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REV: July 5, 2022
WEIRU CHEN
LIMAN ZHAO
NOVA VISION: Digital Transformation of Service
Retailing Industry
“I need to update and change my June keynote speech”, said Wang Zhimin, Chairman of NOVA VISION
Group (China) Limited (hereafter “NOVA VISION”), to his assistant. “We can’t get stuck on private
domain traffic because it only represents a small part of future retail. We must rise above it and see the whole
picture.”
NOVA VISION was the parent company of Baodao ② Optical (hereafter “Baodao”). Since its
entrance into Chinese Mainland market in 1997, Baodao had been the industry leader in eyewear retail
stores (by number). However, unlike most of its competitors, who continued opening additional stores,
NOVA VISION, slowed store expansion from 2015. It shifted to a new “professionalism and
digitalization” strategy by training 1,600 optometrists in-house and purchasing several thousand items
of equipment and professional devices. In September 2019, NOVA VISION established a methodology
for operating in private domain traffic, an industry first. After implementing a fundamental shift in its
business approach, the company moved from a traditional sales model centered on brick-and-mortar
stores to service-oriented retail built around “membership.” In 2020, as the COVID-19 pandemic turned
markets upside down, NOVA VISION’s service-oriented retail initiative was widely recognized as “an
inspiration for enterprises to fight against the pandemic”. 1
However, Wang understood that the group’s “professionalism & digitalization” strategy was far
from what was desired. He believed that the future of the group lay beyond retail and that it should
move towards providing medical services. He also expressed a desire to explore a platform strategy.
However, Wang was also aware of the challenges this presented. Externally, entering the medical
service market meant direct competition with hospitals with their own optical business. It also meant
that the company would be influenced by policies regulating the healthcare industry. Internally,
implementing the “professionalism and digitalization” strategy required developing employees’ skills
①
Private domain traffic, also called siyu liuliang (私域流量), was a term building in popularity in China from mid-2018. Private
domain traffic, for brands or any other companies, refers to their private digital domains, such as user groups and WeChat
friends that brands could easily connect with. It was similar with Western concepts around using first-party data from “organic
reach.” Different from public domain traffic publicly owned by internet giants, private domain traffic could be directly used by
companies without paying others for the data traffic. (source: Cindy Gu, “Move over KOLs: ‘KOCs’ and ‘private domain traffic’
are hot in China,” October 1, 2019, accessed October 20, 2021, https://www.campaignasia.com/article/move-over-kols-kocsand-private-domain-traffic-are-hot-in-china/454639).
② NOVA VISION was established as a group in 2012. In China, Baodao was more widely used. In this case, we used “Baodao”
while introducing what happened before 2012, and “NOVA VISION” after 2012.
Professor Weiru Chen and Senior Case Researcher Dr. Liman Zhao of China Europe International Business School prepared this case. It was
reviewed and approved before publication by a company designate. Funding for the development of this case was provided by China Europe
International Business School and not by the company. CEIBS cases are developed solely as the basis for class discussion. Cases are not intended
to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2022 China Europe International Business School. To order copies or request permission to reproduce materials, call 1-800-545-7685,
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NOVA VISION: Digital Transformation of Service Retailing Industry
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and proficiencies as well as instituting changes in the business model and incentives. But it was not
easy to shift the mindset of its 7,000+ employees in nearly 1,100 retail stores and convince them to
improve their behavior and make the move to a digital and intelligent future. Wang, who had long
been contemplating the future of China’s eyewear industry, planned for his forthcoming speech in June
2021. He was lost in deep thought.
China’s Eyewear Industry
Product, Industry Chain, and Value Chain
China’s eyewear industrial chain fell broadly into three sections (parts): upstream manufacturers,
producing glass, resin, plastic rubber, and metal; midstream product manufacturers and brands (e.g.,
manufacturers of corrective lenses, sunglasses, and contact lenses); and downstream retailers and other
sales channels (e.g., specialty stores, hospitals, vision improvement centers, supermarkets, shopping
malls, and e-commerce platforms). In China, midstream manufacturers sought to reduce raw material
costs and control risks, leaving upstream suppliers fairly fragmented. Midstream companies typically
adopted an OEM model. Most end-sellers were eyewear shops directly targeting individual consumers.
With more than 30,000 shops across China, the eyewear industry had seen perfect competition, where
the fiercest price competition existed among eyewear retailers in the low-end market. In contrast, large
chain stores in mid and high-end markets could enhance competitiveness by satisfying diverse,
fashion-driven, and personalized customer demands while offering professional optometry and
optician services in a comfortable shopping environment.
There were various eyewear products in China’s market, such as glasses frames, lenses, contact
lenses, sunglasses, and contact lens solution. In 2015, glasses frames and lenses comprised the largest
share of the product market, reaching 39.48% and 37.09%, respectively. 2 Lenses manufacturers had a
high concentration ratio in terms of sales revenue, with top firms accounting for nearly 80% of total
revenue in the market. Among these, foreign firms remained the top players: Essilor and Carl Zeiss
generated 22.4% and 15.1% of market revenue, respectively. Prominent domestic lenses manufacturers
and the mainstays of domestic mid-range lenses production, Wanxin Optical and Mingyue Lens,
ranked third and fourth in sales, accounting for 8.2% and 6.6%, respectively. Regarding sales volume
in units, China’s lenses market was relatively fragmented, with industry leaders selling 68.6% of all
lenses in the market. Wanxin Optics and Mingyue Optics claimed the top two positions, with sales
volumes equivalent to 13.3% and 11.7% of the market, respectively. Essilor and Carl Zeiss, with highend pricing strategies, compared unfavorably with Chinese brands in sales volume (with a 4.3% and
1.8% share, respectively). 3
For years, people saw the eyewear business as a real money-spinner, and this perception might be
true when referring to gross profit. According to financial data from Doctor Glasses (known as “China’s
first listed eyewear company”), the gross profit margin in 2020 was as high as 67.6% (the figure was
above 70% for the preceding five years). 4 However, it would be another story after paying all costs,
i.e., the net profit margin of Doctor Glasses was 10.34%. 5 The listing prospectus of eyewear company
Mingyue Optics also provided evidence: a pair of lenses costing less than ¥7① in 2020 could be sold for
hundreds or even thousands of yuan in eyewear shops. The end sellers could obtain a gross margin as
high as 90%, but the net profit was only 2.69% 6. Industry analysts noted that the root of this “low cost,
high price, low net profit” phenomenon lay in the high rental fees and labor costs faced by eyewear
shops – Doctor Glasses contributed 80% of its cost of sales to these in 2020. 7 Thus, in this highly
profitable industry, shop closings were not unusual: Doctor Glasses, for example, opened 180 stores
①
¥ = CNY = Chinese Yuan Renminbi, ¥1 = approximately US$0.1532, as of December 31, 2020.
