There are 27 stores of which 12 are outside the US. “In 2020, our digital channel represented 89% of our sales, while stores accounted for the other 11% of our sales (down from 17% in 2019).” The first store was opened in 2017. “All U.S. stores that were operating in 2019 generated approximately $4.3 million in average unit volume, or AUV, in their first 12 months of operation. We are in the early phase of a ramp towards hundreds of potential locations in the future, with strong unit economics.”
The omni-channel customer is the most valuable. “Across all cohorts and through June 30, 2021, our multi-channel repeat customers, who represented 12% of our total repeat customers as of such date, on average spent approximately 1.5 times more than our single-channel repeat customers.“
The customers are loyal. “Approximately 53% of our net sales in 2020 came from repeat customers, which we define as customers who have made a prior purchase with us in any period (it was 41% in 2018).”
New products are key to cohort growth. “80% of orders from repeat customers in the six-month period ended June 30, 2021 included a different item than in their first order, and 26% of those orders were for multiple items.”
International sales are important. “In 2020, 24% of our net revenue came from outside the United States, signaling a strong foundation from which to scale our business globally.”
$204mm+ raised. $269mm of total capital has been raised when including additional paid-in capital. $126mm of cash sits on the books so net investment is $142mm. There is no debt.
Warby Parker insights from prospectus
It’s been an 11 year journey. “When we launched the business in February of 2010, less than 2.5% of glasses were sold online — yet we believed that if we offered high-quality, uniquely designed glasses for a reasonable price point, with mechanisms to try them on like our Home Try-On program, and outstanding customer service, people would be willing to buy eyewear online for the first time. We reached our first-year sales targets in three weeks, sold out of our top 15 styles in four weeks, and built a waitlist of thousands of customers for our first-of-its-kind Home Try-On. Those first few months were chaotic to say the least, but we learned a lot.” Interestingly, Warby made the decision to go omnichannel early-on, opening their first store 3 years after their founding in April 2013. An app didn’t come out until May 2016.
The customer could come from anywhere. “we find that there is significant interplay across online and offline channels — browsing online might lead to a visit in one of our more than 145 stores and end with a purchase via our e-commerce app. On average, we have observed total market sales increase over 250% in the first year after opening the first retail store in that market. During the first year of opening, e-commerce sales growth slows as the market rebalances between online and store sales. After this initial period, we see e-commerce growth rates normalize to the same level as our purely e-commerce markets that have no store presence. For example, our total sales in Atlanta grew over 295% in the year following our first store opening in September 2014, while e-commerce sales declined by 3% over the same period. In the following two years, e-commerce sales growth normalized to 32% and 33%, respectively. As of June 30, 2021, we now have three stores in the Atlanta market.”
Very strong contribution margins. “Our Average Contribution Per Customer for the years ended December 31, 2018, 2019, and 2020 was $48, $54, and $45, respectively, reflecting Contribution Margins of 25%, 26%, and 21%, respectively. In 2020, the decline in Average Contribution Per Customer was impacted by the COVID-19 pandemic, which led to lower overall demand and slower growth in our Active Customers relative to 2018 and 2019. The decrease in Contribution Margin was also driven by an increase in Customer Acquisition Cost, which increased 49% to $40 per customer in 2020 compared to $27 per customer in 2019, while the increase in our Average Revenue Per Customer was 5%, from $208 in 2019 to $218 in 2020 and 16% since 2018 from $188. The 2020 increase in Customer Acquisition Cost was driven by deliberate investment in media spend; we wanted to broaden awareness that our business could support customers throughout the pandemic by offering critical products and services to help people see through our e-commerce channel and telehealth offerings.”
Vertical integration with outsourced manufacturing. “We design and sell glasses under our own brand name. Our integrated supply chain consists of owned optical and fulfillment laboratories as well as third-party manufacturing and laboratory partnerships that we have built over the years and gives us control over product quality and fulfillment speed.”
$500mm+ of capital raised. $633mm of total capital has been raised when including additional paid-in capital. $314mm of cash sits on the books so net investment is $319mm. There is no debt.
Visit us at blossomstreetventures.com and email us directly at sammy@blossomstreetventures.com