[countrybama24]

As far as I can tell, Luxottica is like a book publisher who also has a significant retail presence. They buy licensing deals with all the major eyewear brands, likely at prices competitors can't afford because only they can sell through their retail channels (7,000+ stores in the US alone, and keep in mind the U.S. is by far the largest market for luxury consumer goods). Eyewear designers want to get their glasses in front of as many consumers as possible, so the alternative of not signing a licensing agreement would mean forgoing all those retail channels (and a big chunk of the U.S. market).

So it's basically vertical integration (exclusive manufacturing rights and retail presense) + economies of scale. They made themselves a very powerful intermediary and signed some very lucrative exclusive contracts to compound that advantage.

There are people taking advantage of this. Namely, Warby Parker.[1] They opened retail stores to combat Luxottica's market share in that arena, manufactured their own eyeglasses, and raised $41mm in funding to do so. They're growing rapidly, but still a relatively small part of the overall market. They originally were going to price their glasses at $50, but found that consumers branded their products as cheap so they artificially raised the price to $100! Still enough to undercut the competition, but shows you how the current market has skewed consumer perceptions of price/quality.

http://www.masoneyewear.com/buy-eyeglasses-online-purchase-g...

[memset]

I would characterize Warby Parker's relationship to Luxottica a bit differently.

You have correctly identified Luxottica's value proposition: "You don't know how to get into eyewear, but we are experts on it. Partner with us!"

However, to even move the needle for Luxottica, that brand partnership has to be worth many millions of dollars.

Warby Parker is not competing against Luxottica. They are not trying to do white-label eyewear for other fashion brands. Warby is simply another fashion brand. They are competing with the other brands that Luxottica is making glasses for.

There is another company (which I used to work for, called Eponym, Inc.) who is a closer competitor to Luxottica in terms of trying to capture the market of fashion who want to get into eyewear. Though the success of selling glasses to individual customers is important, Luxottica is more of a B2B partnership whereas Warby is B2C.

[countrybama24]

I agree Warby Parker is not competing directly with Luxottica. But they're still taking advantage of the fact that those brands are charging very high prices and current retail channels are controlled by a single entity who restricts competition from third parties. And they are certainly competing with retail channels owned by Luxottica.

[minthd]

I think the core of luxxotica isn't manufacturing.

It's being a 2 sided market,same like ebay - a meeting place between most brands and most consumers.And we know that those types of businesses are very tough to attack, and probably even more so offline.

In a way, similar to walmart, but luxury brands don't fight through lower prices, so it might enabled luxxotica to ask them not to sell lower at any other place. In a sense this luxxotica monopoly is great for luxury brands, so i could even imagine a scenario where luxxotica tells to each brand "we're building a monopoly on glasses in the u.s., and we want this place to be the ideal place to sell luxury goods ... , please help us" - why won't they help ?