2
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between 2018 and 2020 while closing 147 in the same period.8
Industry Trend and Characteristics
Increasing myopia in the population pushed the growth of the eyewear industry (see Exhibit 1).
Statistics showed that, in 2018, 48.6% of the Chinese population had vision problems (the rate was 28.2%
globally). The number of children and teenagers in China who developed myopia was higher than in
any other country in the world: 81% of high-school students tested as short-sighted, as did 71.6% of
junior high-school students, 36.0% of those in primary school, and 14.5% of children under six years
old.9 Thus, in August 2018, China’s government released a plan for the comprehensive prevention and
control of myopia in children and adolescents. It stipulated that, from 2019 to 2023, China should strive
to reduce the overall myopia rate in young children by over 5% per year, and provinces with a high
myopia rate should reduce the rate by over 1% per year 10.
Furthermore, digitalization brought new ways of reading and shopping into people’s life, pushing
the eyewear makers to continuously upgrade their offerings to cater to consumers with fashionable
tastes and longing for hi-tech styles. Eyewear, for many consumers, was valued beyond its practical
usefulness and was enjoyed as a fashion item that was selected based on a combination of
considerations, including medical effectiveness and experience. Thus, China’s eyewear market was
diversified. Players included fashionable brands like LOHO, with creative styles that appealed to
young consumers, and MUJOSH, a brand calling for scenario-based glasses consumption. It also
included brands seeking breakthroughs by offering professional services like NOVA VISION and
players like AIER Hospital Group Co., Ltd. (“AIER”) that wanted to revolutionize the industry through
technology (see Exhibit 2).
In addition, product quality in China’s eyewear industry was patchy due to the absence of any
substantial barriers to entry and the lack of consumer knowledge about different brands. A study
identified and weighted the four key factors influencing eyewear purchases: quality (46%), style (24%),
price (13%), and after-sales service (17%). 11
In the internet era, China’s eyewear industry also tried to open the door to e-commerce by
introducing innovative models. For example, a typical online-to-offline (O2O) model allowed
consumers to select glasses online with coupons before stepping into physical stores for eye exams and
having their glasses made. Traditional eyewear retailers started cooperating with internet giants by
opening flagship stores on platforms like TMall and JD.com. Some companies also attempted to launch
services like home-based eye tests and 24/7 eye-care management, but they vanished several years
after raising vast amounts of money. 12
Although many eyewear companies failed to move online, they were still making efforts in this
regard. The digital transformation of NOVA VISION was the epitome of innovations in China’s
eyewear industry.
Early Expansion and Informatization (1981-2010)
“The first development stage of NOVA VISION was the period before 2010. Doing business
was very easy back then because we could keep opening new stores without worrying about
anything. We made good money in that seller’s market.”
— Wang Zhimin, Chairman of NOVA VISION
3
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Early Development
In 1981, Baodao was officially founded in Taiwan, China, by Wang Guosheng, Chen Guofu, and
Chen’s wife. Based on their early success, Baodao had already opened 13 stores by the time of its
establishment and enjoyed a good reputation across Taiwan. By 1997, Baodao had over 200 stores in
Taiwan, then Wang Guosheng decided to make his foray into the mainland market with the first store
opening in Wuhan, a populous central city in China. It took only two years for Baodao to expand its
business in this new market to 20 stores. Upon graduating from university, Wang Zhimin returned
from the US in 2001 and joined the company to assist his father Wang Guosheng. By 2009, Baodao had
opened more than 800 stores in Chinese mainland, becoming the biggest eyewear retailer in Asia. 13
In 2010, Wang Zhimin became chairman and general manager of Baodao, and Wang Guosheng took
on the role of CEO. In the same year, the company’s mainland headquarters moved to Shanghai. By
2011, BAODAO had opened over 1,000 stores, 33 training institutions, and 15 processing centers; it also
established a national product testing center.
As Wang Zhimin explained, “From 2003 to 2010, we remained No.1 by number of stores in this industry
through sustainable as well as speedy growth.” He attributed the company’s success to two factors. “Firstly,
we have a comprehensive methodology for staff training whether regarding professional skills or management
capabilities; secondly, we go in relentless pursuit of digitalization.”
Enterprise Resource Planning (ERP)
Baodao began its digitalization and informatization process in 2001 when it only had 30 stores. In
those days, ERP was also known as a system that would seal your demise: sooner if you used it, later
if not. After months of deliberation, Wang eventually decided to take the risk and implement ERP,
reasoning that, “when you have a small number of stores, the cost is low, and change can be implemented more
efficiently”.
People within Baodao saw two possible routes to introduce ERP: internal development, which
would save approximately two-thirds on the upfront cost or purchasing an advanced package ERP
system, guaranteeing compatibility with any subsequent system. Given Baodao’s long-term goals, the
company finally opted to invest ¥3.5 million in a ‘package’ calling on SAP—the world-renowned
software developer—to oversee the installation. In the following five years, Baodao became an SAP
‘poster child’, giving Wang access to a network of top talents in China in informatization.
“Thanks to our early integration of ERP, the company’s business expanded by opening more stores, and their
management was also effective”, said Wang Zhimin, who was very happy with the move.
Observing and Embracing the Internet (2010-2014)
Wang called the exploration before 2010 “Stage I: Store Expansion,” when Baodao achieved initial
development in China. Then Wang turned his attention to developing related industries and
technologies in both China and overseas. This brought Baodao into its second phase of growth - “Stage
II: E-commerce.”
Value Proposition: Healthcare or Fashion?
