I went to the Optometrist for an eye exam and to get a new prescription for contact lenses (exciting start to an article, I know). I decided to get a six month supply from my doctor, and get a six month supply from the Internet.
The story is the same as all transformative eCommerce industries: minimize a middleman, get much lower prices. The contacts cost nearly $100 less (about 40%) for six months, just by going online. As this industry grows, Optometrists will have no choice but to start charging more for eye exams (or cut their salary), as their traditional margins of selling contacts erode.
In the airline industry, change has been swift. The number of consumers who use travel agents to book a Domestic flight has been rapidly declining as most people I know use one of the travel aggregators such as Expedia, Travelocity, or Kayak.com (my current favorite). It’s quite telling that these sites organize their fares by price. Not sorted by airline. Not sorted by if an aisle seat is available. Sorted by price.
Due to the transparency of price, consumers need a compelling reason to spend the extra $25, $50, or $100 on a flight that is not the cheapest. I type this sitting in my leather chair, watching DirectTV, getting 12 more True Blue points on… You guessed it, Jet Blue.
Jet Blue is an interesting case as they differentiated by price and amenities. The price originally sold me on Jet Blue, but the aforementioned amenities keep me coming back. I’m flying them now even though there were cheaper alternatives for this particular route.
Other airlines have tried to create loyalty through strong loyalty programs, first class amenities, as well as price matching through restructuring of their worker structure (UAL reorganization, Delta pilot salary concessions to name a few)
But back to contacts. Contacts are a major part of a wearer’s daily life as they effect how someone sees, and are generally used on a daily basis. I’m sure we all wish our products were used this much by our consumers. However, my optometrist recommended a generic brand to me- she didn’t feel there was a significant difference in brands. As pricing becomes more transparent, contact lens companies will need to change this perception and innovate, so optometrists can explain to their customer the benefits of one type of contacts over another. For example, many contacts now have a lettering system to easily tell if a contact is inside out; there are color contacts (yes those are my real brown eyes); and many are now UV protected; the list goes on.
In almost any industry, as pricing transparency enters the market, the market must innovate, or face commoditization. Substitute the word contacts for your product. Could this happen to you?
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