wearers report using more than a single pair of eyeglasses. Our product can be geared toward achieving the sale of a second pair to 15% or more which would have a significant upside for our customers.
Although the recent economic environment had a negative impact on the purchasing behavior of consumers including eye glasses, the projected positive economic recovery will means companies will be more likely to invest on products that will give them a better competitive edge. Although designer frames provide optometrists a better profit margin, they tend to stay on shelf for longer period than cheaper alternatives. With a better economic outlook, consumers will have more discretionary income which will allow them to go for more expensive brand name options.
Our product can be the catalyst on speeding up the turnover ratio by making the shelf life of these frames much shorter. . The worldwide contact lens market is now estimated at $6. 8billion, while the U. S. market is estimated at $2. 6 billion. Growth of 3 percent to 5 percent expected in the United States and worldwide in 2012. According to Ophthalmic Lasers: A Global Industry Outlook available from Global Industry Analysts[->0], the global market for ophthalmic lasers will rise from $591.
5 million in 2011 to $804 million by 2015, a compound annual growth rate of 7. 65 percent. According to Ophthalmic Lasers: A Global Industry Outlook available from Global Industry Analysts[->1], the global market for ophthalmic lasers will rise from $591. 5 million in 2011 to $804 million by 2015, a compound annual growth rate of 7. 65 percent. This results in patients seeing their eye doctor less than half as frequently as they do when their care is delivered through specialized eye care plans.
When coverage is limited to an examination only, patients are four times less likely to visit their eye doctors. https://www. bea. gov/scb/pdf/2010/09%20September/0910_healthcare. pdf http://eyefinityblog. com/2009/11/17/healthcare-reform-and-optometry/ http://www. prlog. org/11765166-vision-care-devices-global-pipeline-analysis-competitive-landscape. html http://www. prweb. com/releases/eyeglasses_spectacles/lenses_frames/prweb4259644. htm http://www. nytimes. com/2008/04/24/business/24lasik. html? _r=0 http://www. visioncareventure. com/ME2/Audiences/dirmod. asp?
sid=&nm=Insight&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&AudID=6885CE1E5B9D4FE89D6AB336E4378B13&tier=4&id=DF22DCEFA0284ECC9F791C9EC1E0016C http://state-of-optometry. epubxpress. com/luxso1 http://eyefinityblog. com/2009/11/17/healthcare-reform-and-optometry/ http://www. mba-ce. com/data/sites/1/paa_keymetrics_2012_lr. pdf http://newsfromaoa. org/2012/04/03/new-aoa-course-helps-practices-benefit-under-health-care-reform/ http://optics. org/indepth/3/1/4 [->0] – http://www. strategyr. com/ [->1] – http://www. strategyr. com/