Private label brands, also known as house brands (or somewhat less kindly, generic products) are a common feature of grocery stores, providing shoppers with a lower-priced alternative to well-known and trusted brands. Often they are relegated to the lower shelves, with brand names occupying the coveted eye-level spots.

Optical labs have sometimes referred to themselves as “grocery stores,” offering their customers a wide range of branded products to suit their preferences. As relationships with manufacturers evolved, some labs would give a particular name-brand prominence over others. Often labs would also offer a private label as a lower-priced, lower-shelf alternative.

Today, some independent labs are flipping the script on brands, positioning their private-label in the foreground as their go-to product line, while offering established brands as alternatives. To understand this new phenomenon, we spoke to three independent lab execs whose labs are using this approach and having success with it.'

Technical Background
The freeform revolution is the enabler of the new generation of lab private labels. Freeform has created a new level of performance by making it possible to customize lenses for individual wearers. But it has also provided the foundation for some significant changes in the optical business.

In the traditional manufacturer-wholesaler model, labs relied on manufacturers to do much of the heavy lifting in the fabrication process. Lab surfacing capability was limited to applying symmetrical curves, either spherical or cylindrical, to a lens.

Lenses with complex designs like progressives had to be fabricated in two steps: the manufacturer would place the progressive design on the front of the lens using a mold-based process, and the lab would grind curves on the back surface to match the patient’s prescription. Freeform technology allows labs to apply the complete progressive design, already customized for the patient’s prescription and add, to a lens puck resembling a single-vision lens blank.

This streamlined process puts more control of the manufacturing process in the hands of the lab. Some lens companies, while still manufacturing traditional product, have recognized that they are also intellectual property companies whose “products” are lens designs and customization schemes that live in a computer, not on the lab’s shelves. Instead of buying product by the piece, labs pay a “click fee” for each manufacturer-branded product they make.

Some major manufacturers have developed their own private-label products to support retailers and labs that want their own brand. But the freeform revolution has also led to the development of new type of lens company that can no longer be called a manufacturer—design shops whose sole purpose is to create lens designs and customization software for private-label use.

Some independent labs, especially those who have been around for many years, moved gradually into the private label model. William “Bill” Heffner IV, director of IT, marketing and sales for FEA Industries, Inc., said that FEA first used freeform private-label products to fill supply gaps. “Any time a traditional progressive was on back order, we could easily switch to a freeform lens and get it out the same day.” That not only helped avoid delays in serving customers; it also allowed practices to become acquainted with in-house products. “They were willing to give a new lens a try if it meant they would have it in their hands a few days sooner,” Heffner said.

According to Jason Sharpe, president of Eye-Kraft, the lab’s private label evolved from a traditional grocery store model offering many different lens brands. At that time, progressive lenses weren’t the lab’s main focus. “We probably sold less than 100 progressives a month,” he said. “We were really focused on managed-care commodity work.”

The lab’s move into freeform surfacing changed that approach. “When we decided to install digital surfacing at the lab, I looked for a partner that could give us a good, solid brand that had good market recognition, and had good quality too.” They chose a major manufacturer because, “Their house brands were really good products, and they had some flexibility in how they were constructed, so I could really make them our own.”

However, the partner “went through some reorganization and pulled their brands back from independent labs, and we made a business decision to go out and look for another vendor.” They settled on IOT, a major supplier of customizable designs for private-label use.

For GSRx, Inc., founded in 2014, there was no transition: a premium private label, and the price advantages it could offer, was one of the pillars the lab was built on. As Dave Jochims, GSRx’s founder and CEO, explained, “We started GSRx with one goal in mind: to level the playing field for independents when it came to acquisition costs of premium lenses and coatings. It doesn’t make sense for us to sell other companies’ premium branded product at twice the price or more when performance is similar, and it does nothing to help with our partner’s cost of goods or building their own internal brand.”

In addition to their epik lens line, GSRx supplies VSP’s Unity brand when doing VSP work.

Building Confidence
One of the major challenges of launching a premium private label is convincing practices to use products that don’t have an established brand or a long track record. All of the labs we spoke to emphasized that high quality and performance were essential for their private-label product. Said Heffner, “As we saw the potential in private labeling, we went on to develop relationships with specialized freeform software designers. We wanted to use the best possible designs, and not the ‘leftover’ white label offerings that some name brand lens designers offer.”

Sharpe said that Eye-Kraft’s history of offering value frame-and-lens packages for Medicare patients has helped build confidence in the private label. “You sort of get your feet wet that way, and then as they use the product, they recognize the value of having an off-brand digital lens that works really well.” That opens the door for premium product.

“You kind of build the conversation in layers like that, as you work your products into the market.” He also believes that using IOT designs is becoming a confidence-builder for practices, and features the IOT logo in marketing Eye-Kraft’s DLS Camber products. “They’re independent too, and they’re building some brand recognition in the market as well. That lends legitimacy to our house brand.”

