Opternative, commercially launched in Chicago in 2015, is the provider of a highly innovative--and potentially disruptive—platform that allows people to have their eye exams performed online using a technology application the company developed starting in 2013.
Established refractive eye exam techniques are the basis for the now patented business applications developed by the company’s founders. The outputs of Opternative's online eye exam are reviewed through a network of ophthalmologists, who also work online. Opternative, which offers the option to order eyeglasses and contact lenses online, digitizes and streamlines the process of obtaining an eye exam and potentially purchasing eye wear. The company states that its online service is not intended to replace extensive eye exams by optometrists or ophthalmologists (e.g., pupil dilation), which the company recommends be performed every two years.
We typically do not cover work intermediation platforms that are consumer-oriented; however, we’re making an exception in this case because Opternative illustrates platform features that could have analogs in a B2B services setting (services/indirect spend procurement). Among those features are the use of sophisticated, specialized technology that users interact with as a part of the service performance and integrated work and inputs of online experts to produce a service outcome. Perhaps most important, Opternative also offers a great example of how technology-based platforms can reorganize existing supply chains into new, highly efficient service delivery models. In some ways (though the company does not assert this), Opternative could be viewed as a kind of Uber for optical services.
Opternative has entered a traditional industry that includes the very large, vertically integrated optical product and service company Luxottica (the dominant industry player that owns LensCrafters and Pearl Vision). The industry also comprises a number of medium-sized firms and tens of thousands of small business and sole practitioners in the U.S. alone. In effect, the company’s service could take significant market share from optometrists or the eye exam services of brick-and-mortar eye care companies.
The company reached operations in 33 states earlier this year but has encountered headwinds, with at least eight state legislatures passing laws that prohibit online eye exams. As one might imagine, thousands of optometrists have raised objections to this service, while ophthalmologists (specialists who do not do corrective lens exams) see value in it. The veto of the Republican governor of South Carolina was promptly overturned by the legislature. Even Newt Gingrich has weighed in to repudiate a bill in Georgia, saying that optometrists' current service model “exists not for medical reasons, but because it ensures a steady and repeat customer base for the optometrists." Thus far, eye care insurance companies have remained quietly on the sidelines.
Market and Business
According to some sources, the number of eye exams for corrective vision was reported to exceed 90 million in the U.S. in 2012, with revenues for all types of eye exams exceeding $5 billion.
Less than a year from its launch, Opternative has reported 65,000 registered users, attracted to this alternative fast and efficient model. Though it is very early days, the model is promising:
A customer can complete the eye exam in about 25 minutes, at which point it is sent to a network ophthalmologist to review online. At that point the customer has the option to order eyewear, which can be delivered in 24 hours. The exam itself is freemium, and the ophthalmologist prescription costs $40. Eyewear purchasers presumably enjoy typical e-commerce price advantages.
The benefits to customers include cost, time savings and convenience. The use of an online network ophthalmologists is a brilliant stroke in terms of network-based efficiencies and politics (this may also be viewed favorably by customers).
If Opternative was eventually able to capture 25% of the annual corrective vision eye exam market, it could be a unicorn. But the company has yet to prove itself, and there is at least one significant limitation already coming into play — state legislative preemption.
Notwithstanding that, Opternative has received $9.5 million in funding, indicating investor confidence in the business.
Spend Matters View
Opternative represents an interesting and instructive work intermediation/service platform case for a number of reasons, despite its consumer-oriented approach:
- It illustrates an online work intermediation/service platform model that could arise in a B2B setting and is unique in a number of respects.
- It creates a comparatively fast, convenient and efficient service by integrating:
- Unique advanced technology (something that goes beyond an e-catalog or even AI-driven guided buying)
- A networked, vetted crowd of online experts working (perhaps moonlighting) on a “freelance” basis.
- An ecommerce solution — hence not just a service, but also a product buying and delivery offering.
- It also illustrates how an online platform can restructure a supply chain to create buyer advantages in the form of cost savings, speed and other benefits. For example, a key feature of platform models is the collection of extensive data that can support visibility, spend analysis and other important analytics-based optimization and prediction.
- Finally, it also illustrates the disruption that platforms can drive — not just in the classical Clayton Christensen sense but also in terms of unleashing a complex dynamic (read “risk”) among industry stakeholders, including governments and the courts. (Uber has been the poster child for this.) However, such risks may be tempered in the case of B2B platforms, where consumer protection issues may not come into play at all.
If looked at from a procurement practitioner standpoint, the relevance of Opternative may not be immediately clear. However, stepping back, it presents an instructive example of what a platform (versus just a marketplace of supplier network) can do and what significant second-order effects it might give rise to. If we assume that platforms will play a greater role in supply chains and procurement, then there are probably important insights to be extracted.
To learn more about Opternative, visit its website.