‘The beginning of a new era’: How Zenni harnessed its vertically integrated business model to reach record heights

After an initial slowdown in March due to supply chain constraints, Zenni says it saw record growth in 2020. With people stuck at home, the company received an influx of new customers trying to avoid going to the eye doctor. And since most were working from home, Zenni’s line of blue light blocking lenses grew at an unprecedented clip.

According to chief product officer Bai Gan, this past year was “the beginning of a new era” for eyewear brands. He joined the Modern Retail Podcast this week and talked about why.

Zenni, which was founded in 2003, makes very affordable eyewear — glasses as cheap at $7. According to Gan, this is because the company uses a vertically integrated business model. Zenni owns much of its supply chain, meaning it cut out middlemen most other brands deal with daily. It owns a one million-square-foot manufacturing facility outside of Shanghai, and works directly with suppliers to get the best rates. For its first decade as a company, Zenni focused on creating this infrastructure. “Originally, we just focused on that core competency — the backend,” said Gan.

Now, Zenni is in hyper-growth and trying to make more people aware of its products. It wields, however, a double-edged sword. “It was a little bit harder to really communicate quality to customers when the price was so exceptionally low,” he said. As a result, over the last few years the company has been on a marketing blitz trying to introduce itself to more customers.

One of Zenni’s big PR approaches is influencer marketing. The company has worked with online personalities and well-known designers — including Rashida Jones and Coco and Breezy. On the podcast, Gan describe the brand’s “sector by sector” approach. This includes working with gaming personalities to evangelize Zenni’s blue light blocking lenses.

According to Gan, the growth is only beginning. For years, online glasses sales stagnated, but the coronavirus changed all that. Now, he said, Zenni is trying to implement a growth strategy its slowly been building. “That vertically integrated business model,” he said, “now seems to be giving us a lot of edges over the competitors.”

Here are a few highlights from the conversation, which have been lightly edited for clarity.

On building a vertically integrated business
“We are deeply embedded in the supply chain. We work with some of the largest ODM and OEM frame designers and manufacturers and we have direct access to some of the lens blanks. Basically, this is what brick and mortar [glasses brands] do. But there [are] a lot of middlemen that we have cut off. I think that’s the biggest piece…. [But] even our cheapest glasses are actually of very high quality… In terms of communication point of view, it was a little bit harder to really communicate quality to customers when the price was so exceptionally low. Our product [costs] about one-tenth the brick and mortar strategy. So that really takes many years in the making. But originally, we just focused on building that core competency — the backend.”

How to choose the right influencer
“To persuade people to go online, we have to go sector by sector. That’s how we have picked our influencers and designers. For example, e-gaming is one of our focuses — that is really about riding the wave of this enthusiasm over blue light filtering glasses. [E-gaming influencers] all have this massive following… With Covid, the realm of influence has really changed — the way you communicate, the way you reach audience; a Reddit post can really mobilize a huge amount of enthusiasm.”

The coronavirus bump
“We actually saw quite a bit of new demand after the initial impact. We saw the makeup new customers amount, compared to total customers, went up in percentage. So we have been dealing with a lot of first-time purchasers of online glasses. That number is still increasing. This is really the beginning of a new era — for a lot of our competitors and the sector as a whole.”