Fresh razors every month
Observing how the major razor manufacturers operate, the founder of the Dollar Shave Club realised he could do it better. And he was right.
»Do you like spending 20 dollars a month on brand-name razors? Nineteen go to Roger Federer. I’m good at tennis«, said Michael Dubin, the founder of Dollar Shave Club, to his future subscribers right before completely missing the tennis ball in a viral video that now has well over 25 million views on YouTube. But his business model was a service ace.
How Dollar Shave Club works is clear from the name. In their very first package, new subscribers received a razor stand and some razors. Each subsequent month, packages of replacement blades were delivered to their homes, for which they paid a dollar, six dollars, or nine dollars, depending on the package.
Subscribers who wish to receive monthly razor blades can now choose from many more options. First, they have to choose if they are interested solely in shaving products, or also shower and dental hygiene products. If they stick to shaving, the starter package will cost them five dollars, after which they will automatically receive a package of new razors and shaving cream every three months, the price of which is 24.70 dollars, so a little over eight dollars a month.
Subscribers are free to modify the package contents as they please. In addition to shaving accessories such as premium shaving butter, aftershave balm, and cologne, subscribers can also order toothbrushes, toothpaste, men’s hygiene wipes, shower and hair gels, as well as body and face creams. Subscribers can include each of the listed products in their tri-monthly package, the price of which will change correspondingly.
Dubin’s success is a clear example of how important the story behind a subscription economy product is, and how far you can get if you know how to use the power of social media.
The story of Dollar Shave Club began in 2010, at a Christmas party during which Mark Levin asked his friend Dubin to help him sell 250,000 razors he had ordered from Asia. The year after, Dubin started the pilot project, with a subscription business model at its core. In 2012, he won the hearts of potential subscribers with the aforementioned viral video, and began to break the status quo on the razor market, which until then was dominated by the much pricier Gillette and Wilkinson.
»Just a dollar a month,« promised Dubin in the video, challenging the doubts of those who still swore by established brands, supported by the cleanly shaven faces of the biggest sports stars. »Are our blades any good? No, our blades are f***ing great!« A day after the publication of the video, which cost a measly 4500 dollars to produce, the Dollar Shave Club website crashed due to the extraordinary number of visitors. The very next day, 12,000 customers were subscribed to receive their monthly dose of razors. The rest is history, as Americans would put it.
Dubin’s success is a clear example of how important the story behind a subscription economy product is, and how far you can get if you can use the power of social media. With the success of the Dollar Shave Club, life per month won over the men who like to keep a clean look by shaving.
In 2015, Dollar Shave Club was by far the largest online retailer of shaving products in the USA. In their market analysis, Slice Intelligence estimated that it dominated 52.4 percent of the online razor product market that year; in the same year, Gillette only managed a 21.2 percent market share. In Dubin’s company’s 2015 annual income exceeded 200 million dollars, with Dollar Shave Club supposedly achieving enviable margins, since it was selling Chinese and South Korean razors for three times their wholesale price.
Dollar Shave Club started shattering the status quo of the razor blade market, which had been dominated by Gillette and Wilkinson in 2012. Three years on, the company controlled half of the American online razor blade market.
It is therefore no wonder, that Unilever, a giant in the consumer goods industry, entered the »shaving« game in 2016, taking over one of the champions of the subscription economy for the dizzying amount of a billion dollars. Today, Dollar Shave Club has over 3.2 million monthly subscribers in the USA, Great Britain, and Australia alone. Their plan is to take over the European and Asian markets next.