Around 2010, one of Wang’s major concerns was whether the eyewear industry was more about
healthcare or fashion, saying, “Our suppliers come from two camps: fashion and healthcare. When meeting
with them, you even have to use different terminologies. On the one hand, fashionable suppliers, with the mindset
4
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that the eyewear industry is retail that provides high-quality, convenient, and trendy services to customers, talk
about fashion trends, users, colors, etc.; the healthcare suppliers, on the other hand, are more attentive to health,
arguing that the customers should be offered professional eye-exam services and eye-care solutions addressing the
full life cycle of their needs. They are from totally different worlds with no convergent boundary.”
To find the answer, Wang became a frequent participant in many global activities of the eyewear
industry. According to his analysis, “in Europe and the US, eyewear shops are professional and provide
healthcare services, targeting the provision of vision-correction and eye-care solutions to customers, with fashion
only as a secondary consideration. However, in Asian eyewear shops that are retail and price driven, fashion is
central while professional healthcare is secondary.”
In 2010, in Singapore, Wang met Professor Brien Holden, who was working at the World Health
Organization. Wang asked him how far China’s vision and optical development was from the leading
standards globally. Holden’s answer was that China currently faced a 30-year lag, saying, “China’s
eyewear industry should aim to be more professional since eye exams in China often fail to offer some of the most
basic critical tests. In the US, professional optometrists have been taking pictures with fundus cameras to check
eye health for over a decade. These optometrists have to attend medical school for three to four years, while in
China, the professional standards for becoming an optometrist couldn’t be lower.”
Thus, in 2011, Wang introduced a human resources model used for optometrist training in the US,
the UK, and Australia. He also adopted Holden’s methodology to certify optometrists in Baodao. At
the same time, Baodao, keen to become a comprehensive enterprise providing one-stop service for
preventive healthcare, optometry, retail, diagnosis, and treatment, jointly established the BHVOPTINOVA Research and Training Centre with the Brien Holden Vision Institute (a global optometric
research center) and introduced more professional equipment and products to China.
To ensure the separation of these new businesses and the existing eyewear retail business, Wang
established NOVA VISION in 2012. By doing so, he hoped to achieve unified platform management
and resource sharing. He also wanted to realize the company’s transformation from a simple-portfolio
retailer to a platform company embedding multi-brand operations, industrial empowerment, and
cross-industry cooperation.
Entering E-commerce?
The rise of e-commerce platforms, exemplified by names like T-Mall and JD.com, directly
challenged traditional offline retailers. The price transparency and convenient shopping experience
introduced by online shopping indicated the necessity for traditional retailers to rethink their
businesses. In 2010, the year following the first “Double-11” shopping event ①, Baodao began selling
online. In 2012, the company established an e-commerce department and began cooperating with ecommerce platforms, employing an O2O business model in which consumers went shopping in
physical stores with coupons issued online.
However, Wang believed that the label “O2O” did not fit his image of the business. He did not see
offline and online trading as two opposing concepts: rather, he saw them as forming a symbiotic
relationship. He began referring to the model within the company as O+O, at the same time attaching
significance to technology and personal services. In addition, through independent R&D, he upgraded
the original customer relationship management (CRM) system that held the information for more than
30 million members into a “Super CRM” system. Based on the data, NOVA VISION categorized
①
“Double-11” shopping event, also called Singles' Day shopping festival, was created by Alibaba in 2009, to offer online
shopping discounts and offline entertainment. It became the largest physical retail and online shopping day in the whole.
5
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members’ information and observed their behavior. The system also enabled NOVA VISION to
monitor the company’s entire operations, including online traffic attraction, offline reservations,
physical store visits, purchase and transactions, and satisfaction surveys.
In the e-commerce world, NOVA VISION also made forays into fast fashion. However, “after a while
in it, I found that fashionable eyewear belonged to the world of e-commerce platforms or technological e-commerce,
not the offline world,” said Wang. Thus, NOVA VISION abandoned its fast-fashion strategy but
maintained the e-commerce aspect of its business. Its standard products (e.g., sunglasses and contact
lens solution) achieved remarkable online sales.
“Professionalism and Digitalization” Strategy (2015-2018)
From the company’s internet journey in the preceding years, Wang learned that the online aspect
was merely compensating for the loss of customer flow in physical stores rather than substantially
contributing to company growth. To identify where NOVA VISION’s future would lie, he had to know:
“What exactly is the eyewear industry?” Reflecting on his original values, he decided to take advantage
of the internet and the firm’s professional equipment. In his words, “Instead of being changed by ecommerce and assiduously fighting in this battlefield, we have to pave our own path.” Therefore, as a step in
the Stage II period, in 2015, the group launched its “professionalism and digitalization” strategy.
Professionalism
NOVA VISION defined professionalism based on four factors: professional equipment, competent
optometrists, expert service (e.g., a 45-minute eye check), and specialized products (e.g., myopiapreventing lenses). The company turned its eyewear shops into professional eye-care service centers
offering comprehensive vision-correction solutions to its customers.
In 2014 and 2015, professional equipment started becoming smaller and cheaper than ever. Thus,
NOVA VISION positioned itself as an upfront medical warehouse. More precisely, this meant that of
the four sequential stages of medical services, namely screening, diagnosis, treatment, and follow-up
care, NOVA VISION was able to deliver screening services This enabled a generation of accurate data
traffic in the medical field and made cooperation with hospitals or departments of hospitals possible.
Offering follow-up care was also an option for facilitating customers’ long-term well-being.
NOVA VISION purchased professional equipment from well-known companies such as Carl Zeiss
and Essilor, including fundus cameras, automated multi-functional complete eye examiners, and
digital slit lamps, ① referred to in its eyewear stores as the “New Big Three.” In the flagship store, a
fundus camera was used to photograph the interior or rear of the eye and see its blood vessels and
nerves. Such cameras provided a non-invasive way to obtain early indications of fifteen types of fundus
lesions that might be caused by diseases such as diabetes, hypertension, and retinal detachment. NOVA
VISION offered customized and comprehensive services for special customer groups (e.g., children
and senior citizens) through eye health screening. Automated multi-functional complete eye examiners
could screen thousands of anterior segmental data in about two minutes, forming reports on binocular
degree, day-night visual pressure risk, and whether corneal thickness was suitable for myopia surgery.
