Unilever recently announced that it bought corporate viral-video and subscription-model darling Dollar Shave Club (DSC). Here are 6 reasons why shave and razor brands shouldn’t necessarily be worried, but all other personal care brands should take note.
The acquisition is driven by Unilever’s desire to get a piece of Dollar Shave Club’s loyal customer base, brand equity (DSC’s corporate video has over 23 million views on YouTube) and most importantly, DSC’s robust online sales supply chain and at-home subscription business model. Giant CPG companies have looked at new online-based, personal care subscription models like three-headed monsters – now they have one of their very own!
DSC does not produce their own razors. Dorco is the key manufacturer for DSC’s blades and holds the IP for the design and tech. Therefore, DSC was not purchased for their IP dominance, razors or shaving products per say, but rather for the reasons listed above.
Dorco, on the other hand, has been slowly but surely entering the USA market to sell shaving products via an online, e-commerce module, offering more premium products for a cheaper price than the ones they source to DSC. In a category-to-category comparison, razor brands like Gillette (or DSC) should care much more about Dorco’s moves.
Unilever has made a past attempt to enter the razor market under the AXE brand (under a partnership with Schick), but this hasn’t led to much. DSC’s strong US-presence presents a new opportunity here for Unilever, who is not as dominant in the US market. Additionally, AXE has the brand equity and customer loyalty of a complementary customer base and complementary products. Augment AXE (or Unilever’s Dove) with an online subscription model, and then P&G owned Gillette and other personal care brands might have something else to worry about.
DSC has over 3.2 million monthly subscribers that receive their razors and shaving kits, and additional millions more purchasing every other month (in 2013 DSC extended their product line to include wipes, shaving creams and moisturizers as well as razors). This is what Unilever wants – an existing customer-base that is primed to receive a mix of Unilever brands and products in their mailbox once a month.
DSC comes with a bank of experience and consumer knowledge on new ways to engage with consumers via online retail and new e-commerce business models. This “peek-under-the-hood” of the leading at-home subscription company gives Unilever a new opportunity to drive and growth online, globally, for all of its brands.
It’s not necessarily razor companies like Gillette that need to worry – it is everyone else.
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Written by Avi Zuck
Avi Zuck is the Head of Business Advisory at Signals Analytics, a Decision Science as a Service company that enables global organizations to continuously experience the “aha moment” through Signals Playbook™, a cloud-based analytical intelligence platform that transforms the world’s unconnected data into actionable insights to enhance customer experience, optimize product portfolio health and propel innovation.