Business

Who needs Square, PayPal? Warby Parker forges its own path for payments

Warby Parker is not only “disrupting eyewear” — it’s taking on the point-of-sale (POS) industry too and building its own POS system.

The hot e-retailer of eyewear is known of being one of the most tech-savvy fashion brands out there. Warby Parker makes stylish eyeglasses and sunglasses that sell for $95. The brand’s success not only stems from its stylish, reasonably priced product but also from its savvy use of the Internet to “disrupt eyewear.” According to a report in AllThingsD today, Warby Parker is now building its own point-of-sale system after failing to find an existing vendor that would accomodate its needs.

Before Warby Parker, most people avoided buying glasses online because physically trying on frames was a key step of the process. Warby got around this by setting up an at-home try-on service where shoppers can sample five pairs of glasses for five days as well as offering virtual try-on feature and placing Warby glasses in “pop up” stores. These steps gave consumers the real-world experience they craved but kept their transactions online.

The company recently closed $41.5 million and investors include big names like General Catalyst Partners, First Round Capital, Lerer Ventures, Menlo Ventures, SV Angel, and Millard S. Drexler of J. Crew and American Express. The money was slated to expand its product offerings, marketing efforts, and open brick-and-mortar stores.

Warby Parker stores opened in New York City this spring and more are on the way. Director of retail Kyle Ashley told AllThingsD that the company looked into multiple point-of-sale systems, but it found nothing that suited its unique requirements when it came to payments or customer management. While most physical retailers charge at the point-of-sale, Warby wanted a way to charge when a purchase actually shipped. It also needed an integrated system for entering and storing prescription information. Warby’s sales process is also unique because customer interactions are spread across so many different channels  — there are e-mail and web communications; billing, shipping, and payment data; and now in-store information, and it all needs to be consolidated to provide a cohesive, positive consumer experience.

Instead of customizing existing software or picking-and-choosing from multiple products and assembling something piecemeal, Warby has decided to build its own. The system is still in progress and may be expensive to build, but it will ultimately pay off when Warby doesn’t have to pay expensive licensing fees to multiple vendors over an extended period of time.

The point-of-sale industry went undisrupted for a long time and only recently began seeing some innovation. Square led the charge with its “dongle,” or small card reader that plugs into iOS devices to process credit card transactions. Since then a number of startups around the world have built solutions that provide cloud-based, flexible, cost-effective alternatives to legacy vendors, which are traditionally bulky, expensive, and not connected to the Internet.

Warby Parker is part of this trend of direct-to-consumer e-commerce startups that cut out the middleman to reach consumers with quality products at a lower price point. Operating a physical store is expensive and the Internet provides a cheaper (and more expansive) alternative for marketing, sales, and distribution. Bonobos and Julep are both well-funded, successful examples of this approach, and interestingly, they too are experimenting with real world commerce. Bonobos is opening Guideshops around the country and Julep has opened multiple salons.

The gap between online and offline commerce is becoming fuzzier with every passing month. Retailers that start out online have different requirements than brands that go the other direction, and the available POS systems haven’t adopted to this new breed of brand. In true form, Warby is figuring out a way around these barriers.

Warby Parker is based in New York.

Photo credit: Cullen Wilson


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