Digital slit lamps, based on an AI algorithm, could screen basic health conditions of the cornea,
conjunctiva, sclera, and other parts to find the crux and obtain targeted solutions. It could also tell
Stores of different types were equipped with distinctive instruments, equipment, personnel, and products. Stores in shopping
malls mainly sold standardised products (e.g. sunglasses and solution) and were thus not a suitable place for advanced
equipment or optometrists. The company’s experience or flagship stores – around 700 in total – were equipped with one or two
optometrists and professional equipment to provide professional services to customers.
①
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whether it was a good idea for the testee to wear contact lenses and provided specific suggestions on
suitable glasses. 14
In addition, NOVA VISION paid particular attention to providing professional and continuous
training to optometrists. It selected optometrists with national certification, and based on various
criteria such as years of experience, educational background, and awards. Optometrists recruited by
NOVA VISION then underwent in-house training to develop skills that complied with the company’s
standards. In addition, it developed incentives for optometrists, i.e., they would receive annual salary
increases and a 5%-10% sales commission. According to Liu Jizhong, the operations director, “The
average optometrist turnover rate in the industry is around 20%, but we have always capped the figure below
8%.” By July 2021, NOVA VISION had trained about 1,600 optometrists.
Professional optometrists must explain equipment-generated test reports must be explained to
customers by professional optometrists to ensure the results can be used to provide more personalized
services. Customers then received a detailed test report and follow-up health reminders on their
WeChat, facilitating regular contact with their optometrist.
Concerning its goal of providing services and products with a higher level of professionalism, the
company segmented its customers into three groups: children and teenagers under the age of 20, whose
vision could change very quickly; adults between the ages of 21 and 45 who normally had more stable
vision and better eye adaptability; and middle-aged and people over 45 years old whose vision changes
are likely to accelerate. By redefining the eye-care demands of these three groups, NOVA VISION
embarked on designing the contexts, products, and services for each.
In China, not many consumers were happy to pay for the services, and the services based on NOVA
VISION’s pricey equipment did not initially generate substantial revenue. Liu believed that the
company needed to cultivate customers’ willingness to pay for services and better represent those
services. For example, in 2018, it launched a ¥99 optometric package called “Vision Power 1+7”, which
covered not only regular eye exam items but also seven other specialized assessments and tests for
various customers. Since adopting the “professionalism” strategy, the ratio of the contribution to
revenue of frames and lenses changed from 3:2 to 2:3. Revenue generated from assessments and testing
also rose month by month.
Digitalization
Professional examination equipment was the foundation of digitalization, and professional
optometrists were the direct users of the data platforms. The digitalization of NOVA VISION stores
comprised four aspects: employees, services, customers, and equipment. Each employee at the store
was provided with a workplace laptop, which they used to record information on consumers’
examination reports, orders, and points. It then generated consumer profiles by combining this
information with other details provided by consumers who consented, such as age, gender, and contact
information.
The pictures taken by the professional equipment in stores were promptly transmitted to the backend database in the cloud. Within a few minutes, artificial intelligence software would perform
preliminary analysis and discern 30 signs of abnormality belonging to eight categories. NOVA VISION
believed that customers owned their data, so employees drew clear tables based on this data and
explained them to customers in plain language. Based on the background data, NOVA VISION tagged
customers to perform data analysis, modeling, and grouping, in preparation for targeted future
interactions. Customers were divided into nine groups based on three elements: needs, attitudes, and
behaviors. This method, similar to building and managing medical records and health files, showed its
7
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usefulness in managing customers’ eye health, such as preventing and managing myopia in children.
By further upgrading its CRM system, NOVA VISION connected the data system and the
company’s WeCom account, “moving” all member data. In 2015, the company launched an optometric
big data cloud platform, the “Kongming System”. The following year, it started an independent R&D
on the Vision-iBook platform (based on the Kongming System), an eye health e-profile that integrated
digitalization, mobilization, and customization. The new platform launched in 2018. By integrating the
Kongming System and the Vision-iBook into high-tech optometric devices and external systems,
NOVA VISION built a data hub that revolutionized the consumer experience.
Digital solutions enabled NOVA VISION to effectively manage a variety of products and bolstered
its bargaining power in negotiations with brands. Cui Enlong, the product director (who had a database
programming background and served as the company’s stores operator), recalled: “We had a lens
supplier who usually had a lead time of 25-30 days. Their lenses were made in Thailand, and they were unwilling
to build a warehouse in Shanghai, despite our advanced orders. But after our product management and supply
chain operation were backed up with data and proved our demand, they set up a warehouse in Shanghai.”
Organizational Revolution and Member Operation Methodology (2019- )
NOVA VISION slowly transformed its “store-expansion-centered” managerial and operational
model into a “membership-centered” one. In 2019, “private domain traffic” became a buzzword. Thus,
Wang, with a keen eye on business trends, decided to make a foray into the private domain to further
boost the “professionalism and digitalization” strategy. Henceforth, its third stage (Private Domain
Traffic Operation) started.
“In the past, under the O2O business model, we used group buying coupons to attract customers,”
Wang said. “In the e-commerce era, brands like us increasingly depend on the traffic brought by large
and comprehensive platforms. But we cannot always rely on them because platforms will balance their
traffic allocation among all the brands in the future to avoid oligopoly. Thus, private domain traffic is
a wonderful new existence based on the simplest logic: customers’ trust in a brand”.
Wang was also aware that “professionalism and digitalization” would not be realized without
solving the problems of “inappropriate organizational structure, mismatched team cognition, and unenhanced performance under new mentality”. Therefore, NOVA VISION’s initiative to operate in the
private domain traffic was accompanied by a profound organizational revolution.
Private Domain Traffic Operation
NOVA VISION started its private domain traffic operations in 2019, and one of its goals was to
change its mindset from being traffic-oriented to user-oriented. After nearly two years of hands-on
efforts, NOVA VISION established a methodology, formulated standards, and developed best
practices.
NOVA VISION’s methodology of operating in the private domain traffic could be generalized as
“two movements and five paths” (see Exhibit 3). The first movement referred to turning public domain
traffic into private domain traffic and transporting consumers acquired from the public to private
domain, which helped build a membership traffic pool owned by the company. The second movement
consisted of membership development, which required the maintenance and development of
membership within the company’s internal traffic pool. The five paths sought a public domain traffic
pool, enhancing online visibility, creating touchpoints, designing context, moving from the public
domain to the private, and developing memberships.
