The Story Of Dollar Shave Club – Strategy With RS

Do you know the route to follow to build a successful business? It is simple.

Identify an area about which you are passionate. In that area identify pain point of customers form the existing best solutions. Then endeavor to either reduce or eliminate the pain points totally.

Take the mundane task of shaving. A young man followed the above route to establish a successful business – Dollar Shave Club. He identified the existing best solution available in the market vis-à-vis saving – Gillette. He identified the pain points of customers with Gillette – the high cost paid every month & month after month for buying its blades.

He launched Dollar Shave Club, which offered a subscription model, starting as low as $1 per month. For that price a razor was delivered every month to the subscribers doorstep. Of course if the subscriber wanted a better quality razor he went in for higher subscription fees. On an average the company’s customers pay $7 per month to have razor delivered to their doorstep every month. Dollar Shave Club was launched in 2012 with video which went viral – it was viewed 19 millions times.Dollar Shave Club can be credited with creating this segment because prior to its entry the subscription model for shaving product did not exist.

Today Dollar Shave Club has 2 million members & Is valued at $ 615 million. But unfortunately it is still not breaking even.To add to its misery, Gillette too has entered the subscription market this June.

Anticipating imminent entry of competition, Dollar Shave Club came up with a strategy based on 1 insight – men’s grooming market will grow at a rapid pace. It decided to introduce a range of men’s grooming products like shaving crème, hair styling gel etc. And you would not believe it – men’s butt wipe branded as One Wipe Charlie.

What was the reason to expand into men’s grooming products? Apart from the fact that the segment is likely to grow, it would also afford The Dollar Shave Club an opportunity to send many mare items in the same box that goes out every month carrying the razor. Result: Fall in delivery cost.

Business Lesson for us : 1. Ever one of us have the capability of bring the ‘giant’ of our industry to its knee – provided we follow the strategy I have shared with you.
2. As a company our job is to ensure our customers do not have any ‘pain point with our product / service nor while dealing with us’ else somebody else will execute this strategy on us.

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rajesh-srivastava-insideiim

 

In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here

Comments

2 comments

Rajesh Srivastava

Ramji
1. Gillette razor & cartridge that is currently available in the market can give ‘shave’ for a complete month & more.
2.The average realizatdion is $ 7 per month … refer to the content.