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Essilor & The Coastal Acquisition: A Candid Discussion

AdminWolf

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Essilor's Recent announcement of its acquisition of Coastal.com has raised a flurry of questions and concerns.

How will it impact optometry in general and practices like yours in particular?
Does the acquisition threaten your business?

Join us for a candid discussion with Essilor's Howard Purcell, OD, FAAO, who will share:

  • The company's reasons for the acquisition
  • The benefits they see for the industry
  • Why the company believes the acquisition can help practitioners like you build your businesses in the coming years
Dr. Purcell promises to answer your questions about the direction of the industry and the profession.
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Stephen McDaniel said:
This is a waste of time. Expect a copious amount of corporate spin. IMO it's best to avoid Essilor as much as possible.
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You're entitled to your opinion of course.

However this particular show I feel is no waste of time. In fact, it is the first show we've done in a while where I have literally no idea what is going to happen.

When you get an MBA one course that they force you to go through is called M&A -- mergers and acquisitions.

You read a lot of case studies to try to figure out how and why these things happen, and to analyze why they succeed or fail (mostly fail -- B-schools LOVE to study failure. It is more interesting to read, anyway...)

I've thought about this merger over the past few days, from the perspective of the spreadsheet cruncher and corporate analyst, and I'm having trouble wrapping my head about the motivation for the acquisition, or how it fits into a broader strategy.

Certainly, even for Essilor this is not a small acquisition, especially for a company like Coastal that is still losing money.

So make no mistake -- a move like this is serious business, requiring the input and buy-in of a lot of people. It isn't something that one person woke up and decided to do one morning.

So I am really, really curious to get the background information as to who, how, and why this all happened. Essilor has shared nothing with Paul or myself as yet. We are as in the dark as you.

Paul is going to be sitting by my side tonight as this unfolds, he is going to take the role of clinician and ask whatever dribbles out of his brain into the mic. It should be amusing.

I'm going to look at it from the perspective of an MBA, and see if this makes any sense to me as we learn the facts.

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Essilor is more worried about acquisitions and dominating the industry than they are with developing honest-to-goodness products that help the industry. They're using us.
 
Jeff Kiener said:
Essilor is more worried about acquisitions and dominating the industry than they are with developing honest-to-goodness products that help the industry. They're using us.
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I'll pass along your input during the show, if you'd like.

As I mentioned, I don't understand the rationale for the acquisition yet, and I don't think anyone outside of Essilor knows the whole story -- yet. That's what we're going to hear tonight.

My speculation is as mindless as anyone's right now, but looking at it from an outsider's point of view, one thing they are buying with Coastal is a running and highly efficient distribution and fulfillment system -- how they intend to use it is another story completely, and I think that's what we're going to learn about tonight.

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It may be efficient for all I know, but it wasn't profitable.

You know Essilor's modus, they choke competition to corner the market. This is just another strategy.

They want to dominate on-line. Fine. Let them.
 
Here's a question I'd like you to pass on:

My lab was acquired by Essilor quite a few years ago. I stayed with them because out of loyalty to the staff & have only seen a small decline in the quality & service since they were bought out by Essillor. I've spent well over $1M on their products.

I removed all Luxottica products from my office when they became my competitor.
Coastal is not only a competitor, but they don't even play fair, filling long expired prescriptions for glasses & contacts.

Q: How is Essilor going to address this issue & why shouldn't I transfer my business to a lab who isn't trying to compete with me?
 
Alan -- thanks for that question, and thanks for phrasing it so nicely. I'll be sure to ask 'em tonight

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Allow me to answer for Essilor. *ahem*

Thanks for that great question, Dr. David. We purchased Coastal because we believe that online purchases are what consumers want these days and integrating their distributing prowess into our company will only help diversify our services and strengthen our position in the industry.

The industry is changing and we are doing our best to stay ahead, to innovate, and continue to provide state-of-the-art products and services. We do not see ourselves competing with private practice at all. In fact, we are private practices best ally. Our history with private practice is synergystic. We consistently provide PP with the most innovative lenses on the market, we also offer PP unmatched educational programs, business management support, and a sales and lab network like no other.

We are into this together. Your success is our success!
 
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Aaron Buthod said:
Allow me to answer for Essilor. *ahem*

Thanks for that great question, Dr. David. We purchased Coastal because we believe that online purchases are what consumers want these days and integrating their distributing prowess into our company will only help diversify our services and strengthen our position in the industry.