8
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Wang listed five criteria for assessing the value of a company operating in private domain traffic:
re-touchable, analyzable, able to close the loop of transactions and data, able to improve the total
lifetime value of customers, and able to carry out fission marketing.
Organizational Revolution
The biggest change brought by the organizational revolution was the newly added “business
development center” that replaced the existing operation department’s work. Previously, the operation
department handled location selection, renovation, opening ceremonies, product allocation, and daily
operation (see Exhibit 4). Following its strategy for operating in the private domain traffic, the
company narrowed the focus of the operation department to the management and supervision of
physical stores, while establishing two new offices: the MCN (Multi-Channel Network) and the MOC
(Membership Operation Centre) (see Exhibit 5). The MCN was responsible for designing different
contexts for users, searching for public traffic pools, and enhancing online visibility. The MOC was
committed to developing various digital instruments to empower the transition from the public to the
private domain and the development of membership. The cooperation of these two offices aimed to
“create touchpoints and design contexts”, thus closing the loop of the digital business. After going
through the organizational revolution, NOVA VISION changed its marketing logic (see Exhibit 6).
The MCN accommodated over 40 employees, most of whom came from the marketing department,
but their duties changed from “advertising and promoting” to “coaching celebrities and creating
content”. The celebrities coached by the MCN were selected from over 7,000 NOVA VISION employees.
They then set up personal accounts on China’s mainstream social platforms, including Dianping, RED,
and Zhihu. These bloggers made NOVA VISION more visible to the platforms’ users, who were
attracted to NOVA VISION’s WeCom Platform and became part of the company’s private domain
traffic. After running the business in this way for some time, the company started to have a clearer
understanding. Platforms with a wider range of users (e.g., Dianping) were suitable places for all staff
to make contributions while knowledge-sharing platforms like Zhihu, which hosted professional
questions and answers, might represent good playfields for optometrists. Moreover, teamwork also
indicated the potential for gaining more traffic on platforms like Douyin and WeChat Channel.
Based on the characteristics of different public domain platforms, the company assigned distinct
goals for new-customer-development on each of them, among which Dianping topped all the others.
For example, when a Zhihu user visited a physical store because of the influence of a particular NOVA
VISION optometrist, instead of being limited to that optometrist, they could meet all the optometrists
in-store. After joining NOVA VISION’s WeCom network, the user also entered the company’s private
traffic pool, where the MOC’s duties started. Thus, performance measurements of the MCN and the
MOC were linked.
The MOC operated private domain traffic. It was also composed of 40+ employees, but their
responsibilities and backgrounds were more diversified. The center was divided into two teams: one
for product R&D and the other for business development and planning. ① The product R&D team
(previously a part of the e-commerce platform) was the same team that had developed the Kongming
System. The business development and planning team created user profiles by drowning themselves
in data. These employees also had to cooperate with other departments to make activity plans, create
content, and develop WeCom-based digital tools. These were then delivered to members by
salespeople and optometrists, facilitating effective interactions with members and generating data for
①
MOC included: 2 membership planners, 2 channel developers, interaction developers subordinated to the customer service
team (including 6 customer service representatives), empowerment developers including 5 designers, 5 data miners, and around
20 employees in the technical R&D team.
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business development. Such data was then returned to the MOC for analysis, thus forming a closed
loop.
Lu Wenjing, the MOC leader, shared her opinion on successfully handling multiple digital tools:
“In many companies, there is a gap between the R&D and operation of products: the operation side, based on
usage context, will put forward the product requirement and the vision; but it is the product managers that are
responsible for the R&D of systems and products. However, many product managers only have a technological
background without truly understand the process of operation, so the product they make cannot meet the
requirement of the operation side. This is like a deadlock that cannot be solved by outsourcing the R&D to an
external supplier either. Yet, at NOVA VISION, we have solved this issue by integrating R&D and operation.
Products managers are responsible for both R&D and operation, including filing requirements, conducting R&D,
and launching.”
Successful Launch and Implementation
Wang was convinced that the company had to fundamentally reshape its approach, starting with
how and who it recruited. He stated: “Working with private domain traffic, means 70% of the emphasis has
to be on service, with only 30% on tools, and service depends on the quality of staff.”
Throughout the transformation, the company was especially attentive to three elements: employees’
cognition, competence, and behavior. The most difficult part was aligning the cognitive levels of
employees due to their distinct needs and expectations. In addition, people take different approaches
to achieve their goals. NOVA VISION recognized the importance of achieving breakthroughs in
employees’ cognitive levels for its operation in the private domain while regarding the alignment of
cognition as a continuous process. Nevertheless, such an organizational adjustment guaranteed
turbulence; resistance was to be expected among 7,000 employees whose work would be impacted.
Addressing this issue, NOVA VISION created a general rule: “Praise, Never Punish.” Employees that
made progress in improving their mindset would be granted a certain amount of material or nonmaterial incentives.
Moreover, there were also challenges related to competence. For instance, in the training of internet
celebrities, some employees were performing their tasks exactly as required without doing anything
above their pay grade. However, to create content on major social media platforms, interact, and attract
customers, there was more for them to learn. In 2020, NOVA VISION set up NOVA Innovation Centre,
to illustrate its digitalization strategy, organizational transformation, and strategy implementation not
only within the company but also to the public. Directors of key departments and Wang acted as core
members of this center and delivered training courses covering the headquarters, the business
department, and the branch stores.
When planning the courses, NOVA VISION had mainly three considerations. First, the training
content had to be in line with the company’s strategy. Second, training for the business department
had to provide specific methods or solutions. For example, the company provided employees with preprepared greetings and WeChat messages to send to consumers. Third, the training tailored for branch
stores had to cover specific behaviors and set clear objectives and requirements for employees. The
company set up an audit team to measure performance and support the implementation of the whole
strategy. It also regularly held workshops to share good practices. NOVA VISION required its
employees to develop competence in four aspects: strong sales capability, solid professionalism and
expertise, capability to enhance the company’s online visibility, and capability to attract new customers
and “close the loop”. The first two served as basic skills, while the third and fourth were essential for
building the new retail model.
