Sometime back in 2011, Mark Levine and Michael Dubin, met at a party and shared their frustration with the high costs of retail razors. The discussion resulted in setting up a start-up (Dollar Shave Club) that would use internet based subscription model to sell blades & razors to consumers online but back in 2011 Gillette was the undisputed leader in blades & razors market and still to this day controls at least 70% of the market.
The team behind the venture decided to take the competition head on with the launch video starring the co-founder Micheal Dubin asking without naming Gillette “Do you like spending $20 a month on brand name razors? 19 go to Roger Federer.” Gillette was a long time sponsor of Roger Federer until they parted ways last year. The video went viral clocking about 23 million views till date and adding over 12,000 subscribers in the first 48 hours of the launch. The servers as expected went kaput as they couldn’t keep with the high unanticipated traffic.
By 2013 Dollar Shave Club had over a million subscribers and they had transformed themselves into a lifestyle brand by adding new products in personal & hair care segments. To keep up with the traffic they decided to be hosted on Amazon Web Services (AWS) which basically meant they now had more time to focus on retaining and acquiring subscribers. They continued to use video & social media marketing as an effective means to reach out to customers even appointing an army of brand ambassadors who did effectively what P & G couldn’t do even after spending billions of dollars on advertising on TV.
By 2015 Dollar Shave Club had a presence in the US, Canada & Australia and had become the no. 2 Razor Cartridge Brand in the US overtaking Schick owned by Unilever. To compete with DSC Gillette launched Gillette Shave Club last summer but many believe that it’s game that P & G has little experience in.
Last week Unilever agreed to acquire Dollar Shave Club for $1 Billion dollars which represent almost 5 times the revenue that the company promised to deliver in 2016. What started off as a discussion about a funding round between Dollar Shave Club and Unilever became an offer to acquire the company as both parties saw value in the deal. Dollar Shave Club will have the marketing spends of Unilever to take Gillette head on and the production capabilities to optimise its costs while Unilever which seeks new distribution models to reach consumer which hugely benefit from the expertise of the DSC team.
Find all the finer details that we missed out in the article in the Dollar Shave Club Infographic: