Using the Zappos business model, Clearly Contacts is striving for $1 billion in sales.
Expanding from contacts to glasses, Clearly Contacts CEO Roger Hardy sets his sights on dominating the global market for eyewear.
Beneath Vancouver’s Broadway Tech Centre industrial park at Broadway and Renfrew on a spotless factory floor sit three Plexiglas automated booths, each capable of spitting out a pair of eyeglasses every minute and a half. At the far corner of the cavernous facility, an electronic billboard tallies the day’s shipments; at mid-afternoon today, the number 3,616 flashes across the screen.
Roger Hardy would seem to be well on his way to dominating the world market for corrective eyewear. If the goal seems grandiose, consider his success to date: Since co-founding Coastal Contacts Inc. (which operates in Canada under the brand name Clearly Contacts) in 2000, the company’s chair and CEO has overseen uninterrupted growth, from zero to $140 million in sales. “A hundred million was an ambitious target when we started contacts,” Hardy notes. “I think we’ll get to a billion in glasses.”
From ski bum to CEO
The athletic 40-year-old is an unlikely manufacturing mogul. The poli-sci graduate of Quebec’s Bishop’s University came to B.C. in 1994 as a ski bum. It was only after a season at Whistler and then a summer surfing at Mexico’s Baja Peninsula that he settled into a job with Loomis in Vancouver. He credits that early career in sales with the armoured-car courier for much of his success with Coastal Contacts, citing a solid grounding in logistics as the backbone of his global online retail operation.
But perhaps more than anything, Coastal Contacts was the result of being in the right place at the right time. By 1999 Hardy had moved from Loomis to a contact lens manufacturer, and at the time he sniffed an opportunity in retail sales. “I just noticed there was a huge disconnect,” he says. “We as a company sold contact lenses for $12.50 to opticians, who were selling them for $45, $50, $60 a box. I thought there must be an opportunity here somewhere. Even I could figure that out.”
At a time when e-commerce was all the buzz and it seemed everybody and their dog was putting up a website, a virtual storefront was a no-brainer. Hardy launched what would prove to be the first iteration of Coastal Contacts with his sister Michaela Tokarski in 1999.
In a remarkable case of good timing, he almost immediately received an offer he couldn’t refuse and sold the company in December 1999 to More.com, an online drugstore. The San Francisco outfit had big plans to apply $150 million in venture capital to hyping itself with national TV ads in preparation for an IPO. “They spent it in six months,” Hardy recalls. “I worked there and I watched it get spent, every Thursday night on Friends and Ally McBeal.”
When IPO dreams fizzled in the wake of the tech crash, Hardy stepped in to pick up the pieces, repurchasing Coastal Contacts in 2000 and setting the company back on track. (He declines to specify prices of the original sale or his repurchase of the company.)
A lightweight bulk commodity, contact lenses were ideally suited for online sales, except for one complication: the College of Opticians of B.C. cried foul, launching a lawsuit claiming that selling lenses without a prescription and a fitting from a registered optician is illegal. After three years of lawsuits, countersuits and appeals, the matter was finally settled in May this year, when the provincial government enacted regulations enabling the online sale of contact lenses and eyeglasses without having to renew a prescription.
Capturing a new market
While the legal battles may be behind him, Hardy faces a challenge of another kind in his quest to take the company from $100 million to $1 billion. While most customers don’t care about the look and feel of their contact lenses – after all, they either work or they don’t – eyeglasses are another matter. Because they’re as much a fashion accessory as a vision corrective, most customers want to try glasses on before committing to a purchase.
It was a stumbling block that at first Hardy viewed as insurmountable. “For years people were asking us to get into eyeglasses and we said there’s really nothing we can do,” he recalls. “Then we heard about Zappos.” The light bulb went on, he says, after news broke in July 2009 that Amazon.com Inc. had agreed to buy online shoe retailer Zappos.com Inc. for close to US$1 billion – after Zappos had hit US$800 million in annual sales. “They gave us a glimpse of how to do it well,” Hardy says. Hardy is confident that copying the Zappos model of focusing on customer service and offering a no-questions-asked return policy will take Coastal Contacts to the billion-dollar mark.
Back at the Broadway factory, racks of boxes extend as far as the eye can see, each labelled with a designer name: Tommy Hilfiger, Giorgio Armani, Lacoste, Prada. A worker pulls a pair of frames from a box, selects a pair of uncut lenses from another box and places the assembled package on a conveyor belt; a couple of minutes later, a finished pair of glasses rolls out of the Plexiglas booth. Matched with the appropriate designer box, the glasses are packaged and labelled, and today’s pair number 3,617 drops into the shipping bin.
With each pair of glasses, Hardy is one step closer to his goal. Whether the challenges come from disgruntled opticians or aggressive competitors, he is guided by a simple formula. “It’s just the nature of things,” he says with a shrug. “Whoever serves the customer best is going to be successful in business.”