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When put into practice, the results of the proposed actions were not as good as expected. For
example, eight required procedures were reduced to two or three by the employee performing the task
or the performed action failed to bring the supposed outcomes (imagine if an employee working in a
store gets consent from the customer but forgets to register the customer’s information or registers it
incorrectly). Through trial and error, NOVA VISION continued to search for solutions to address these
problems.
In addition, NOVA VISION also shared its best practice with the whole industry. NOVA
collaborated with several well-known domestic and international retailers not part of the eyewear
industry, including Master Kong, KFC, Starbucks, BBK, and Luolan Home. Apart from delivering
courses and hosting workshops, the company also carried out eye health condition screenings for
companies they were cooperating with by launching the “NOVA X Plan”. In 2021, the group started
charging a fee for these workshops and screenings.
By attaching great importance to “user-centered service,” NOVA VISION transitioned its key focus
on the digital closed-loop from “sales-centered” to “digital-centered”. Lu said, “In the past, we only
focused on revenue but paid little attention to maintaining good relations with our customers, thus they were not
returning or referring us to anyone. We now put lots of efforts into providing quality services in the whole process.
For example, we launched the adolescent myopia prevention and control services in 2019. We encouraged all
salespeople to provide professional services in the stores, such as spreading scientific myopia prevention
knowledge and providing well-designed solutions, and continuously provide timely aftersales services to help
them prevent myopia. Meanwhile, we reward certain behaviors if customers get significant improvements in their
myopia. All such salespeople’s behaviors can be recorded by our system. If one storekeeper has not provided
aftersales service for one year, we can know this from our system, and assign other salespeople to follow up.”
Lu added, “A store composed of optometrists, salespeople, the store manager, and others is an offline team
providing services to customers. Online teams deliver services to communities through WeCom, realizing
continuous communication and effective interaction. The cooperation between online and offline teams enhances
customer experience.” With its programs for myopia prevention and control for teenagers, NOVA
VISION grew into “Stage IV: Social Connection,” where the company could realize development by
offering continuous care to different communities. However, with its traditional retailer background,
NOVA VISION still had a long way to go.
Where Did the Future of Service-Oriented Retail Lie?
Starting in 2001, NOVA VISION made significant investments in informatization and digitalization.
In 2020, the company’s offline business bore the brunt of the COVID-19 pandemic: around 100 stores
shut down. However, the crisis also brought opportunities: NOVA VISION’s 2022 goal to operate in
the private domain traffic was accomplished ahead of schedule. By the end of June 2021, NOVA
VISION employees had started over 7,000 Dianping accounts, 800 RED accounts, 500 Zhihu accounts,
and 20 Douyin accounts. The company’s performance on WeChat was also commendable: its official
account had nearly 6 million subscribers, and members on WeCom exceeded 6.66 million, with over
1,000 member communities. In addition, it had built a livestreaming team of 800 people, which gained
approximately 150,000 hits in a member-day livestream.
In December 2020, NOVA VISION’s transaction volume generated from private domain operations
increased 581% over the same period. For the year 2020, the transaction volume from the private
domain traffic accounted for about 4% of the company’s total transactions. Regarding future
development, Wang believed the destiny of operating in the private domain was that all salespeople
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would become KOPs or KOLs ① for their industries, and they would be able to address more than 80%
of the questions from customers.
Where did NOVA VISION’s destination lie as a service-oriented retailer? Wang set his heart on
leading the company into the healthcare industry and selling eye health supplements, OTC drugs, and
even prescription drugs. However, such an ambition faced significant limitations from the policy side.
Wang stated, “The eyewear industry is not entirely market-oriented. You have to acquire various approvals by
following multiple procedures. In Shanghai, not one license was issued in the past three years.”
From this perspective, Pharm Huang (his nickname), the general manager of NOVA Innovation
Centre, seemed to be much more optimistic, saying, “Risks exist in every industry. But just think about
how hard it is to access healthcare today. So the private healthcare sector will be developing in a more favorable
environment.” Nevertheless, it was also noticeable that eye clinics and hospitals, such as AIER, started
to develop their own eyeglass prescription businesses. They launched full-process prevention and
control services for adolescent myopia (see Exhibit 2). Essilor and Carl Zeiss, the world’s leading
optometry brands, also released blue light protection lenses 15 and introduced innovative lens
technologies to prevent and control myopia among adolescents 16. What signal did this send to NOVA
VISION?
The fundamental challenges that NOVA VISION faced, from Huang’s point of view, were
developing competence and seeking resources, especially to attract more physicians. In terms of
competence, many of NOVA VISION’s managers and employees retained a very strong “traditional
retail” mentality, thus making it necessary for them to improve their mindset and skills. As the
company followed the strategy of “professionalism and digitalization”, it faced the continuous
challenge of combatting employees’ unprofessionalism and the misleading information they provided
to customers.
Moreover, Wang expected that NOVA VISION could share its self-developed digital system and
methodology with other enterprises to grow into a platform company. However, many other
companies were reluctant to use this system and unwilling to share their data on the NOVA VISION
platform. Thus, he considered two solutions, “First, similar to internal entrepreneurship, our employees
could be encouraged to open NOVA VISION reseller-stores in their hometowns. In the future, the company will
only directly operate 300–500 branch stores, but we could have several thousand resellers. Second, we could also
motivate the leaders of other companies in the industry to cooperate with us on our platform and system and
explore its value.” However, these remained mere possibilities without being launched and
implemented on a large scale. Wang estimated that the system might need another two to three years
to reach 80% completion. By then, it would be sufficiently mature for NOVA VISION to discuss its
platform strategy with other companies.
All of these questions and prospects lingering in Wang’s mind also represented the thoughts,
dreams, and plans of countless other service-oriented retailers.
①
KOP: Key Opinion Professor; KOL: Key Opinion Leader.
