What Do Buyers Want From Their Relationships With Optical Buying Groups? The Role of Embeddedness, Switching Costs, and Commitment

Abstract

Independent optical shops (or independents) are increasingly being squeezed out by competition from first, warehouse clubs and superstores such as Walmart and Costco which have the means to penetrate the low and middle markets at a national level and second, from direct marketers such as 1-800-Contacts entering the industry with low online pricing. The increasing commodization and price competition in certain segments of the optical market (e.g., contact lens) has made it even more difficult for independents to co-exist with these competitors. Compounded by their inability to offer lower prices comparable to the larger chains as well as the lack of individual negotiating power with manufacturers, many small independents have turned to buying groups (sometimes called cooperatives or purchasing alliances) to help drastically reduce product acquisition costs and to stay competitive as independent entities.