Myopia lenses belong to what industry

Glasses stores belong to the service industry; specifically, they are half business and half medical (commercial sales, health care)

Profit analysis of the glasses industry

Related data show that 90% of China's 320 million middle-aged and elderly people need glasses; of the more than 20 million schoolchildren, at least 80% of them need glasses. And a person's demand for more than one pair of glasses, plus glasses for fragile products, damage and update rate is very high. 50 million pairs of annual demand, 20 billion yuan in annual sales, 10% annual growth rate, which is China's eyeglasses retailing industry is now the market capacity. The eyeglasses market is a huge market, such a large market has to attract attention.

The eyeglasses industry is a special industry, which deals with semi-finished products that must be processed by intermediate retailers before they can be sold as products. This makes the profit of this industry hard to figure out. At the same time, the transparency of information in the eyewear industry is very low. Frames and lenses are processed through optical stores before they can be sold out, so no manufacturer is that motivated to advertise, unlike electrical appliances and cell phones. This creates information asymmetry between buyers and sellers. The many unknown factors in the eyeglasses industry have created a profiteering debate between non-industry people and industry people.

I. Analysis of the industry situation

1, the eyeglasses industry profiteering

Early in 2004, some media listed the eyeglasses industry as one of the top ten profiteering industries in 2003. In May of the same year, China Economic Times published an investigative report: "8 yuan frames sold to 180 yuan to peel off the domestic eyeglasses industry profiteering amazing truth." The factory price of 8 yuan glasses sold to the consumer's face is 180 yuan. According to the survey, the level of regular manufacturers within the scope of Wenzhou, wholesale eyeglasses frame 15-20 yuan is considered high-grade, 10-15 yuan is considered mid-range, 3-10 yuan is considered low-grade. But these frames appear in the optical store counter, less than a couple of hundred, more than a thousand.

The other half of the total sales of framed glasses are eyeglass lenses, and there is also this problem with lenses. General myopia lenses, if the glass white, the price of entry is generally as little as 3 to 5 yuan, plus the film glass lenses are only 8 to 15 yuan, but turn can easily be sold to more than 100 yuan. Imported Korean resin lenses, for example, the lowest wholesale price of 25 to 30 yuan, the quality of a little better for 45 to 60 yuan, but in the retail can be sold for more than 300 yuan. If it is a little famous resin lenses such as Essilor, TAG Heuer, Suna, etc., the retail price can be sold at least 800 yuan a pair, but the purchase price is only about 300 yuan. There are sunglasses, the wholesale price is generally between 15 yuan to 35 yuan, in shopping malls and specialty stores can be sold at least 200 yuan, even if the 40% discount, the business is still profitable.

2, non-profit defense

Glasses is a special commodity, customers want to wear a pair of suitable glasses, from the lens and frame factory to the customer to use, but also after the optometry, processing, adjustment, review and other links. Therefore, the sale of eyeglasses is a completely personalized service. Under standard technical conditions, optometry takes between half an hour and one hour, and about two hours for complex and difficult cases. The initial estimate in general is that the cost of optometry is about 50 to 100 dollars and the processing cost is about 25 to 30 dollars. But good lenses have more processing procedures and the time cost rises. Mass production of lenses, myopia within 1000 degrees, astigmatism within 200 degrees, more than this range, eyeglass lenses need to be customized, the processing time to be in 3 days to 1 week time. Special needs even need to go abroad for processing. Since optometry and processing are more complex technical work, the embodied value needs to be further calculated (the cost of optometry is about US$30~50 in the U.S. and HK$200~700 in Hong Kong), and the value is hidden in the country, which generally uses free optometry and free processing as a selling point to attract customers.

For standardized chain stores, the invisible class gross profit margin of about 30%, frames, lenses gross profit margin of about 50%, such a high profit margin is partly due to optometry and processing costs mixed in the price. It is assumed that the merchant's gross profit margin can be maintained at about 50%. After amortizing the operating costs, the expense structure is approximately as follows: rent accounts for 14% to 16% of turnover, labor costs are about 13% to 14%, marketing expenses are about 6% to 8%, depreciation of fixed assets is 3%, 17% of the incremental tax, 50 × 17% = 8.5%, and other expenses are 2%, including distribution, scrap rate, and so on. The above expenses total between 46.5% and 51.5%. In a boom, the net interest rate is as low as 3.5%, and in a recession, even a loss.

The eyeglasses industry is neither a policy-protected industry nor a monopoly industry; it is an industry that develops normally under market conditions. Through competition, the businessman's profit margin is getting smaller and smaller. It is said that it is a profiteering industry, it does not have the basis of profiteering, and can not find the reasons that can be accomplished for profiteering in the optical industry; all the expenses and sales profits of the optical retail stores are reflected in the commodities, and the consumers do not know many of the expenses of the optical stores, and they do not have enough knowledge about the added value of the labor force of the optical products, the technological added value, the sales added value, the added value of the design, and the added value of the famous brand. Some consumers simply compare the factory price of frames and lenses they know with the retail price of finished lenses, thus concluding that eyeglasses are profiteering, which is illogical.