12
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Exhibit 1: Development of China’s Eyewear Retail Market (2016-2021E)
Source:
Selected Article | A Brief Analysis on Today’s Eyewear Industry. Doyen Opto-World. July 10, 2021.
https://mp.weixin.qq.com/s/uB2ffnKxrd7Xi6d--iuRIg, accessed July 28, 2021; The Future of the Eyewear Market:
Diversification in Consumption, Professionalization in Technology, Digitalization of Industry. Wenzhou International
Eyewear Exhibition. July 9, 2021, https://mp.weixin.qq.com/s/xfCtguCyo7aygLWr1XwRYA, accessed July 28, 2021.
Exhibit 2: Companies with New Business Models in the Eyewear Industry
MUJOSH:
MUJOSH, established by Photosynthesis Group in 2010, was a fashion eyewear brand targeting
young people around the world. MU (in Chinese 木 – wood, pronounced as “me”) referred to
bamboo and woods as the material of the glasses; JO (in Chinese 九 – nine, pronounced as “jiǔ”,
same as “ 久 ” – prolonged) meant long-lasting impeccable quality; SH (in Chinese 十 – ten,
pronounced as “shí”) meant its perfect manufacturing process. Except for the classic MU series,
MUJOSH carried out rapid iteration of its products, from prescribed spectacles to sunglasses, from
the shape of frames, materials to decorations and other details. In the words of Chen Feng, founder
of the brand, MUJOSH shone out only because of the brand experience, of which the freshness never
faded away due to the enriched brand content including store decoration, cross-industrial activities,
flash mobs, and sense of technology. For example, with creative and artistic techniques, MUJOSH
created immersive installations based on different themes to stimulate people’s senses, at the same
time enhancing brand image and consumers’ satisfaction.
MUJOSH‘s target audience was young people between the ages of 16 and 30. Since its
establishment in 2010, MUJOSH has opened over 800 stores in 300 cities of 15 countries. Its hi-tech
and fashionable stores stock over 200 kinds of glass frames, more than that in traditional eyewear
shops. The price of MUJOSH’s frames ranged, mostly, from 299 to ¥899. Shops are not big in sizes,
around 30 to 40 square meters, accommodating 2-3 employees who occupy multiple roles, for
example, the shop manager may also be the optometrist. In this way, rental fees and labor costs are
reduced.
13
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At the same time as developing physical stores, MUJOSH also expanded its business into ecommerce, opening more than 10 online flagship stores on major e-commerce platforms.
LOHO:
Founded in 2011, LOHO positions itself as a fashionable brand based on the Internet, and it is
regarded as the first e-commerce merchant among eyeglass prescription companies in China.
LOHO offers a two-step eyeglass prescription service: offline eye examination and remote glasses
fitting, which means that, if a consumer knows their diopters, they can purchase their glasses online.
At the same time, if a customer needs an eye check or to try on the glasses, they could also place an
order after visiting a physical store. This business model reduces front-end inventory, saves shop
floor space, cutting the main costs of offline sales. In addition, products design and manufacturing
are all in-house. Consequently, the price of a pair of LOHO glasses can be as low as ¥349, and
generally does not exceed ¥1000.
Huang Xinzhong, the founder of LOHO, thought that eyewear products would undergo a
transition from highlighting “functionality” to focusing on “accessories” and then adapting to
“contexts”. Therefore, he advocated that “everyone in this world should have four pairs of glasses”,
encouraging consumers to choose different glasses as accessories in different contexts. Therefore,
LOHO had launched glasses products that could match different contexts, including functional
glasses, fashion glasses, smart glasses, and cosmetic contact lenses highlighting eye makeups.
As of June 2021, LOHO had opened nearly a thousand stores in the core business districts of
more than 150 cities in China, with its annual sales volume reaching millions of pairs of glasses. The
company had more than 7 million registered members and 70% of its sales came from online.
AIER:
AIER (full name AIER Hospital Group Co., Ltd.) was one of the largest ophthalmic medical
institutions in China, offering mainly ophthalmic medical services such as eye disease diagnoses,
treatment, and optometry and glasses prescriptions. AIER, strategized around professionalism,
standardization, and science was dedicated to introducing the best ophthalmic technologies and
management methodologies in the world. By 2020, it had over 600 medical institutions, contributing
¥11.91 billion in revenue with a growth rate of 19.24%. The revenue generated by its ophthalmic
medical services was 2.45 billion, occupying 20.60% of its revenue, with a gross profit rate of 56.93%
and a YoY growth rate of 27.15%.
In recent years, AIER had always been making innovative explorations that could benefit the
downstream of its value chain. For instance, in light of enhancing customers’ service experience, in
2018, EyeLink – a sub-brand of AIER launched a professional door-to-door service in Beijing and
Tianjin, providing eye examinations and optometry services. To ensure that such kind of door-todoor services was professional, AIER facilitated its door-to-door smart vehicles with professional
test equipment. Users could book the service at any time via Meituan, Dianping, JD.com or
“EyeLink at home” Subscription Account.
EyeLink aimed at building a convenient eye care service platform that covered a wide range of
customers. Empowered by both door-to-door services and physical stores, EyeLink provided eye
examinations and optometry services that were professional, convenient, and highly efficient.
EyeLink mainly provided two kinds of glasses fitting services: customized and standardized. In the
customized service, after eye checks, a consumer might be able to choose the preferred frame and
lenses on the door-to-door smart car, while in the standardized ones, consumers might purchase
14
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their ready-to-wear glasses via reservations. Middle and senior aged people sometimes suffered
from a troublesome: they had to prepare two pairs of glasses, one for seeing nearby objects, and the
other for seeing distant objects. To solve this problem, on March 17, 2021, AIER officially released
the “Yuyue Full Life Cycle Eye Solution”, which was jointly developed by AIER and Essilor. The
core of this solution was to provide accurate prescriptions to the glasses that were multi-functional
and able to cover the full life cycle of eyes.
On July 26, 2021, based on valid data from its 1.02 million patients who underwent myopia
surgery during 2018-2020, AIER released the White Paper on Chinese people’s myopia surgery. Statistics
showed that 0.5 people per 1,000 had received myopia surgery in 2020, increasing nearly 75%
compared with 2018. Students aged 20-24 showed higher acceptance of this new technology.
However, in the US, 1.7 per 1,000 people took myopia surgery, and the figure was 1.1 in Europe
and 2.9 in South Korea. Per the prediction of the White Paper, people’s acceptance of myopia
surgeries as a way of removing glasses would grow higher.
