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Warby Parker Essay

Essay by   •  February 12, 2019  •  Essay  •  910 Words (4 Pages)  •  395 Views

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Dear Warby Parker’s Management Team, I am a student from X University. After a month of learning in my accounting class, I would like to share my understanding of Warby Parker(WP) and some thoughts about your future risk and opportunities.

For starters, as a start-up in the eyewear market, WP’s business model includes in-house design glasses, direct sales to customers, a unique home try-on program and buy one give one approach. Your passion is to do good to the society and improve lives around the world. Those efforts showed you took a big role in social responsibilities from the first beginning. WP has a clear value proposition of customer intimacy. Taking part in telemedicine proves that you are offering a full solution to customers and accordingly enhance the brand relationship with them. From your creative marketing efforts and personalized customer service, I can tell your leadership DNAs are primarily customer and innovation. WP is trying to build a friendly, positive and engaging company culture, while on Glassdoor, many people complained about the poor internal communication being one of the growing pains of WP. Also, as I learned in the class, a customer intimacy company usually has a medium to high margin, but you are still not profitable now, so I start to look at the three financial statements’ components to find out why.

Let’s start discussing the asset section in your balance sheet. WP probably have a lot more digital asset than hard asset, since you started as an online company. But with expanding of physical stores, WP’s hard asset might be more than in the past. I also noticed you have a low inventory level since the company’s establishment. I learned that inventory matters a lot when it comes to value proposition. Low inventory level has its advantages, but it can also hurt WP’s customer intimacy value proposition because the longer time people wait for the product, the more dissatisfied they are. Reversely, I understand that the home-try on service is one of your selling points, but imagine if a million people want to try on one pair of glass, then sharing inventory with the flagship stores will no longer be a choice, you will need to have more inventory and buy a separate warehouse which accordingly increases your expenses in PP&E. So having too little or too much inventory both post huge challenges for you. WP should definitely find a way by either limiting the home try-on service or providing more inventory. For intangible assets, the “buy one give one” approach and your passion to improve lives definitely build a lot of goodwill in intangible assets, but a downside of doing this huge amount of company philanthropy is it costs a substantial amount of expenses, time, and effort.

For income statement, WP sells the glasses at average $95, your revenue rose from $35M to $100M+. I think WP might put more operating expenses on marketing and PR(e.g. WP’s GQ story) instead of products themselves. WP interacts directly to its customers through different channels include a huge social media fan base, SMS, live chat, emails and phones. Multichannel communication is highly efficient and personal to build more customer intimacy for WP. Additionally, WP is expanding from online to offline. With enough capital sources from investors, WP’s decision of moving to physical stores proved to be effective in driving both online orders and in-store orders. It is even more important to have physical stores for an eyewear company. Nowadays, it is easier to convert between online and physical stores, because the future is about omnichannel. Having pop-up stores & physical stores is the way to go for WP, and it successfully caught the opportunity of omnichannel to perform at its best and meet customers’ needs at all levels.

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