Dollar Shave Club

Dollar, Shave, Club is changing men's grooming
By Kyle Stock. Source: Bloomberg Businessweek.

Dollar Shave Club Plots to Take Over Your Bathroom

Friction is building in the American shaving market. Procter & Gamble (PG) just released a new razor dubbed the ProGlide FlexBall to much fanfare.

In the wake of the big launch party, we thought we would check in with Dollar Shave Club, the startup that built a business trying to undercut the consumer-goods giants behind Gillette and Schick.

Turns out, Dollar Shave, essentially launched via a YouTube video a little over two years ago, is no joke these days. The company has 45 full-time employees and expects to post $60 million in revenue this year, which would be triple its 2013 haul.

This week, Dollar Shave is adding moisturizer to its subscription service, which already includes razors, blades, wet wipes, and “shave butter,” a kind of high-end substitute for foaming cream. Founder/CEO/pitchman Michael Dubin says the company will offer 12 more products in the next nine months, and at least one more irreverent video akin to its inaugural offering and its June pitch for “One Wipe Charlies.” The goal, in Dubin’s words, is to “own the bathroom.”

The strategy is working, albeit slowly. Four out of 10 Dollar Shave customers now get regular shipments of something other than razors.

That said, Gillette is still very much in business. In fact, Dollar Shave’s business model faces challenges on all fronts. P&G’s new FlexBall contraption, which looks like a Dyson vacuum cleaner, probably won’t be very easy or cheap to replicate. It is also getting a strong push from $200 million in marketing. (AMZN), meanwhile, is encouraging customers to schedule regular shipments of household products—horning in on Dollar Shave’s service proposition.

And a rash of e-commerce competitors are now in the fray, most notably Harry’s, which was developed by Warby Parker co-founder Jeff Raider, and 800Razors. Both of those companies make a much bigger deal about the quality of their razors than Dollar Shave does.

“You’ve got some people who are going to be die-hard Gillette fans … but there’s only so much money people are willing to spend to shave,” 800Razors co-founder Phil Masiello says.

Meanwhile, Dorco, the Korean company that supplies razor startups, is making its own bid for U.S. customers.

Dubin, however, is pretty sanguine about the market. None of Dollar Shave’s competitors, he says, offers the same package of service, savings, and savvy corporate communications. It’s the communications—the marketing—that really sets the brand apart.

“We’re very quick, we’re very affordable, and we’re very fun; that’s the part Amazon misses,” he says. “We know how to talk to our members.”

In an effort to sell wet wipes and raise money for cancer research, Dubin recently live-streamed his colonoscopy.

Thanks to, ahem, that strange brand of low-budget marketing and the ensuing word of mouth, the company now has 600,000 people in the club buying more than 24 million razors a year. Though it markets pretty much exclusively to men, almost 20 percent of its customers are women. Dollar Shave doesn’t disclose profit details, though Dubin says the company could eventually capture “well above 20 percent” of the men’s grooming market.

Its strongest selling point, however, is still its original stance as the anti-Gillette—the foil to expensive “shave tech.”

“We’re very good at emotionally connecting with our customers,” Dubin says. “People really feel like we built this business for them.”

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