$9.8M richer, Dollar Shave Club may have survived the subscription commerce reckoning
Like any business model trend, subscription commerce companies appeared to grow on trees for the better part of the last 18 months. Many have rightly called the model a fad (we preferred “smokescreen”). As consumer and investor appetite waned, a few winners have risen to the top, while the majority have faded away. Those succeeding have generally been the companies whose offering was genuinely enhanced through the convenience of subscriptions, pre-dominantly replenishable utility products like household items, cosmetics, and clothing basics.
Dollar Shave Club, a branding masterpiece squarely at the center of that narrow bullseye, is announcing a $9.8 million vote of confidence in the form of a Series A led by Venrock, with participation from existing investors Kleiner Perkins Caufield & Byers, Forerunner Ventures, Andreessen Horowitz, Shasta Ventures, and Felicis Ventures. Venrock’s David Pakman will join Dollar Shave Club’s Board of Directors.
Venrock, et al are betting that Dollar Shave will be able to expand beyond simply delivering ultra-convenient razors to become “the Internet’s best ‘men’s company’” as the company puts it. The initial post-funding push will be to expand the service into international markets, beginning with its launch in Canada today. In addition, the startup will press hard on a customer acquisition and explore product-catalog expansion.
Unlike many of its subscription commerce brethren, Dollar Shave doesn’t rely on discovery or impulse buying to drive its business. Instead, the startup has tapped into the a few well known facts about men: Nearly all of us shave regularly; buying razors is expensive; and shopping a hassle we’ll gladly avoid however possible. These distinctions are not unique to razors, and can presumably be extended to a wide variety of toiletry items, and possibly even other consumables like food, vitamins, clothing basics.
The number one thing going for Dollar Shave is that male consumers see its brand as cool. The company orchestrated a masterful re-launch in March of this year in partnership with Santa Monica technology studio Science Inc. The hilarious viral video that accompanies the promotion has since been viewed more than 7.2 million times.
Adding to the company’s mistique, reports soon began coming in that real world bars were honoring faux coupons that the company sent out offering new members a free drink:
Dollar Shave Club sends a faux coupon for a free drink with their razors. Some bartenders honoring it. Epic! #AACMO @mdubin
— Mike Ma (@michaelwma) July 18, 2012 At the end of the day, the discount razors that Dollar Shave delivers are no better or worse than those offered by the major CPGs at every pharmacy and convenience store in the world. If users wanted to maximize their savings, with a little online research they could buy the exact razors offered by dollar shave in bulk and with free shipping directly from the manufacturer, although without the convenient subscription model – at least currently.
What Dollar Shave Club really sells is convenience and an experience. Like the unprecedented success of the Axe line of men’s body sprays, consumers resonate with the message that the company puts forth and seem happy to continue using its product. With healthy direct-to-consumer margins and an exceptionally loyal fan base, Dollar Shave Club may be one of the few left standing after the subscription commerce reckoning is complete.