Dollar Shave Club: business and growth hacks

dollar shave club case study

Dollar Shave Club’s story and growth hacks that they used is a perfect illustration of the Golden Era of e-commerce in the early 2010’s. In 2016 it was the talk of the day in e-commerce. Perha[s, acquisition by Unilever for a reported $1bn had something to do with it.

Today, Dollar Shave Club still has 3.6mln subscribers on Facebook, 230K+ followers on Instagram. With almost no engagement. Looks like since its acquisition the company has largely lost its authentic voice (Mr. Dubin – more on this below).

It is now very much a subset of Unilever corporation, no more than that. Whether it worked out financially for Unilever is unknown. However, this doesn’t concern us.

Let’s take a look at the rise of the company, the growth hacks they used, and how the Unilever deal came about.


Overview
  • Dollar Shave Club was founded in 2011 by Michael Dubin and Mark Levine in California, U.S..
  • The company offered subscription-based razor retail service to consumers (later expanding to other skin care products).
  • The venture was initially bootstrapped.
  • $100,000 was invested by the Science Incubator in 2012.
  • $65mln in sales in 2014.
  • In 2015 the company took over 48.6% of the online razor market (not to be confused with the whole razor market).
  • Sold for a reported $1bn to Unilever in 2016, just five years after the company was founded.
  • In 2021 Dubin stepped down as the CEO giving way to Jason Goldberger (previously CE of kitchenware retailer Sur La Table).

That video

The idea for Dollar Shave Club came to Dubin when he was out shopping for razors. It seemed to him that razors were: a) expensive, b) difficult to access, usually behind security screens and only sold in pharmacies. Dubin’s background was in digital marketing, and he specialised in helping other companies make online promotional videos. Also, it just so happens that Dubin had some comedic training at the Upright Citizens Brigade (improvisational comedy school), which he attended for eight years.

dollar shving club - rykov media analysis

It is not surprising that his entry into the online shaving market was announced with a comedic video. At the time of filming the promotional clip, Dubin and his co-founder were looking to move 250,000 twin razors that they had in stock.

The video as of March 2022 has been watched 27.7mln times and has been copied numerous times by other marketers in an attempt to draw the right audience.

If you haven’t seen it before, stop reading this article and watch it. It is not surprising that at the time of its release in 2012 the video went viral.

The ad was initially shot for $4,500. It was produced by Dubin’s friend and comedian Lucia Aniello, who coined the catchphrase: “Our blades are f**king great”.

In a space of 72 hours it brought in 12,000 paying customers crashing Dollar Shave Club’s website. It is unknown how much was spent on advertising the video, but the founders cleverly coincided it with their website re-launch and announcing a $1mln investment round. In just a few days the video was watched 3 million times.

Unprecedented for a first-time video campaign.

Later on Dollar Shave Club would utilise:

1. The video format as the primary form of advertising.

2. Emails that were customised to retarget and upgrade existing subscribers.

Which brings us to their business model, an important part of the Dollar Shave Club’s story.


Business Model

Dollar Shave Club started off by offering razors for just $1 a box. They really did start a “Dollar” club with just one dollar. The pricing was soon upgraded to $5, but one box kit included other products, such as shaving cream, etc.

As of April 2022, the club offers subscriptions to UK audience at £3, £6 or £8 a month. Essentially the minimum price has stayed more or less the same.

It looks like the $1 deal was used to lure in the original customers. This played a huge part when the initial 12k orders came right after the video went viral. Once the company had first paying customers (first adopters), they could retarget those customers with emails.

Launching follow up videos also helped spread awareness of the brand, although none of these clips took off as much as the first one did. But that did not matter. Retargeting was the name of the game, and that is how marketing works in an ideal world. (Dollar Shave Club world, that is).

One important point to remember: this was the time of e-commerce “Golden Era”. Ads were cheap, and Facebook ads in particular scaled like crazy between 2011 and 2015. Timing was on Dollar Shave Club’s side.

When the customers got used to ordering from Dollar Shave Club – a small price hike wasn’t a big deal. (It was actually 5x, but who cares, it’s only $5 instead of $1, right?)  

It is unclear whether the business became profitable right away, as the margins must have been razor thin (sorry). However, this guaranteed growth and follow-up raises. In total the company raised $163.5mln through 8 rounds, and 28 investors.


What happened later

In 2015 Dollar Shave Club learned what it’s like to play in the “big boys” league. Gillette* came out with a lawsuit, claiming the newcomer stole their proprietary shaving technology. The company fought back with their own lawsuit, but eventually decided to take the paycheque from Unilever. Unilever have been looking to enter skin care market for some time at that point (2016).

https://www.globenewswire.com/news-release/2020/03/25/2005955/0/en/Razor-Market-to-be-Worth-22-5-Billion-by-2030-owing-to-Increasing-Efforts-by-People-to-Maintain-their-Appearance-P-S-Intelligence.html

*It needs to be said that Gillette have tried multiple times to regain ground in the advertising world. So far, they haven’t been able to find their footing. In 2019 launching a “woke” ad backfired massively as they faced customers’ backlash and exodus. Someone wasn’t doing their market research.

In 2021, Michael Dubin decided that he had enough money in his account (and also we can presume that his contract with Unilever ran its course), and he left the company. He is still on the board, but as of 2022 on a hiatus.

Which concludes the Dollar Shave Club’s story: the business and its incredible growth since 2011.


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