The industry is changing and we are doing our best to stay ahead, to innovate, and continue to provide state-of-the-art products and services. We do not see ourselves competing with private practice at all. In fact, we are private practices best ally. Our history with private practice is synergystic. We consistently provide PP with the most innovative lenses on the market, we also offer PP unmatched educational programs, business management support, and a sales and lab network like no other.

We are into this together. Your success is our success!
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Cute, but I think wrong. I can't tell you exactly what will be included in the talk, but I did just receive the powerpoint, and there are specific, concrete action-items that I think you'll like.

hope to see you in an hour
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If one is so self deluded with their own Bullsh*t, can they actually be considered liar? Put another way, are sociopaths actually capable of lieing?
Mark Horwitz said:
"our patients do not want to buy from us because they want to buy online and they feel we do not offer them enough opportunities."

Really?
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Did they say that? I don't know how in the world we somehow manage to sell an annual supply to over 80% of our patients. I'm really starting to HATE Essilor. Public Enemy #1
 
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"Expand Myonlineoptical"

"Focus on Canada first."

Lucky you guys. :) -Charlie
 
he says essilor does not have any intention to compete with us, by not setting up brick and mortar stores. they won't need to since they will now go direct to the customer via the web.

no plans to offer crizal? Why not? And if not, for how long? Will essilor eventually offer it on coastal.com?
 
I think this is going pretty well. No bricks and mortar, no more free pairs. It's a start. He didn't say that patients don't want to buy from us, he said they want to but sometimes go online for plano sunglasses.
 
AdminWolf said:
Cute, but I think wrong. I can't tell you exactly what will be included in the talk, but I did just receive the powerpoint, and there are specific, concrete action-items that I think you'll like.

hope to see you in an hour
ad
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Hmmm, the only difference I heard was he didn't use my word, "synergistic".
 
Adam, he dodged most of your questions and did not answer the questions you asked. you should have redirected him back to answering your questions.
 
he kept saying that the coastal aquisition will allow them to drive more patients into our practice but did not give any info on how they will do that. what i heard is that they will educate about premium product but not offfer them right now becuase technology does not allow it right now.

but you better believe that once the technology is there, they will offer those products most likely, in my opinion.
 
Scott Lauer said:
I think this is going pretty well. No bricks and mortar, no more free pairs. It's a start. He didn't say that patients don't want to buy from us, he said they want to but sometimes go online for plano sunglasses.
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That was my take-away. It is easy to be cynical and say "this is all nonsense", but if you take what he is saying at face-value, what they have done is acquired a company that has done things historically that ECPs don't like, and are now planning to in some sense "de-fang" the worst parts of it. The de-regulation lobbying, the free pairs, etc...

This to me is not a bad thing. When Howard mentioned that other (less reputable?)m companies were looking to acquire Coastal, I was reading between the lines that those companies would probably have cranked up the shady factor to 11 in order to chase market share once the acquisition was done. I don't see that here. YMMV.
 
BTW, if you want to hate on big business, please start with Adobe. I cannot believe what they put me through tonight. I need a cocktail.....
 
Kudos for him to come on and do the interview. He certainly didn't have to as this is not an Essilor friendly place.

Optometrists can only hope the AOA can pass some legislation before the profession goes down the corporate toilet.
 
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Aaron Buthod said:
Kudos for him to come on and do the interview. He certainly didn't have to as this is not an Essilor friendly place.

Optometrists can only hope the AOA can pass some legislation before the profession goes down the corporate toilet.
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Essilor/EyeMed/Luxottica are a primary target of investigation by the anti-trust attorneys hired by the Union of American Eye Care Providers. More to come as the white paper for presentation to the Dept of Justice is drafted. Anticipating a June meeting with DOJ.

Craig
 
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I wasn't able to make it last night. I assume this Webinar is archived someplace? I haven't looked around on here yet...
 
Gretchyn,

See my post #9. The only thing that was added in the webinar was that Coastal will not sell Varilux products.....right now.
 
Thanks, Aaron. I'm looking to hear the whole thing, though. :D
 
Keshav Bhat said:
I was unable to log in last night... Where is the link to the archive? Oh Wait, let me get *my* cocktail ready...
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Just read post #9 by Aaron Buthod.....it'll save you 1 hour and 15 minutes..
 
Archive Available

An initial archive of the show is available here.

We'll have an embedded copy on ODwire.org ASAP.

