From Fortune Magazine
My eyes opened wide when I saw the news last week that Dollar Shave Club was sold to packaged goods giant Unilever for $1B. I knew Dollar Shave was disruptive and a fairly new company (five years old). I did have questions never having used the product, as to what a ‘Dollar’ shave meant. More on that later.
While I pondered what does the dollar shave mean it’s apparent that it means an increasing market share and as Farhood Manjoo wrote this morning hin his regularly excellent column, a warning shot across the bow of many retail brands.
In fact another of my favorite columnists is from Steven Davidoff Solomon and he too yesterday opined that …’every company should worry’.
How did Dollar Shave do it? As Mr. Manjoo puts it “by cutting out on retail, and shipping products to people’s homes on a subscription basis, the company made buying shaving products more convenient than going to a store.” Shipping directly offered better pricing, more convenience and a better customer experience.
So a little research into the category turned up this from Huffington Post last fall:
…‘Does the service live up to its name? Can you really take care of all your shaving needs for a dollar a month? In a word, no. The minimal cash outlay gets you a basic two-blade razor call The Humble Twin. Each month, you will receive five replacement cartridges at the advertised cost of just one dollar per month, hence the name Dollar Shave Club. However, the true cost comes in at three dollars per month as you are on the hook for a two-dollar shipping and handling charge. I guess the Three Dollar Shave Club didn’t sound as snappy.
The Mid-Range Option
The next option offers a fancier four-blade razor called The 4X. You will only receive four cartridges per month with this option at a cost of six dollars per month. The good news? Shipping is included. But that’s still twice the price as the cheapest option.
The High-End Option
The ultimate package includes a six-blade razor called The Executive that also features a special trimmer edge. Like the mid-grade plan, you will receive four cartridges per month, but at nine dollars per month, including shipping. That puts you out more than $100 over the course of a year.
These prices are competitive with buying full-price, name-brand razor cartridges at retail stores, but you could do better by buying cheap, no-name razors or shopping the occasional sale. The Club does offer convenience, though; since the service is automatic and they will keep shipping you new cartridges every month until you cancel, you should never run out of razors (unless you go through your monthly allotment too quickly). If you want to maximize your savings, however, better deals do exist to ordering razor blades online.
Dollar Shave Club Alternatives
Dollar Shave Club does not manufacture their razors. In fact, they reportedly buy them from a company called Dorco. You can cut out the middleman and order razors from Dorco yourself and keep the savings.
Surprisingly, there are no savings to keep if you’re a fan of The Humble Twin. To buy a year’s worth of cartridges plus a razor handle, you would pay $49.40 through Dorco and only $36.00 through Dollar Shave Club. Unfortunately for Dollar Shave Club, Dorco wins the pricing battle with The 4x and The Executive. The 4x would cost you $72 through Dollar Shave Club and only $61.60 for the first year through Dorco. The Executive would cost you $108 through Dollar Shave Club and only $92.75 through Dorco. In both of these cases, you’d get a few extra blades to boot.
Is it making more sense to you now? Another upstart brand in the space Harry’s is similarly gaining market share and awareness.
Being a direct marketing practitioner I always tell clients that digital is direct. Dollar Shave has done a great job of using tried and true direct marketing techniques – digitally. Precise targeting and measurement is undoubtedly a key to Dollar Shave’s success. Mr. Manjoo closes by offering:
“…It’s striking how few of these online companies could have taken off in the presocial age. At the very least, they would have been sunk by the inability to target ads to the demographics they’re aiming to serve.
“Look at Dollar Shave,” Andrew Bosworth, Facebook’s vice president of ads and business platform, told me. “They were just trying to reach men. If they’d started advertising on TV, they definitely would have wasted half their money.””
Right on. Do you understand why I love direct marketing?