lenskart: ET Startup Awards 2024: Lenskart eyes $200 million factory as revenue rate hits $1 billion

Lenskart plans to invest $200 million in its new manufacturing plant in southern India, which would be “ten times the size” of its Rajasthan plant, as the eyewear retailer hits $1 billion in revenue for the current year fiscal.

executive director Peysuh Bansal told ET in an interview that for the first time since its inception, online growth has been faster than in the last 10 years. According to Bansal, Lenskart’s local manufacturing has become the backbone of not only India’s online operations but it also sells Indian-made products to its global markets in Southeast Asian markets. 100% local manufacturing has enabled it to make next-day deliveries in eight Indian cities between 5 and 6 a few years ago.

“We’re just getting started” Bansal saying. “The next few years will be about scaling up everything we have built – faster deliveries, more stores, more innovation – and taking India’s eyewear industry to the next level.”

“The Rajasthan facilities have been a pillar for us. We have moved much of our global manufacturing to India; the frames we used to import from Japan are now manufactured locally. This has allowed us to control quality, reduce costs and significantly improve delivery times,” Bansal said, adding that it manufactures 25 million frames a year, as well as between 30 and 40 million lenses.

“We have moved from five-to-six-day deliveries to three-day deliveries and now offer next-day delivery in eight cities, which started in Bengaluru,” Bansal told ET. “This has been possible only because we control the entire supply chain, from manufacturing to delivery, here in India.”

The new Lenskart facility, for which final agreements will be signed soon, is expected to be operational in the next 18 months. Bansal said the new investment comes at a time when the Indian market, which drives most of the business, is profitable and the same is reflected in its overseas operations as well as at a consolidated level. “This gives us the confidence to further accelerate our growth,” Bansal said.

Backed by SoftBankKKR and Temasek, the Gurgaon-based firm more than doubled its FY23 revenue to Rs 3,788 crore and has also posted “significant growth” in FY24. In FY25, it is now on track to close more than $1 billion in revenue, according to people in the know. Bansal declined to comment on FY24 and FY25 financials.

Lenskart took top honors for Startup of the Year where the elite jury recognized their success in building a fast-growing, large-scale, omnichannel consumer retail company while creating an entirely new category.

The new plant will also strengthen Lenskart’s position in India as a global hub for eyewear manufacturing, allowing the company to export to markets such as Japan, Southeast Asia and the Middle East. “We now ship glasses to Japan, Singapore, Thailand and the Middle East. It is a big change for us and the new facility will help us scale it further,” Bansal added.

Omnichannel and consumer experience

The company’s omnichannel strategy, with its online stores and 2,500 retail stores, has been a key driver of its expansion. While its online channel has grown faster in the last two years than in the previous decade, Bansal remains focused on continuing to invest heavily in physical retail. He said the firm will add another 400 new stores this year.

“Our online growth has been phenomenal, but what really drives it is our omnichannel presence. People shop online, but they also come to our stores to make adjustments or pick up their orders. The trust we have built through our physical stores enhances the online experience,” said Bansal.

This execution of integrating online and offline services has enabled Lenskart to tap into a broader consumer base, especially in tier II and III cities. More than 50% of its users are also first-time consumers who buy prescription glasses. Bansal said the high growth of the online channel is also helped by the rigorous work done on its app and website. The company has doubled the size of its engineering team to more than 600 people, focusing on improving customer experiences both online and in stores. “We have introduced several technology innovations, from face sizing tools in our app to social-assisted selling features that allow customers to view and try on different frames virtually,” Bansal said.

The company’s net promoter score, a key indicator of customer satisfaction, has increased from 65 to more than 80 in recent years, indicating the effectiveness of its technology-enabled initiatives. “Technology is at the heart of everything we do, whether it is improving the customer experience, optimizing our supply chain or reducing delivery times,” he added.

Bansal said one of the main focus areas at Lenskart is to continue to focus on consumer experience and deliver it at scale. “We believe that at the end of the day, it all comes down to the customer experience. The bigger you get, with scale, it’s important to achieve what people call “managed growth.” And for us, that has meant consistently delivering on our promise to be on time,” Bansal said.

“We have seen the same thing in industries such as paints or automobiles, where companies have taken 50% of the market share by fulfilling their main promise. For us, the goal is to offer that great experience and at the same time grow,” he added, citing examples from Asian Paints, Maruti and Indigo.

Market opportunity, business abroad and IPO plans

Lenskart remains the largest player and has been able to expand the overall market size by leveraging new users as well.

“There are still more than 75% of our population who need glasses and do not wear them today. So despite our growth, we still have a single-digit share of the overall glasses market,” Bansal said of the growth potential and total. addressable market.

Apart from expanding its core business, Lenskart is also targeting new consumer segments. The company recently launched Cooper, a children’s glasses brand, and introduced what it calls a “highly innovative product” called Creator, designed specifically for children with myopia. The product, with customizable frames and myopia control lenses, is focused on children.

“This is probably the most technically innovative product we have ever developed and is designed to address the growing problem of myopia in children,” Bansal said.

Lenskart’s focus on children’s glasses comes at a time when the market for children’s products is growing rapidly, driven by increased awareness of vision problems among younger demographics.

Lenskart acquired Japan’s Owndays in 2022 to expand in Southeast Asia in the largest merger and acquisition in its history. “We have chosen Southeast Asia (as a market), which has 80% myopia, and India, which has 60% myopia. So I think we already have important markets. We are not actively looking for mergers and acquisitions at the moment Honestly, we already have a lot of markets in play,” he said.

In September 2023, your The subsidiary Neso Brands invested 4 million dollars for a “significant stake” in Paris-based omnichannel eyewear brand Le Petit Lunetier.

“Today, we have 13 cultures working in the company, from Japan to India to the Middle East. How do we make the best of all of this? I think a lot of work has gone into building the overall talent density and capability of execution of the company,” said Bansal on how this will help Lenskart become a global company.

When asked if Lenskart is also planning an IPO next year, Bansal said there is no rush to go public. “It will happen over time, but I still feel like we are very early in our journey… We will go public when the company is at that stage; it doesn’t depend on the timing of the market,” he said.

According to him, many companies quickly go public due to exit pressures. “But we are in a position where we have gotten some people who have done large amounts of secondary information for our existing investors, which allows us to better manage our schedule,” he added.

Lenskart delivered exits of over $600 million to its investors in the last year. In June, Temasek and major US financial services company Fidelity joined forces invested 200 million dollars in the company led by Bansal through a secondary sale of shares at a valuation of $5 billion.