The news that Dollar Shave Club, a US monthly subscription box setup by two friends, has been purchased by Unilever for an estimated $1 billion has sent a shock through the retail market and confirms the subscription box model is changing the way we choose to buy and receive our products.
"Every now and again a deal comes along that signals a shift in direction for an industry. And Unilever’s acquisition of Dollar Shave Club is one of them."
Business Leader Report by The Guardian
It's not surprising that a big corporation would want to buy up an emerging fast growing startup such as Dollar Shave Club, which has grown to over 2 million subscribers in just 4 years. This type of purchase happens all the time in the digital arena of silicon valley, where small disruptive startups are quickly swallowed up by the tech giants . However, what's revealing is Unilever's clear desire to also acquire the understanding of how to sell physical goods direct to customers through an online subscription model.
In addition to the recurring revenue and customer loyalty, it's the potential cost benefits of shipping direct to customers and avoiding both the need for high street retailers and big budget advertising campaigns which is proving highly attractive to manufacturers.
Whilst the struggling high street may not welcome this shift, the benefits to the customer are equally attractive. The costs savings made by the manufacturer and the forecast of a monthly customer base allows the savings to be passed onto the customer.
Customers can also expect a higher level of experience and convenience each month, a below par box delivered one month and social media will soon have subscribers hitting that cancel button. This ensures the service must deliver a consistently strong user experience. It's hard to argue with a better customer experience and a better price.
This is the benefit that co-founder Michael Dubin famously highlighted in Dollar Shave Club's early promo video. “Do you like spending $20 a month on brand-name razors? Nineteen go to Roger Federer,”
Dubin says in the ad, claiming customers are being ripped off buying branded razors as most of the money goes towards celebrity endorsements and advertising campaigns. Dubin then goes onto to also confirm that "Our Blades are F**king Great”. The video soon reached over a million views (now over 24 million) and 12, 000 signed up in the first 48 hours.
This innovative approach is an inspiration for entrepreneurs startups and existing companies, the ability to compete with established leading brands through the use of clever online marketing and a good understanding of growing online communities is seeing a rise in new and exciting subscription services. This in turn is helping to reignite existing industries which have previously been dominated by a small number of multi-nationals.
"Dollar Shave Club has shown that the shaving market can still be transformed – thanks to an online subscription model, a memorable brand, and a strong consumer experience"
Bhaskar Chakravorti from Harvard Business Review
It will be interesting to see how Unilever will develop both Dollar Shave Club and the concept across it's other product ranges. Will the connection from subscribers be damaged due to the companies acquisition by a corporate giant or will the backing enhance the service?
What is certain is Unilever clearly see huge potential in the subscription model, this shift in strategy will see more companies follow suit to replicate the success of Dollar Shave Club and we'll be sure to continue our work in finding and reviewing the very best in the UK.
Dollar Shave Club UK
Dollar Shave Club have not yet launched in the UK, however it is rumoured to be happening soon. In the meantime there are a number of UK alternatives such as CornerStone and The Bearded Colonel . We are also putting together a full in-depth review into the best UK razor subscriptions, so check back soon or signup to our newsletter (top right of page) to get the latest reviews and discount codes direct to your inbox.
Sources and Further Reading
Dollar Shave Club and the Disruption of Everything - Stratechery
Unilevers Strategic Bet on Dollar Shave Club - Harvard Business Review
In China every brand is a Dollar Shave Club - Forbes
How Dollar Shave Club Went Viral - Entrepreneur