The news was greeted with sadness by many of the company’s loyal customers, who purchased stylish frames on Rivet & Sway initially for $199, and then later for just $169.
Rivet & Sway seemed to have a lot going its way: a growing customer base; attractive pricing and a well-regarded CEO in former Amazon.com manager Sarah Bryar.
So, what happened?
Bryar shared some of the pitfalls with GeekWire, providing a level of transparency not often seen with those dealing with the pain of closing down their entrepreneurial dreams.
Rivet & Sway — which raised more than $3 million in funding — did face serious competition from heavily-funded Warby Parker. But Bryar said the 14-person company’s challenges did not stem from that rivalry. In fact, she said Warby Parker helped get more women comfortable with the idea of buying eyeglasses online.
Rivet & Sway’s problems really were tied to the high-cost of customer acquisition, especially around the costs associated with a service that allowed women to try on frames at home.
“Women want to try frames on before purchasing, but it’s an expensive marketing program to ship frames back and forth,” explained Bryar. “Our economics were improving, and we had plans to introduce hyper-efficient showrooms to attract customers not yet shopping online, but our progress wasn’t strong enough to attract additional capital. We had an option on the table to strip back our team and value proposition, but I felt it would compromise our ability to differentiate on service and quality. And so, we made the hard decision to close the company on a high note.”
Here’s more from an e-mail Q&A we conducted with Bryar Thursday:
What was the biggest surprise — something didn’t foresee happening?
“I’m not sure I can call out a single “biggest surprise.” When you’re forging a new path, there are always things that are surprising along the way because you don’t know what to expect. Hence the fun of a start up!
One insight I found fascinating: women are truly motivated by getting a great deal. We did a lot of experimentation with promotions to influence conversion. On one hand, common wisdom is if you’re going for a brand play, don’t discount. Don’t train your customers to wait for the sale; invest in the brand to justify a higher price point.
On the other hand, discounting truly works — every time. We changed our pricing in January 2014 to maintain the “premium” price anchor at $169 that signaled quality, but we also provided a motivating incentive to buy additional pairs at $99. It was really working well. By the way, I put “premium” in quotes because $169 is a premium to Warby and other Warby copycats but not compared to pricing in legacy channels where $169 still offers a disruptive value.”
Do your challenges speak to the difficulty of selling something online that people are used to purchasing in-person?
“Yes and no. 96 percent of all eyewear purchases still happen in traditional retail channels. But because the process quite frankly sucks — expensive, time consuming, uninspiring — we found that women were quite willing to give us a try especially because we addressed these pain points. However, driving awareness among potential users is much harder because online penetration of eyewear is still low. So when you’re an e-commerce company with limited funds — in contrast to Warby — relying on word of mouth and online search, it’s just harder to reach those potential customers.”
If you could do it again, would there be one thing you’d change with how the business was run?
“If only running a business were straightforward enough to boil down to one thing I would change to effect a different outcome! Hindsight is 20/20 (no glasses needed), so there are a lot of things I would do differently.
Here are a few at the top of my list:
Drive market awareness/dominance regionally: Seattle, NW, West Coast…
Adapt the Home Try On model sooner
Scale only when absolutely necessary (we outsourced to a big-company 3PL way too early)
Focus more on PR
Get more sleep
Aspects I wouldn’t change:
Our authentic commitment to delight our customers
High standards for design: of our collection, the website, packaging, emails, etc.
Our target audience
On what worked, and the overall challenges of the business model:
We designed and manufactured our own frames so that we could offer glasses at a disruptive price point. We helped women find stylish specs via our Personal Stylist and Style Finder services, both of which delivered high conversion and customer satisfaction.Our pricing model, $169 + $99 each additional pair, influenced women to buy more than one pair in every order.
Women loved Rivet & Sway, consistently rating us off the charts for customer service, and referring us to friends. 75 percent of our visits came from referrals, organic search, direct visits, and content marketing like social and email, i.e. non-paid channels. And as I mentioned before, our Net Promoter Score was consistently between 90-95.
The part of the model that was challenging was the physical home try-on process. Even if you can reduce the cost of the back and forth shipping and refurbishing trial frames with scale, the conversion rate has to be high, north of 40 percent, for the cost to justify itself. Let’s say it only costs $15 per home try on. At a 40 percent conversion rate, the cost per converted order is $37.50 — and that doesn’t include the marketing cost to acquire the customer in the first place.
Warby Parker also offers home try on, and there has been speculation that one of the reasons they’re opening up retail stores is because home try on is very hard to scale. Despite advances in virtual try on, customers — particularly women — want to try on frames before they purchase. Maybe that will change over time, but we’re still very early in the adoption curve so physical try on is still expected.”
GeekWire’s Taylor Soper contributed to this report.