NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

VisionSpring delivers eyeglasses to base of the pyramid consumers, viewing them “not as a constituency that needs to be served with donated glasses, but instead as a potential market that can be activated through a high-volume and low-margin approach.”

The company primarily conducts its operations in El Salvador, India and in Bangladesh with its partner BRAC.

In 2007, the William Davidson Institute at the University of Michigan conducted a study of 450 people in need of reading glasses in India and found that eyeglasses increase customer productivity by 35 percent and have the potential to increase monthly income by 20 percent. (Editor’s note: NextBillion is an initiative of WDI.)

I recently sat down with Peter Eliassen, chief operating officer of VisionSpring, and talked about the company’s “hub-and-spoke” approach – with optical shops as hubs and “vision entrepreneurs” conducting outreach in the surrounding communities – and the company’s aspirations.

Kyle Poplin: What’s your current sales volume?

Peter Eliassen (left): For this year our plan is for 375,000 eyeglasses distributed. We have a few more employees in India (75) than El Salvador (60), but in terms of overall sales, about 155,000 of those units are in India whereas about 35,000 are in El Salvador. (The remainder are sold in Bangladesh in partnership with BRAC or through partners in more than 10 countries.)

KP: Are you growing?

PE: Yes. There’s an immense opportunity in India; 155,000 is really the tip of the iceberg there. Think about the global market failure for eyeglasses. About 545 million people lack access to affordable reading glasses. Another 160 million lack access to distance vision correction. A vast majority of that is in India and China. We hope to be doing half a million alone in India in the next five years. In Bangladesh, we have a partnership with BRAC, which is the world’s largest NGO, where over the next five years we plan to provide 1.7 million people with eyeglasses. Concerning future growth, in India and Bangladesh the thrust is to just go deeper, whereas in Central America and with our global partners, it’s more about extending our reach. It’s finding why we have been successful with the hub-and-spoke model and finding markets that have those same parameters and dynamics.

KP: How do you measure success?

PE: Units distributed, impact, as well as cost coverage, which is our measure of sustainability. … Including all in-country overhead, our program in El Salvador is months away from profitability and sustainability. In India, many of our programs are sustainable, but we need a little higher volume to become fully sustainable including all in-country overhead.

KP: How much are the glasses?

PE: Depending on the market, from $2, retail price, to above $40 for nice prescription glasses at our urban-based hubs.

KP: So you don’t just serve BoP customers?

PE: Correct. The hub-and-spoke model drives our sustainable models in India and El Salvador because it allows for cross-subsidization. We position our stores in urban locations with a design that is comfortable for both BoP customers and those with a slightly higher capacity to pay. That blend of customers is subsidizing our work with the BoP consumers in the surrounding areas. There’s a higher capacity for them to pay and a higher likelihood that we’ll have a higher margin per pair. There’s a cost to those rural campaigns and entrepreneurs in the field, and you’re generally working with people (in rural areas) who have lower economic means, so you’re not able to create much of a profit margin there. But our mission is to increase access to affordable eyeglasses, so having that store outlet really fuels our ability to accomplish both sides of our mission: reaching those who might not have previously had access, and doing it sustainably.

We struggled for a few years trying to find a model which would focus only the BoP customer. With a low-turnover product like eyeglasses, that’s pretty tough. So how do you find the right model that allows you to keep serving that BoP consumer? What we found is that a cross-subsidized model, combining a hub that comfortably serves the BOP and a crowd with a slightly higher capacity to pay with frequent outreach to areas where the market failure is greater, you can deliver both impact and sustainability.

KP: Do you have competitors?

PE: Much of the focus in the vision-focused nonprofit or social enterprise sphere has been on the need for ophthalmological services: eye diseases and cataracts. There aren’t too many organizations fully focused on refractive error, like us. We see our primary competitor as lack of awareness. It’s less about a formal competitor and more about a market dynamic. People don’t know they need glasses. Once we can address the lack of awareness, the market will grow and people will be able to restore their livelihoods with a simple pair of eyeglasses.

KP: Because you’ve been successful, do a lot of people come to you seeking advice on how to serve the BoP?

PE: Rural distribution is the main topic of conversation when people are asking questions. How do you leverage existing or create new infrastructure to distribute a service or a product? The second question is, How do you do that sustainably?

KP: Is there one important piece of advice you give everyone?

PE: It’s about combining the right local people with the right model. Initially, when launching in new markets, you need to “over hire” for the role. You need to have people with demonstrated skills who know how to test and evaluate, who know how to create processes and controls, and how to make a sustainable program/business work. And you need both short-term and overarching goals to guide you and allow you to assess if you are on the right path or not. Have milestones along the way. If the big picture is daunting, stop talking about it, get out there and test your assumptions to refine and re-evaluate, and then continue that process. In most cases, that will change your initial thinking and take you down a more informed path. That has a lot more value than overthinking it in the beginning to get to the perfect model design.

KP: Are you still looking for investors?

PE: Yes. … We’ve been fortunate to have wonderful supporters who have provided us with grant funding until now. Now that we have programs on the verge of profitability, we’re looking at the potential of taking on other types of expansion capital.

KP: Does fashion matter at the BoP?

PE: Sure. Our founder Jordan Kassalow has a quote: “Vanity is not monopolized by the rich.” That’s a key for us to have in the back of our heads. It’s not a question of just getting something to the BoP. We see everyone as a discerning customer. We think those at the BoP are actually that much more so, because they don’t have much disposable income and they want to be empowered to make the right choice for themselves. In the beginning, we might test a market by providing less choice, but then soon after we know that the way to succeed in that market is to provide variety and the right selection according to local tastes. They’re voting with their dollars; we’re not giving away products. … If it’s three to seven days of someone’s wages, it’s a bigger decision than for a domestic consumer here.