From a tiny startup founded in 2011 to a safe $ 1 billion landing in 2016 when he joined Unilever. Dollar Shave Club (DSC) is a live demonstration of smart selling.
Simple but good
If only in terms of business model, Dollar Shave Club owns a model that can be said to be too simple:
- DSC is merely a commercial company. Products that DSC provides to customers are purchased in bulk and at high discounts from many suppliers (such as razors from Dorco USA).
- The “DSC Club” is simply a place where a customer signs up to become a member and pays a fixed amount each month for product delivery by DSC.
But the special thing here is that DSC always spends most of its costs to satisfy customers. This “club” is willing to take a loss to get new members.
Typical is the strategy “All for only 1 dollar”. Registered customers have the right to try DSC products from budget to premium for only 1 USD.
So how does Dollar Shave Club make money?
As noted above, DSC is a combination of commercial business model and membership registration.
DSC does not manufacture directly, products supplied by DSC are purchased in bulk and distributed to club members. The difference between the buying and selling price becomes DSC profit, and club members are automatically “credited” with a certain amount of money in their account each month to receive the product at regular intervals.
The cost of a DSC product package includes:
- Input purchase price of the product.
- Logistics fees (transport + packaging + printing …)
- Sales and administration expenses (including marketing fees, operating expenses of the company and other unnamed expenses).
DSC is often “willing to play” when there are no logistics and product purchase charges for the customer’s first order. These fees (and profits) are only added after customers are satisfied and continue to use the service.
This simple-sounding tactic helped DSC attract a lot of customers to try it out and become loyal members.
How is Dollar Shave Club different from other companies?
Right from its name, Dollar Shave Club has always positioned itself as a “Club” rather than an ordinary company. The DSC is capable of recognizing the men’s needs and common personal hygiene problems and working to address it. Although the business model is not new, the new way of selling smart is what differentiates and at the same time is an advantage for DSC.
With the marketing minds, analysts praise them. DSC’s advertising content always hits the target, right to each audience and right to each product they need.
“The Beards Club” is always proud of their products as “excellent”, ready to provide a good and cheap solution for customers.
Despite its enormous value to its customers, DSC still needed an efficient sales plan to take off. After all, low prices and quality are only achieved when DSC has a strong enough revenue to put pressure on its partners to maintain a competitive edge for customers.
And the hard thing got its smartest, DSC decided to use a “stormy” video and content-based sales tactic, starting in 2012, the first DSC video “exploding” as CEO with style. Very humorous explanation of the price and excellent quality of the product.
Within the first 48 hours, the video brought DSC over 12,000 new customers who needed just 1 minute and 33 seconds to feel that DSC was delivering exactly what they needed.
And not only providing products, DSC also focuses on developing the relationship between the company and the customer. The “DSC experience” is one of the factors that makes this company a part of the daily lives of gods.
With each package delivered, DSC sends customers a copy of “Bathroom Magazine” that includes humorous content, beauty tips for men, and extremely “heaven on earth” articles. like: “How do I shave without glasses”, or “Can the toilet lid be used as a shield?”.
According to a recent survey, some of DSC’s loyal customers said they could not “want to” cancel DSC service because the club was too “interesting”.
Dollar Shave Club cleverly combines economic benefits with an extremely smart sales model, making the DSC quickly become a counterbalance to industry giants like Gillete. Even Gillete had to create his own “Club” in order not to continue losing more market share to competitors.
The “storm” success and the “billion dollar” ending with Unilever
Dollar Shave Club is not only loved by customers, but also is supported by dozens of different investment funds with many “poured” amounts continuously: $ 1 million in March 2012, $ 9.8 million in October / 2012, and $ 12 million in 2013.
In 2014, DSC began adding dozens of products to the razor and offering a complete “cleaning package” to its customers. In June 2015, DSC received an additional $ 75 million in investment.
Since its inception, the DSC has more than 3.2 million members across the United States to date. And while DSC’s products are always aimed at men, more than 20% of current customers are women, showing the product’s conviction regardless of gender.
In 2016, Dollar Shave Club was acquired by Unilever – the world’s largest consumer group, with a value of up to $ 1 billion, five times higher than the expected revenue of DSC that year. Although causing a lot of doubts after the deal was announced, but only a short time later, Unilever has slowly become a counterpart to rival rival P&G (owns Gillette).
Le Thanh Sang
* Source: Young intellectuals