Dollar Shave Club sold in reported $1B deal,
Unilever ponies up $1 billion for digital start-up that mails razors direct to consumers
A digital start-up that promises shaves for a dollar has turned the concept into big bucks.
The Dollar Shave Club, an online subscription service that delivers razors and other grooming products to customers’ doors, sold itself to multinational consumer goods giant Unilever. Unilever announced the move late Tuesday. Neither company disclosed the terms of the deal, but Bloomberg and others reported it to be about $1 billion U.S.
Based in Venice, Calif., the Dollar Shave Club cultivated a following with cheeky YouTube ads, some of which have amassed millions of views. In a recent video, a man held on a leash by a leather-clad, whipwielding dominatrix says: “Sure, I like the rough stuff and maybe a little pain, but not when it comes to a razor. “Do you make your members use their blades for a month like those other guys?”
It was a commercial like this one that caught the attention of Mark Fraser, an executive at a Toronto IT firm. “It was truly remarkable, even downright hilarious,” he told the Star. Fraser subscribed about three years ago and hasn’t bought blades at a pharmacy since.
He found Dollar Shave Club’s direct-to-consumer model so convenient that he signed up online for other goods, from underwear to laundry detergent.
Many experts described Unilever’s acquisition of Dollar Shave Club as a sharp move. In a blog post, Forrester Research analyst Ted Schadler says the purchase will help Unilever get to know its customers better. “Unilever has sold through distribution for time immemorial,” Schadler wrote. “It doesn’t know its customers except through the lens of research and sometimes purchased sales data. No longer.”
Until Dollar Shave Club and its counterparts came along, the razor market was dominated by Schick and Proctor & Gamble brand Gillette. “They are the Donald Trump of shavers,” said Alan Middleton, a York University marketing professor, about the start-up. “It touched people and men who thought they were paying far too much to scrape stuff off their faces.”
In Tuesday’s announcement, Unilever said the online razor seller made $152 million in sales and was on track to collect $200 million in revenue next year.
The Dollar Shave Club faces competition from other e-commerce sites that cut out retailers and pass savings onto consumers. One successful rival is Harry’s, a New York City-based shaving brand started by two college friends. Harry’s website offers a shaving plan for $13 U.S. plus $6 shipping to Canada. In comparison, members of the Dollar Shave Club can buy a range of razors for between $3.50 and $9.50 a month.
In the past four years, it has brought in 3.2 million subscribers and influenced other startups, such as the Dollar Beard Club, which sells beard oils, balms and shampoo.
The concept for the beard product business came to Chris Stoikos, a native of Richmond Hill, and his friends Alex Brown and Mike D’Agostini after they decided to grow their scruff, but couldn’t find affordable oils. Since the site launched last year, almost 70,000 members have signed up, he said from California, where the company is based.
The co-founders bristle at comparisons to the Dollar Shave Club, despite obvious similarities. “We weren’t inspired by them by any means,” Stoikos said.
“Obviously, the natural fact that Dollar Shave Club was there, that became our shot back to say ‘We’re not guys that shave. We’re the antiDollar Shave Club.’ ” The Dollar Beard Club is planning to begin shipping internationally this year.
The appeal of monthly services like theirs isn’t just about convenience, but also a pride of membership, Stoikos said.
“To say I’m a member of Dollar Beard Club is great. I think other companies have that to some extent as well,” he said. “It makes you feel happy to belong to a club.”