3, factor analysis

①Semi-finished products

Glasses and color TV and cell phones and even cars are different, the optical store is not a finished product, but a semi-finished product, "8 yuan frames" is just the factory price, and frames and lenses sold to the optical store, but also need a series of processing and dispensing glasses, the optical shop needs to be equipped with a series of service procedures, the optical shop needs to be equipped with a series of services. After the frames and lenses are sold to the optical shops, a series of processing procedures such as optometry and dispensing are needed, and the optical stores need to set up professional instruments and licensed professional optometrists, which can be solved by more than just a few salespersons. In this way, it is difficult to directly reflect the reduction of the price of eyeglasses products coming out of the factory to the consumer field.

②Low transparency of information in the industry

The transparency of information in the eyewear industry is very low. Frames lenses have to be processed through the optical store before they can be sold, so no manufacturer has that high motivation to advertise, unlike electrical appliances and cell phones. This creates a lack of understanding of the consumer of the optical products. Information asymmetry between buyers and sellers. The salesman knows what is going on with the glasses he sells, but the consumer doesn't have the knowledge and just wants the more expensive the better, and more often than not, the money is spent to buy a peace of mind.

③The old sales business influence

The old store store store sales business, resulting in 'three points of glasses, seven points of the cost', their own prices can not come down, but also hindered the emergence of new business.

④Industry agreement

Eyeglasses industry in the past there is a convention, that is, the purchase price multiplied by 2 or multiplied by 3 for the retail price on the counter, but industry insiders revealed that who still abide by the rules of the trade will be regarded as a fool, and even the industry is also circulating such a catchphrase: "20 yuan of the frames, 200 yuan to sell to you is to speak of favors, 300 yuan to sell to you is to speak of friendship, 400 yuan to sell to you is to speak of friendship. You are talking about friendship, 400 yuan to sell you are talking about the market."

Two, cost analysis

If you look at the data from 8 to 180 alone, the eyeglasses industry is sure that there are most people think of profiteering. But whether there is profiteering need to have a comprehensive analysis, especially with the economics of the point of view to analyze.

The eyeglasses industry insiders have an analysis of their own to prove that there is no profiteering in the eyeglasses industry: eyeglasses are a special kind of goods, unlike some products, the factory parts can be put into use after a simple assembly. Therefore, for myopia, presbyopia and other glasses with degrees, from the lens and frame factory to the customer to use, but also through more complex links, that is, optometry and prescription, and even review. Therefore, the sale of eyeglasses is a completely personalized service. Under standard technical conditions, optometry takes between half an hour and an hour, about two hours for complex cases. The initial estimate for a typical case is about $50-100 for optometry (the cost of optometry is about $30-50 in the United States and about $700 in Hong Kong) and about $25-30 for processing. But good lenses have more processing procedures and the time cost rises. Now the instantly available current lenses are for myopia within 1000 degrees and astigmatism within 200 degrees. Anything beyond that belongs to a special group of people and needs to be operated separately, and the processing time will take from 3 days to 1 week, and it may even be shipped abroad for processing, which will also incur the cost of tariffs. As optometry and prescription glasses are highly complex technical work, are for each customer to provide personalized service, therefore, the embodied value needs to be further calculated, and the domestic optical stores generally free optometry, free processing as a selling point to attract customers, the value of which is hidden.

The credibility of this set of data can not be said to have no, but also can not be fully believed. If the analyzed data shows that the optical industry only exists in the net interest rate as low as 3.5%, then why are there still so many optical stores exist? This set of data can only be described as an exaggeration of the industry.

But consumers still do not understand the cost of glasses, which are:

Consumers can see, now the optical store are in the downtown area, the price is not low front cost is a lot of part of the cost. In accordance with the "national standard for prescription eyeglasses (GB13511-1999)," the provisions of the optical examination alone, it must be half an hour time, samples to try on 15 minutes. This regulation increases the time cost of the optician, and also shows that the optical industry is a technical industry, there are technical costs.

In addition, the optical businessmen have to open a store to operate, to Daming Beijing Road two stores, for example, its store investment in the monthly rent of about 10,000 yuan, equipment investment of about 150,000 yuan, personnel expenses of about 6,000 yuan per month. In addition there are working capital costs, raw material inventory costs and so on.

To capitalize on the conversion, an eyeglasses store a day's overhead of more than 2,000 yuan, then the daily sales of eyeglasses store to reach more than 2,000 yuan in order to make a profit.

Three, profit analysis

First cited an analysis of the optical industry:

"For the standardized chain stores, the invisible class gross profit margin of about 30%, frames, lenses, gross profit margin of 50% or so, we also want to reiterate is that such a high profitability is partly due to the cost of optometry and processing costs are hidden inside. Assuming that the gross profit margins of the merchants can be maintained at around 50 percent, and after sharing the operating costs, the cost structure would be as follows:

Rent accounts for 14-16 percent of the turnover.

