Sramana Mitra: Why optical? Where did that idea come from? What was your background or any of your co-founders’ background that drew you to that particular idea?
David Menning: We weren’t really optical-specific in terms of our expertise. We were rather entrepreneurs and savvy young business people. We were looking at identifying niches or business ideas with a lot of opportunity for the future. As mentioned, we saw that books were being sold online. You may recall that back in the day cameras were much more expensive in America and Australia than in Japan.
If you travel to Japan 15 years ago, you can buy those sorts of cameras much cheaper than in other parts of the world. It was through travel and understanding what’s happening with the global trade that we were able to understand that these sorts of anomalies exist. We were curious about it at that time.
We identified that in the eyewear industry, there are very few sellers selling the product online. It was a product category that hadn’t really migrated online. There were a couple of optical stores in the US, but it was a very small, sporadic effort. At that point, there was no e-commerce website that offered a comprehensive range of designer sunglasses and designer eyeglasses online.
That was the niche that we identified. There was another factor that we identified, which was that the price discrepancies between the product being sold in the US and Europe were extremely high.
Sramana Mitra: What geography did you launch this for?
David Menning: Our first idea was to set up a website in Australia and sell eyeglasses and sunglasses. We knew we wanted to do a global business. We didn’t necessarily want to set up a company in Australia itself. We wanted to set up a global company. We had a global mindset from the very beginning.
We realized that the immediate opportunity was in Australia because products were available at a wholesale price in the US and Europe. We could purchase that and resell in Australia at a very competitive margin at an incredible 20% to 50% discount off the normal retail price. There was a real arbitrage opportunity here in that category and we capitalized on that, initially, with no money at all.
We started the business with no money and no seed fund. We literally took a small range of products that we had available from our suppliers in other parts of the world and we listed them on eBay. We started selling and collecting revenues.
Sramana Mitra: How were you acquiring the customers?
David Menning: It was just through eBay. eBay and Amazon were the platforms of choice. eBay, at that point in time, was a shopping platform. People were already on eBay. I still remember the case of Bulgari 651 sunglasses that had a list price of $399 in Australia. We purchased the sunglasses for substantially less at a wholesale price. We were able to offer it on eBay for $250 to $280, saving customers 30%. That was a popular product. We simply listed that product online and we started making sales.