Thanks
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John Boer said:
After listening to the ABB episode on Gerber's show, I gave up on listening to corporate big wigs. They're all full of shit and they think we're a bunch of idiots.
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You are entitled to your opinion, of course, however I feel that in this case not only is it wrong, it is actively harmful to achieving what you'd like seeing done.

Listen to the show -- Essilor has acquired a company that was doing everything it could to rapidly grow -- including some not-so-ECP friendly initiatives.

Essilor has put the kibosh on the worst practices, and, critically as Howard mentioned -- they have an advisory board of (16?) ECPs that you guys would know.

So they've effectively taken a company that was pursuing a high-growth, low-margin strategy, under no effective ECP oversight that I could see, and put the brakes on it.

If you can find the ODs on that advisory board, this is your chance to give them direct feedback. This is not a bad thing. I only wish I had the ear of someone at, say, Adobe, so I can tell them what I think their software's reliability. ;)
 
Hmm. Coastal was unprofitable. If they wanted to stop them, how much easier it would have been for Essilor to simply not sell them Transitions and other products? That would kill them off, since Essilor has virtually a monopoly.
 
Jeff Kiener said:
Hmm. Coastal was unprofitable. If they wanted to stop them, how much easier it would have been for Essilor to simply not sell them Transitions and other products? That would kill them off, since Essilor has virtually a monopoly.
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Again, they mentioned that they aren't going to allow the higher-zoot products to be sold through the site.

With my MBA hat on (and with no insider knowledge), Coastal was unprofitable likely because their strategy was extreme growth ahead of profits (a la Amazon), AND possibly because their mix of products were lower margin.

My take-away from the show though is that profitability and product mix aside, Essilor believes e-commerce will happen (and they are right -- it will, whether anyone likes it or not), so what they are acquiring is a reliable platform.

How they use that platform going forward is really the defining issue that I think everyone needs to grapple with.
 
You are right about expansion. They were spending gazillions on marketing (presumably web links).

It doesn't matter how they use the platform. It will be wrong. It's fundamentally and unalterably wrong.
 
I've uploaded the archive at the top of the thread (and deleted a bunch of posts about adobe connect bombing out -- my apologies for that. if you'd believe it, the service had an outage just as our show was starting. Murphy's law....
 
AdminWolf said:
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I do believe that the Optometric Community needs to hear .. Specifically by the leadership of Essilor
their philosophy on Deregulation Of Optometry as what occurred in BC ..

It's Imperative for ALL to open the LINK below so they can get a better handle on the philosophy
and how eyecare is delivered by the then CEO Roger Hardy and Coastal Conatcts .
Glasses were no more than screws holding lenses and a pair of temples ...simply a commodity.

My concern is more concerned with the philosophy of Coastal Conatct leadership that
no doubt supported the efforts to deregulate the profession of Optometry . I have no
doubt that this will effect the health of our patients because of them going years
without eye exams to help diagnose conditions like Diabetes and Glaucoma .

Maybe Essilor would prefer not to address this issue . But I am challenging
them since they purchased COASTAL to either say they support deregulation
or not. Since Roger Hardy will be serving in an advisory capacity to Essilor's
Board .. Will they be willing to tackle this issue and to be clear and transparent
with the Optometric Community .








http://www.the-peak.ca/2012/10/a-follow-up-on-pd-measurements/
 
ken lawenda said:
Maybe Essilor would prefer not to address this issue . But I am challenging
them since they purchased COASTAL to either say they support deregulation
or not. Since Roger Hardy will be serving in an advisory capacity to Essilor's
Board .. Will they be willing to tackle this issue and to be clear and transparent
with the Optometric Community .
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Listen to the show, Howard specifically says that they are going to cease coastal's efforts to promote deregulation (among other things.)

Is there anything more concrete that you'd like to hear from them?
 
Since Coastal promoted Deregulation .. The damage has been done ... .. I challenge Essilor to step up to the plate and help provincial boards and associations by supporting their efforts to educate legislators and the public, that deregulation puts more patients at risk .. And should be reversed.

If Essilor does not support deregulation .. Question will be .. Does Roger Hardy ?
If he still supports deregulation and is a advisor to John Carrier .. What message
does that give to the Optometric Profession .
 
I'm not an expert on web-design/management, but the Coastal.com site still advertises the first pair free promotion. They may have only controlled Coastal for the past few days, but they could have easily deep-sixed that promotion the second they were handed the keys to the car.

Please Essilor, no b.s. phrase that uses the term "unwinding".
 
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