FYI: Dollar Shave Club is Changing Marketing As We Know It

In 2011, Micahel Dubin became a worldwide phenomenon after the release of Dollar Shave Club’s first digital advertisement, in which the co-founder and CEO proclaimed that DSC’s blades aren’t good, they’re “fu@$ing great.” The hilarious, witty spot made waves on the internet, leading to 12,000 sales overnight and bringing the eyes of men everywhere to the then fledgling start-up.

Now, just five years removed from the DSC launch video, Dubin has 1 billion reasons to be the happiest guy in the world. On Monday, Dollar Shave Club was bought by multinational consumer goods conglomerate Unilever for a whopping $1 billion. With Unilever’s endless resources, Dollar Shave Club will finally have the financial flexibility to launch larger-scale marketing campaigns that will allow it to become an internationally recognized name in men’s lifestyle products.

DSC’s sale alone isn’t what makes their story so fascinating. After all, companies are bought for huge sums of money every day. It’s the potentially massive and far-reaching impact on sales models in the digital age that makes DSC’s purchase particularly noteworthy.

Dollar Shave Club operates on a direct-to-consumer model, cutting out retailers and minimizing the need for an excessively large workforce. The company operates with around 190 employees, a fraction of other well-known companies. Using subscription as a business model, Dollar Shave Club ships its products to customers on a monthly basis, all while providing round-the-clock customer support that’s fostered fervent consumer loyalty. By using the internet as its primary marketing platform, Dollar Shave Club spends a fraction of the money that other well-known razor companies like Gillette spend on marketing and advertising.

To put it plainly, DSC has created a sales, marketing, and customer service model that operates perfectly in the digital age. If you want to water it down, you could say that all DSC needs in its office is a phone – through which they can connect with their Kentucky-based distributors and Korea-based manufacturers – and a computer.

Though this is all fine and interesting, DSC is by no means the first direct-to-consumer business, and is just one of many subscription-based companies that have cut retailers out of their sales model. So what makes this sale worth talking about?

It’s quite simple: the size and timing of DSC’s sale has the potential to set into motion a revolution in which retail stores are eventually replaced entirely by online commerce. Unilever wouldn’t have purchased DSC had it not understood the immense potential of Dubin’s company to change the way we think about consumption.

Amazon continues to employ direct-to-consumer sales practices, but the company is a retailer in its own right, serving as the middle-man between manufacturer and consumer, albeit through digital means. A more wide-scale multi-corporation model shift is needed to entirely oust retailers as the primary providers of everyday goods. Influenced by the success of DSC, more companies may explore that shift to direct-to-consumer practices, which could result in the aforementioned revolution.

With millennials on their way into the workforce, this direct-to-consumer e-commerce trend won’t lose steam anytime soon. It’s very likely that product marketing and consumption a decade from now will look vaguely similar to today’s model, if similar at all.

Though such a shift may lead to an increase in convenience and efficiency in regards to consumption, a whole new host of issues may arise as a consequence of the impending direct-to-consumer revolution. For one, some may not have the tech savvy to do their shopping exclusively online. Navigating sites and applications is a nightmare for those less technologically inclined individuals, especially when using sites and apps that have poor usability and a frustrating user experience.

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Fortunately, the growth of online navigation systems programmed to hold your hand throughout internet use can alleviate that frustration.  My guess is that the proliferation of e-commerce companies will force an increased focus on providing a simple user experience like that of Dollar Shave Club’s site. But until UX and usability are perfected by every company, online navigation software can be useful.

DSC has gone from an idea and a funny video to an internationally known, incredibly valuable direct-to-consumer company. $1 billion is a whole lot of money. But money is made to be spent, its time in your pocket only temporary. Revolutionizing product consumption and marketing, on the other hand, is permanent.

 

 

 

James Mello
James is the Lead Author & Editor Product2Market of Blog. James writes for the Product2Market blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Product Marketing.
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