In September 2015, I wrote about the razor blade strategy (literally) disrupted by the Dollar Shave Club (DSC). You can read that blog article by clicking here.
Well, just recently, the efforts of DSC’s CEO and founder Michael Dublin have paid off. After only five years, the startup has proved that disruption can be very successful … using a combination of product, technology and service convenience disruption. What did they do?
Pricing — You receive 4-5 cartridges each month for $1-9/month depending on your choice of shaving model. Much less than cartridges will cost in a retail store.
Delivery — Shipped by mail directly to your home.
Service Convenience — You can cancel anytime or change the frequency of the deliveries (for those that don’t shave as often). And preventing running out of new blades or having to use dull ones (not like that has ever happened!).
Clearly, in this age of commodification, DSC leveraged the high cost of competitors (not to mention the supplier lock-in) to create a new product and distribution model. Gillette had dominated the razor market for decades; one of the reasons that Proctor & Gamble purchased Gillette for $57B in 2005.
As a Shark Tank fanatic, I wonder what Kevin O’Leary would say if DSC had presented its pitch five years ago? I can hear it now …
“You’ll never knock off the big players in the industry! You will get squashed like a cockroach.“
So what happened? Cha-Ching! Last month, Uniliver purchased the Santa Monica, CA business for a whopping $1B in cash. So it was a great month for the CEO and others at DSC. For developing a product, technology and operational strategy to disrupt one of the “big guys” in consumer products.
DSC did get the attention of another consumer product giant. Look at the number of Unilever brands. Looking over the dozens of brands they own, it does not look like they have any shaving products. Now they do!
Could DSC have been successful without an Internet-based model? Doubt it. They integrated several strategic and operational initiatives to build a billion (literally) dollar model.
So … what will your disruption model be? What Porter model strategies will you employ? It’s all in a day’s business if you have the vision and business acumen.
Congratulations to the Dollar Shaving Club!