Labor costs are about 13-14%, including operating managers, optometrists, sales, repair and processing staff.

Marketing costs are about 6-8%, including the chain's publicity, promotional activities and so on.

Fixed assets depreciation of 3%, mainly the consumption of optometry equipment and processing equipment.

Additionally there is a 17% incremental tax, 50 x 17% = 8.5%.

Other costs 2%, including distribution, scrap rate, etc..

The above expenses total between 46.5-51.5%. In other words, the net profit margin is as low as 3.5 percent in a business boom and even a loss in a business slump."

While the credibility of this set of data is not high, imagine such a low profit margin and yet there are still so many optical stores, and one more luxurious than the other. There is certainly a lot of exaggeration in this set of data, but its economics analysis angle is complete.

Here's a hypothesis to calculate the profit margin of the second branch of Jingzhou Daming Optical Shop on Beijing Road as an example.

Costs:

Store rent: 10,000 yuan/month

Store decoration investment: 20,000 yuan, replaced once every three years

Equipment investment: 150,000 yuan, amortized over ten years.

Labor costs: $8,000/month

Taxes: 17% of profit margin

Amortization of inventory and other expenses: $10,000/month

This allows us to calculate a daily capital overhead for the store: about $2,183.

The store receives an average of 10 customers a day as the calculation standard, according to the ratio of high-grade, mid-range and low-grade 1:6:3 to calculate. The price of high-grade glasses to 1200 yuan / pair of calculation, raw material costs 180 + 300 = 480 yuan; mid-range glasses sold at an average of 450 yuan per pair of calculation, the cost of raw materials for the 25 + 45 = 70 yuan; low-grade glasses sold at an average of 150 yuan per pair of calculation, the cost of raw materials for the 15 + 10 = 25 yuan. Deduct the cost of raw materials, then the store's daily gross profit is:

1200-480 + (450-70) × 6 + (150-25) × 3 = 3275 yuan

Deducted from the daily expenses and taxes and its average daily net profit is: 906 yuan. The average net profit margin is about 30%!

So the eyeglasses industry should be a high profit industry, of course, not like many media reported profiteering or industry profiteering. Although the eyeglasses industry has a high profit, but there is a large part of the middle is the cost of technology and risk. Because optometry and lens processing in the middle of the technical factors and investment risk is not good with the money to measure.

Four, the industry development trend

Price will become inevitable, the old business will be broken.

At present, "glasses supermarket" and "100 yuan glasses store" have appeared. Guangzhou "glasses through train" to avoid the strange circle of the optical store, in the same busy road will be their own large signboard hanging in the downstairs, to climb a steep and narrow staircase to go up, the second to fourth floor is a spacious optical store, rows of shelves instead of counters, the decoration than most of the Guangzhou eyeglasses chain stores have been worse than the price of eyeglasses frames, the price of tens to one or two hundred dollars. The price of eyeglass frames is tens to one or two hundred dollars. Shanghai's two "100 yuan glasses" store, the site are in a more remote area, 100 square meters of monthly rent of only 10,000 yuan.

Of course, the emergence of new forms of business will inevitably have obstacles, the old store store store sales business, resulting in 'three points of glasses, seven points of the cost', their own prices can not be reduced, but also hinder the emergence of new forms of business. Every place there is actually a price alliance formed by the industry monopoly, new entrants are often squeezed.

Shanghai and Guangzhou glasses store the innovative way to start from the reduction of store rent. This is exactly the weakness of the chain store business model, which is "high store high rent".

The difference between "Eyeglasses Express" and "Hundred Dollar Glasses" is that it is located in the same downtown area as the big eyeglasses chain stores, and has the same beautiful decoration, and it can sell high-grade eyeglasses, but the price can be much cheaper than that of the big chain stores. It also breaks the practice of eyeglasses chain stores rarely advertise, more than a month after the opening, it actually put 16 million yuan of advertising costs. In the eyes of the general consumers, "glasses through the car" seems to be becoming a new eyeglasses store giant.

The old form of the optical industry gives consumers few choices, and China as the world's factory of eyeglasses is very disproportionate to the "glasses supermarket" and "hundred-dollar eyeglasses store" is now doing, is to break the vicious circle of the old form of the industry.

Su Yong, director of the Department of Business Management at the School of Business Management at Fudan University, believes that the monopoly of the eyeglasses industry will eventually fall apart, and the last to give in will definitely be the famous stores. It is not a coincidence that some glasses stores in Shanghai now have "100 yuan glasses counters" and some famous glasses stores have recently shown a lot of discount advertisements.

Competition will make the new business model, the old business model will eventually be eliminated by competition.

Competition will enable new business models to emerge and old ones to be eliminated by competition.