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Internet Vision: Purchasing Contact Lenses Online

BY MELTEM BUYUKONAT
June 2000

Traditionally, contact lenses are distributed through the recommendation of an optometrist, a state-licensed optical specialist, an ophthalmologist or a medical doctor who specializes in eye care. Contact lens manufacturers usually rely on eyecare practitioners to promote and market their products because practitioners have influence on their patients' brand choice. After all, these same eye care professionals are responsible for writing contact lens prescriptions.

Marketing and Distribution Strategies

Market characteristics such as cultural habits, economic conditions, regulatory environments and telecommunication infrastructures have the greatest impact on contact lens marketing and distribution strategies. The international companies that dominate the contact lens market rely on their corporate management and marketing functions to efficiently evaluate each market, and then use or introduce the best method for distributing their products.

Most of the time, educating practitioners as a matter of course helps them gain an edge. The major contact lens manufacturers, including Bausch & Lomb, Wesley Jessen, Vistakon and CIBA Vision, seem to have well-defined sales and marketing strategies for practitioners. For example, in North America, eyecare professionals receive shipments directly, whereas in international markets, companies serve end users through a network of independent distributors.

Internet on the Rise

North America is the largest and most mature contact lenses and lens care solutions market in the world. Its comprehensive distribution methods range from health maintenance organizations (HMO) to mail order houses.

The evolving avenue of distribution is easy enough to guess. Considering that e-tailer sales exceeded $7 billion during the Christmas season of 1999, it's obvious that Internet distribution possesses tremendous potential for contact lenses and lens care solutions.

In North America, most current and potential contact lens wearers have the same demographic profile as Internet users. In Europe and Asia, stiff regulations exist concerning Internet purchases; however, the convenience of e-commerce is expected to change this atmosphere within the next five years. With an estimated 100 million online users expected by 2002, the Internet is quickly becoming the medium of choice for many Fortune 500 companies to increase market presence.

Internet marketing alone will not increase sales. Rather, the Internet will have maximum impact if used as a tool to educate potential contact lens wearers. Company web sites provide useful information to both wearers and practitioners.

It is a good marketing strategy to develop public relations with other well-established web companies that already have a large visitor base. Likewise, affiliate programs are very effective, as well as banner exchanges with independent retailers of contact lenses and lens care products.

Advantages of Online Purchasing

For purchasers, buying online offers hefty price savings by eliminating the "middle man." In addition, the time-saving doorstop delivery of Internet purchasing spares people from a trip to the practitioner. Furthermore, manufacturers can use their informative websites to introduce new products, offering more choices to online consumers.

For manufacturers, initial investment and maintenance costs of an online ordering site are low, and companies do obtain high profit margins through Internet sales. The Internet allows for broad geographical market coverage without the need for a large sales force. The lack of big store fronts is equalizing the playing field for emerging companies to carry products on the Internet. New entrants or small companies will have a chance to drastically increase their revenues by developing a strong Internet presence.

What Do Practitioners Think?

So it appears that both eyecare patients and contact lens manufacturers will mutually benefit from Internet distribution strategies. But what will be the ultimate impact on the businesses of eyecare practitioners?

Today's practitioners fear that they will actually lose patients because of the Internet. The concern is that customers will not return to their doctors for prescription renewals. Thus, sales generated from repeat business are at stake.

More importantly, practitioners fear that patients will not receive the necessary follow-up care provided through traditional on-site treatment methods. If the eye's condition has changed, or a patient has an adverse reaction to a certain solution, individuals can sustain further eye damage. With this concern in mind, online sellers of contact lenses and solutions must consider the potential legal risk from e-customers.

Despite the Internet's many conveniences, a practitioner's existence is vital to the eyecare patient and the industry. Their expertise can not be matched by the click of a "mouse." Nevertheless, many eyecare practitioners have been able to advantageously use the Internet for promoting patient education, advertising and other customer service-related purposes.

Will The Internet Revive the Contact Lenses Industry?

In 1999, total revenues generated from the worldwide contact lenses and solutions market was $4.91 billion, with a growth rate of six percent. This number is expected to reach $7.11 million by 2006, as developing regions such as Asia and Latin America achieve their highest percentage of revenue growth.

The North American contact lenses and solutions market represents 45 percent of the total market, but this market is also maturing. Contact lens manufacturers could use the Internet as a "resuscitation tool" to revive the North American market, which is witnessing relatively slow growth in traditional product categories. If eyecare practitioners are the "eyes" of the manufacturers, certainly the Internet brings a new "vision" to the contact lenses and solutions market.

Frost & Sullivan released a detailed report titled "World Contact Lenses and Solutions Market" in January 2000. The report includes forecasts on revenues, challenges facing the contact lenses and solutions industry, competitive analysis and major industry trends.

Ms. Buyukonat is an industry analyst specializing in the medical device industry for the healthcare group at Frost & Sullivan.