Mark Levin and Michael Dubin established Dollar Shave Club; company ‘Dollar Shave Club’ is an American firm based in Venice, California, presenting shavers and other personal care products to customers by mail order. It delivers razor blades monthly and offers additional home care products. The club service was first launched on March 6, 2012, with a YouTube video that spread virally (Laudon & Traver, 2020). Dollar Shave Club proposes three membership plans that can be upgraded or downgraded at any time. Club plans: ‘The Humble Twin’ (two blades per razor, five razors per month, $4 per month), ‘The 4X’ (four blades, four razors, $7), and ‘The Executive’ (six blades, four razors, $10).
Most of the razor handles and blades are not made by Dollar Shave Club but are resold ‘Dorco’ products. The organization additionally trades similar accessories such as shaving oil, wet wipes, and moisturizer. In June 2015, the business received $75 million in Series D investment. In 2016, Dollar Shave Club acquired Unilever for $1 billion. (Randall et al., 2016). Thus, the business, in a short time, became the main competitor of the Gillette brand. Currently, the company is trying to improve its technical characteristics in order to cover most of the markets.
Dollar Shave Club’s Business Model
Dollar Shave Club adheres to the B2C business model; accordingly, the difference between the company and its competitors can be described through its price proposal. It is essential to perceive that the firm offers a low price but is strongly customer-oriented. Thus, unlike the main market giant ‘Gillette,’ Club is more accessible to clients and maintains a better feedback loop. The next outstanding element of the business model is that the corporation focuses on vertical growth through online marketing and brand promotion.
Accordingly, Dollar Shave Club has a great chance to expand into the European market with the available capital. Another distinctive difference from its competitors is the system of home delivery of razors and blades through a subscription payment system. That is, the company saves on production costs, which reduces the price for customers (Smith, 2020). Another indicator that distinguishes the firm from its competitors is customer loyalty and a stable base. This is because regular workers, not robots, do assistance; as a consequence, they try to advise and help the client according to any request.
Key Elements of a Value Proposition
First, Dollar Shave Club, as an online corporation, used the price advantage to attract customers. The company’s original advertising skillfully uses humorous language to attract viewers. An important component of the value it offers is affordable promotion. Exactly, videos on the internet that explain the product’s benefit in simple language encourage customers to choose it. This openness and friendliness were the first way Dollar Shave Club provided an innovative and valuable offering to the market. As the company has grown and added value through excellent customer service, real tolerance and humor have formed a feeling of community, understanding, care, and further support for transparency.
Product, personalization, and customization are other major value propositions (Laudon & Traver, 2020). Buyers can choose the number of products they want to receive. Gift cards are also always added to the set, which always raises the spirits of the customers. It is essential to remark that it will test the product first if a company releases a new commodity. If the product is already on the mass market and has dissatisfied reports, Dollar Shave Club will refund the customers.
Regarding the sales revenue model, the company operates on a subscription foundation, with customers contributing to services on a monthly basis. This type is extremely practical because it allows a wide range of options to meet clients’ needs. Buyers do not need to make orders on their own; when they subscribe, their card is automatically charged, and the shavers are sent to their places on the same day each month.
It is additionally the most appropriate model for a particular case since the company sells goods purchased on a regular schedule and which require periodic replacement. Subscription models also reduce the cognitive and physical cost required for customers to obtain a product in stores or on a one-time basis online (Randall et al., 2016). It gives a significant benefit over the traditional retail model used by most competitors in the market. Moreover, it enables the company to build a loyal customer base that promotes and enhances the brand.
Online Business Strategy
Dollar Shave Club engages multiple business strategies, including differentiation, price competition, focused market niche, and customer proximity. However, the company’s chief policy is based on a personal relationship with consumers through online videos and excellent online and phone support. Dollar Shave Club began its online business strategy with a viral video that appeared online in 2012 (Randall et al., 2016).
Dubin, the company’s founder, performed there, introducing his business. It talked about its services, including comparing expensive shavers on the market and their funny features. In 2018, the video attracted a large number of views as a marketing gimmick (Petty & Nichols, 2018). The company continues to use online videos and social media as a marketing target to get customers’ attention. An online strategy is a reliable option because it allows achieving business goals with minimal losses by using marketing methods and opportunities of the Internet. With gratitude to viral videos and other dynamic actions in the network, the company can attract more attention and thus increase sales.
With the widening expanse of the Internet and its prevalence amidst all demographic sections, e-commerce is a fit for practically all industries. It is approximately impracticable for a business to strive in today’s trading environment if it lacks a secure online presence. E-commerce is used to enhance activities and enables services and commodities to be stored online where buyers can examine them out, make requests, and create orders simply by clicking a button. (Laudon & Traver, 2020). Through websites and online advertising, company leaders can communicate with their clients, provide information about new items, and make sales. It is great for both the customer and manufacturers because they can avoid excesses and increase consumer satisfaction.
E-commerce also has helped businesses increase their efficiency by streamlining production and service delivery. Quickly and cost-effectively performing transactions is essential to advancing business efficiency. What is more, companies are using information obtained through online channels, such as customer forums, to develop the property of their goods and make better corporate decisions (Laudon & Traver, 2020). Furthermore, it permits to engage potential buyers without having to be physically present. Thus, business organizations can create products, use them on their websites and other e-portals, and make sales through online transactions. Overall, the significance of e-commerce in the marketplace cannot be overstated, as it has revolutionized how business is done.
Laudon, K. C., & Traver, C. G. (2020). E-commerce 2019: Business, technology and society. Pearson.
Petty, C. D., & Nichols, K. S. (2018). The Razor’s edge: Harrys.com takes on the shaving market. Business Case Journal, 25(1), 13.
Randall, C., Lewis, A., & Davis, A. (2016). How subscriptions are creating winners and losers in retail. Harvard Business Review, 18(5), 1-6.
Smith, G. E. (2020). Disruptive framing in value creation and price setting: Transforming value with strategic frames of reference. Business Horizons, 63(4), 481-491. Web.