Jochims also acknowledged the challenge of building confidence in a house brand. “Performance of lens designs is critical in winning trust, and that can take time to develop in the marketplace,” he said. He works with satisfied customers to communicate their trust to other practice owners. “Our growth is now driven by positive peer-to-peer communications, and the history of more than half a million pairs of lenses we have delivered.”

As with any unfamiliar lens, or course, the proof is in the wearing. Heffner noted, “The main thing a brand offers is a level of implicit trust. You know it’ll work because it’s brand X. This is why I am more than happy to have people try out our lenses. It’s simply easier to have them wear it and see for themselves. The performance is there, just at a more reasonable price.”

Cost of Goods
The lower cost of goods of private-label products is an important selling point. However, lower prices can be a two-edged sword. Of course they’re good for a customer’s bottom line, but practices frequently assume that lower prices mean lower performance and quality.

Said Sharpe, “People had the impression that digital should be expensive, and if it’s not, then there’s something wrong with it.” He counters this by educating practices on the economics of freeform manufacturing. “Once you pay for the (freeform) equipment, the cost of goods is exponentially lower, and I can lower my prices.” His message to practices is “You’re doing yourself a disservice by paying more for something, and sending that margin back to the manufacturer and not recouping it for yourself.”

As Sharpe sees it, the benefit in this relationship is shifted toward the ECP. “I’m still making money, and we’re successful, but I’m trying to take all of this extra margin and move it back toward the doctor so they’re more successful.”

Jochims stressed the importance of lowering the cost of goods to help practices compete against chain retailers whose buying power gives them a significant cost advantage. “We believe that independents have many advantages in the marketplace, but one of the disadvantages is cost of goods, and you can’t have a level playing field when larger competitors have a vastly different acquisition cost for similar technology,” he said.

Private Labels in the Practice
Independent practices use private labels in multiple ways depending on their needs. Said Jochims,“The vast majority of offices we partner with use our epik brand almost exclusively, except when managed care is involved and there is a ‘directed’ requirement.” Practices can also use the brand to capture patients who are likely to buy their eyewear somewhere else.“We have a store-in-store concept called Proper Optics that allows offices to sell a competitively priced frame-and-lens package with solid margins.”

Sharpe has seen a similar variety among Eye-Kraft customers: “I’ve got some accounts that are in 100 percent (on our brand) and don’t do anything else; I’ve got practices that still hang on to their premium (branded) product, and they use us as a mid-level and entry-level tier. I have accounts that just use me for their package, out-of-pocket value patients that they’re trying to stop from going to Warby-Parker. I’ve got lenses that can fit any one of those situations, and so I can operate anywhere I need to in the market.” Eye-Kraft also offers Seiko digital lenses for customers who prefer an established brand for premium product.

According to Heffner, the lack of a name brand doesn’t restrict practices in how they position FEA’s private label, which includes both premium Eagle lenses and a budget Constitution HD line (FEA also offers Kodak brand lenses from Signet Armorlite). “I don’t know that the brand really matters all that much to the patient that is receiving the eyewear. They don’t have the same level of awareness of lens brands that eyecare professionals do, and trying to educate them on the difference between lens brands can be difficult. At the end of the day, they just want to be able to see without problems.”

The Value of Independence
Independent labs, like the customers they support, place a high value on staying independent, and private-label products have a role to play in helping them do so. Sharpe initially saw a private label as a complement to the other brands Eye-Kraft offered.“We want to provide a great lens house brand, but we also want to be that provider of all products and services.”

That philosophy changed when their previous partner withdrew their license for branded product. “I came to the realization that if they were going to be able to do that, then any brand that I decided to do business with was going to be able to do the same thing. If an independent lab wants to compete and be viable in the market, they have to have something outside of that structure in order to retain any kind of control over their business.”

“If you are a lab that only sells brand-name products, it is only a matter of time before those brand names are the thing holding your business together,” said Heffner. “If it ends up that half of your revenue is one specific brand, how independent are you, really?”

Jochims focused more on the private label as a tool for independents to stay competitive. “I can’t say private label brands are essential, but I can say that having great lenses and coatings at a competitive price point is.”

Heffner believes that a private label also supports a practice’s independence by allowing them to offer a product that isn’t available down the street. “If you are in an independent practice, it almost seems nonsensical to sell a branded lens when that brand owns dozens of retail stores and online shops that are your direct competitors,” he said. “Being able to offer an independent product gives your practice a uniqueness that is hard to quantify.”

Jochims described the GSRx’s private label as “A brand that complements their own internal private brand. We’re not trying to build our brand at the expense of the brand of the office itself—the brand is always in service to the practice.”

Just as in grocery stores, name-brand lenses and coatings continue to hold the dominant position in the market, and will continue to be a source of technical innovation, marketing strength, and trust—and trust is ultimately what brands are all about.

But the success of private labels shows that the lab is also a key source of trust, and that trust can transfer to the lab’s unique lens brand. In a highly competitive market dominated by corporate labs, private labels are an increasingly important tool for independent labs to remain successful while controlling their own destiny.