1-800 CONTACTS and Walmart End CLs Alliance, 1-800 to Expand Online Efforts as Division of WellPoint

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The 1-800 CONTACTS mobile app.
DRAPER, Utah—1-800 CONTACTS and Walmart Vision Centers/Sam’s Club Optical have ended their four-year strategic alliance for the sales of contact lenses. 1-800 CONTACTS this week said the termination of its contact lens alliance with Walmart Stores Inc. was effective Dec.31, 2012. Executives said the companies “are working together to ensure a smooth transition for their respective customers.”

A corporate spokesperson for Walmart stated, “Wal-Mart Stores, Inc. and 1-800 CONTACTS have made a business decision to end our relationship. We will continue to offer our customers a wide assortment of eyecare products—including contact lenses—at great price points.”

The agreement between 1-800 CONTACTS and Walmart (NYSE: WMT) began in January 2008, as VMail reported at that time.

With the announcement this week, Brian Bethers, president of 1-800 CONTACTS, now a division of WellPoint (NYSE: WLP), told VMail, “ For more than four years, 1-800 CONTACTS and Walmart Vision Centers/Sam’s Club Optical operated a strategic alliance that benefited their respective businesses and allowed millions of customers to save money on their vision health care needs. 1-800 CONTACTS has appreciated the partnership opportunity with Walmart Vision Centers/Sam’s Club Optical and the synergies that resulted. It was a great relationship for both parties.”

He continued, “1-800 has grown at a higher rate than the industry average in the last five years, and we’ve seen our market share increase. As a company we’re focusing on providing a superior customer experience at affordable prices, which is the DNA of our business. We will now be refocusing on increasing on that customer service, expanding our web, phone and mobile presence and capabilities.”

Bethers related that 1-800 CONTACTS had relaunched its mobile app for iOS devices on May 31 of 2012. The app, which originally began as a contact lens wearing schedule reminder service, now features additional functionality, including ordering directly through the app and the ability to scan an image of the user’s prescription to facilitate verification of the RX. Bethers noted that the 1-800 CONTACTS app was recently reported to be ranked the number one downloaded free medical app at the Apple iTunes app store in 2012.

Bethers declined to provide 1-800 CONTACTS’ sales details, but said, “When we think of the contact lens industry, 25 percent of the visually impaired wear contact lenses, approximately 13 percent of the U.S. population. So 35 million Americans are actively wearing contacts and we believe we’re the largest contact lens sellers with 10 percent of that market, serving millions of customers. We believe we have the largest customer database of contact lens wearers and we also have one of the most accurate databases of providers in the industry.

“We have customers who are patients from eyecare providers across the U.S., from those affiliated with retail chains as well as thousands of independent providers out there. This has always been a key part of our business because we don’t write Rx’s but we do verify Rx’s from around the country. We still have several hundred providers in our network. If customers don’t have a valid Rx, we encourage them to go back to their provider for an Rx. If they do not have an eyecare provider in an area where we do have a provider, we’ll give them a referral. We have a great deal of respect for all eyecare providers and the role they provide in prescribing and fitting contact lenses.”

Asked about Glasses.com, a separate division of 1-800 CONTACTS, Bethers said, “We worked jointly with Walmart on Glasses.com, which was part of the alliance. We will also operate Glasses.com as a part of our business moving forward and we think this has tremendous potential for us and the industry as well.”

1-800 CONTACTS was acquired by WellPoint, one of the country’s largest health care organizations, in 2012 and the deal closed in June of last year at a reported value of $900 million according to several financial sources. “We very much appreciate the opportunity that WellPoint affords us,” said Bethers. “They are a very consumer focused insurance company. If you go back to the original announcements made at that time, we talked about working with our complementary businesses to leverage and grow the direct-to-consumer relationship. We’re working with them now to do that and are looking at opportunities to expand our customer base. We have made no decisions but are looking at opportunities in the marketplace. We’re excited about our prospects with WellPoint,” Bethers said.