With the slogan "Our Blades Are F***ing Great" and the promise of delivering high-quality razors to your door for a $1 a month (plus $2 for shipping and handling), the Dollar Shave Club launched on Mar. 6, 2012 via a YouTube video that has been played over 21 million times.
Brief History of the Company
Sharing a common frustration over the high cost of razor blades, Mark Levine and Michael Dubin co-founded the Dollar Shave Club in July 2011. With an initial investment of about $35,000 from Levine, the pair of entrepreneurs built a site and secured 1,000 subscribers within the first six months of operation.
The co-founders spent approximately $4,500 to create the viral hit video, which was filmed in the original Dollar Shave Club warehouse in October 2011. The video played a major role in helping Levine and Dubin secure their first $1 million in seed capital from nine investors, including Andreessen Horowitz and Kleiner Perkins Caufield & Byers, in March 6, 2012. Within 48 hours of launching the video, 12,000 orders had come in.
Through four additional funding rounds, the Dollar Shave Club has raised $163.5 million from a total of 18 investors.
Membership Options and Additional Products
The Dollar Shave Club offers three monthly razor blade plans, each one with a free compatible handle. The Humble Twin offers five cartridges of two stainless steel blades per month and costs $1 per month, plus $2 for shipping and handling. The 4X offers four cartridges of four stainless steel blades per month and costs $6 per month, with no charge for shipping and handling. The Executive offers four cartridges of six stainless steel blades per month and costs $9 per month, with no charge for shipping and handling.
The Dollar Shave Club charges customers only for the blades, without any additional or cancellation fees. Customers can upgrade and downgrade from programs at any time, and they receive a $5 credit for each successful referral.
The Dollar Shave Club launched its Dr. Carver line of shaving products in April 2013. Two months later, the company introduced its Charlie line of flushable moist wipes. In March 2015, the company introduced its line of Boogie's hair grooming products.
The Dollar Shave Club's main competition is Dorco, a South Korean manufacturer of disposable shavers, shaving systems, and shaving accessories for men and women. Through its subsidiary in San Diego, Dorco USA serves the United States and Canada.
The Dollar Shave Club does not manufacture its blades; instead, it redistributes Dorco blades under a different brand name and a higher price. For example, if you were to buy the Executive model (six stainless-steel blades with a lube strip and a pivoting head) for 12 months (48 cartridges), you would spend a total of $108. With Dorco, you would spend a total of $86.87 ($2.87 for the handle and two cartridges plus $84 for 48 cartridges, free shipping) for the comparable Pace 6 (SXA1000) model from Dorco USA.
Another competitor is New York-based Harry's, which sells German-engineered blades and shaving creams and delivers them via mail like the Dollar Shave Club.
In response to Harry's and Dollar Shave Club, Procter & Gamble's Gillette brand launched its own Shave Club service in April 2014.
Latest Development: Gillette Lawsuit
Despite its entrance into the U.S. razor subscription service industry, Gillette has seen its U.S. market share dip from 60% down to 20% in just three years due to competition from rivals. Industry experts estimate that the Dollar Shave Club holds about 8% of the $3 billion U.S. razor and blade market.
In December 2015, Procter & Gamble filed a lawsuit against the Dollar Shave Club claiming the latter infringed on a 2004 Gillette patent related to a razor blade with a chromium-containing overcoat layer. Representatives from the Dollar Shave Club have declined to comment on the lawsuit, and industry observers are unsure why Dorco, the actual maker of the razor blades, is not mentioned in the lawsuit.
The Bottom Line
With 2 million subscribers and a projected $140 million in 2015 revenue, the Dollar Shave Club is a strong competitor in the razor subscription service. However, its dependence on Dorco for production and the patent-infringement lawsuit from Procter & Gamble may cause financial troubles for 2016 and beyond. Still, the Dollar Shave Club continues to attract investors – its last round of financing was in November 2015 for $90.7 million – who believe that the company can fend off its competitors.