The Dollar Shave Club

Michael Dubin, created a video - that made fun of pain & money spent on shaving & posted it on You Tube. It went viral & laid the foundation for the Dollar Shave Club, which 4 years later is being acquired by Unilever for $ 1 billion.

Dollar Shave Club is not yet profitable - so why has Unilever paid hard cash to acquire it?

The business picked up so well that it has cornered 8% of the $ 3 billion US market for razors & blades, forcing Gillette to file a patent lawsuit against it claiming it infringes on Gillette's hundreds of patents.

To understand the Dollar Shave Club phenomena, let's start by asking basic questions to understand the raison d' etre of its success!

Do you know the route to follow to build a successful business? It is simple. Identify an area about which you are passionate. In that area identify pain point of customers from the existing best solutions. Then endeavour to either reduce or eliminate the pain points.

Take the mundane task of shaving. A young man followed the above route to establish a successful business – Dollar Shave Club.

He identified the existing best solution available in the market vis-à-vis saving - Gillette. He identified the pain points of customers with Gillette - the high cost paid every month & month after month for buying its blades.

He launched Dollar Shave Club, which offers a subscription model, starting as low as $1 per month. For that price a razor was delivered every month to the subscribers doorstep. Of course if the subscriber wanted a better quality razor he went in for higher subscription fees.

On an average the company’s customers pay $7 per month to have razor delivered to their doorstep every month.

Dollar Shave Club was launched in 2012 with video which went viral – it was viewed 19 millions times.

Dollar Shave Club can be credited with creating this segment because prior to its entry the subscription model for shaving product did not exist.

Even when Dollar Shave Club had 2 million members it was still not breaking even.To add to its misery, Gillette too has entered the subscription market this June.

Anticipating imminent entry of competition, Dollar Shave Club came up with a strategy based on 1 insight – men’s grooming market will grow at a rapid pace.It decided to introduce a range of men’s grooming products like shaving crème, hair styling gel etc. And you would not believe it – men’s butt wipe branded as One Wipe Charlie.

What was the reason to expand into men’s grooming products? Apart from the fact that the segment is likely to grow, it would also afford The Dollar Shave Club an opportunity to send many more items in the same box that goes out every month carrying the razor. Result: Fall in delivery cost.

Business Lesson for us: Ever one of us have the capability of bringing the ‘giant’ of our industry to its knee – provided we follow the essence of strategy followed by Dollar Shave Club.