AIER was passionate about scientific and technological innovation that help children prevent
and control myopia. It independently developed the “love vision measurement” WeChat miniprogram, trying to help parents monitor their kid’s eyesight condition by providing professional
and individualized suggestions based on the testing results. It has served over nearly one million
parents in 31 provinces.
Source:
see endnote No. 17,18, 19, 20, 21.
Exhibit 3: Private Traffic Methodology “Two Movements & Five Paths”
Note:
Number of account matrices as of the end of June 2021
Source:
adapted by case authors based on materials provided by NOVA VISION.
15
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Exhibit 4: Organizational Structure of NOVA VISION (before Sep. 2019)
Source:
adapted by case authors based on materials provided by NOVA VISION.
Exhibit 5: Organizational Structure of NOVA VISION (after Sep.2019)
Source:
adapted by case authors based on materials provided by NOVA VISION.
16
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Exhibit 6: Traditional Marketing vs. Private Domain Traffic Operation
Source:
adapted by case authors based on materials provided by NOVA VISION.
17
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Endnotes
Hongtao Tang. BAODAO Fights against COVID-19 on a Digital Battlefield: Digital Transformation Outpaced Corona Virus!. Chief
Digital Officer. April 1, 2020. https://baijiahao.baidu.com/s?id=1662764447148085641&wfr=spider&for=pC, accessed July 28,
2021.
2 For Our Better Vision. Harvest Capital Releasing 5,000-word Research Report on Eyewear Industry: Eyewears are the Best Consumer
Product. January 14, 2019. https://www.sohu.com/a/288946513_656626, accessed July 28, 2021.
3
iResearch Inc, White Paper on China’s Eyewear and Lenes Industry in 2020. Netease News. January 11, 2021.
https://www.163.com/dy/article/G02T6BF505118VBB.html, accessed August 4, 2021.
4 An analysis on China’s Eyewear Industry’s Development in 2020: capital rushing into the big and highly profitable market. ASKCI
Consulting. June 8, 2020. Https://baijiahao.baidu.com/s?id=1668929566397316675&wfr=spider&for=pc, accessed July 28,
2021.
5 Based upon data in the financial annual report of Doctor Glasses, http://money.finance.sina.com.cn/corp/go.php/vC
B_Bulletin/stockid/300622/page_type/ndbg.phtml.
6 Qinwen Liu, Mingyue Lens Going IPO, Lens with the cost of ¥7 could be sold at ¥2,000. Yema Financial, July 7, 2021, accessed May
18, 2022, https://baijiahao.baidu.com/s?id=1704626147317677100&wfr=spider&for=pc.
7 Guobao, Yuan. Chinese companies hastening away from a highly profitable industry with a gross profit as high as Maotai. CYZONE.
July 20, 2021. https://www.cyzone.cn/article/641906.html, accessed August 4, 2021.
1
Based upon data in the financial annual report of Doctor Glasses, http://money.finance.sina.com.cn/corp/go.php/vC
B_Bulletin/stockid/300622/page_type/ndbg.phtml,
9
iResearch Inc, White Paper on China’s Eyewear and Lenes Industry in 2020. Netease News. January 11, 2021.
https://www.163.com/dy/article/G02T6BF505118VBB.html, accessed August 4, 2021.
10 “The Ministry of Education and Other Seven Departments Issued a Notice on the Implementation Plan for Comprehensive
Prevention and Control of Myopia in Children and Adolescents,” https://www.gov.cn/, No.2 2019, accessed October 22, 2021,
http://www.gov.cn/gongbao/content/2019/content_5361801.htm.
11 For Our Better Vision. Harvest Capital Releasing 5,000-word Research Report on Eyewear Industry: Eyewears are the Best
Consumer Product. January 14, 2019. https://www.sohu.com/a/232237855_164565, accessed July 28, 2021.
12 Home service for glasses prescriptions – Mafu Glasses raising ¥120 million in series B+ financing round. Tencent Entrepreneur,
September 6, 2017. https://tech.qq.com/a/20170906/078990.htm, accessed August 4, 2021.
13 An Introduction to BAODAO. Hexun.com. August 29, 2012. http://news.hexun.com/2012-08-29/145261246.html, accessed
July 28, 2021.
14 Sierfu, NOVA VISION (Baodao) Attended the 14th China Retailer Summit & the 3rd International Intelligent Retailing Show in
Xiamen, Sohu.com, August 31, 2020, accessed March 31, 2022, https://www.sohu.com/na/415716294_120296029.
15 Essilor Focuses on Eye Health Experience Center, Leading China’s Eye Health Practice, Sina Finance, February 22, 2019,
accessed March 31, 2022, https://cj.sina.com.cn/articles/view/1649036617/624a4d4902000jvy6.
16 How about the Effects of Carl Zeiss’ MyoVision? What are other lenses of Myopia Prevention and Control, dzwww.com, April
20, 2021, accessed March 31, 2022, http://www.dzwww.com/xinwen/jishixinwen/202104/t20210420_8374870.htm.
17 Jinyuan Liu. “New life and breakthroughs of the 100-billion eyewear industry,” EqualOcean.com. February 27, 2019 accessed
July 28, 2021, https://mp.weixin.qq.com/s/8azyJUK-TA6wp8Edja8oQA.
18 The eleven years’ success of MUJOSH – an innovative brand: what makes it a star. Dazhong News. July 27, 2021, accessed
August 4, 2021, https://www.163.com/news/article/GFTLCLED00019OH3.html.
19 A dialogue with Huang Xinzhong, founder of LOHO: why bet big on cosmetic and contacts market. Business Vision. June 17,
2021, accessed August 4, 2021, https://baijiahao.baidu.com/s?id=1702703036350907412&wfr=spider&for=pc.
20 Home service optometry? This is what AIER will offer you. Ebrun.com. May 12, 2018, accessed August 4, 2021,
https://www.ebrun.com/20180512/277076.shtml.
21 AIER removes your glasses – launching ceremony of the White Paper on Chinese people’s myopia surgery & AIER Mid-year
Celebration Party held in Hanzhong Beunique Hotel. NetEase. July 26, 2021, accessed August 4, 2021,
https://www.163.com/dy/article/GFQTRK0H051495SS.html.
8
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