Not just razors anymore: Dollar Shave Club introduces wet wipes for your other sensitive areas

By Michael Carney , written on June 4, 2013

From The News Desk

When Dollar Shave Club launched last Spring it was with a single product and a seemingly endless supply of attitude, courtesy of a viral video introducing the phrase, “Our blades are fucking great!” The company’s subscription-based replenishable razorblades were a big hit among cost, convenience, and image conscious men and the VC funding quickly followed in the form of a $9.8 million Series A round led by Venrock, on top of  $1.9 million in Seed funding.

But despite all the buzz, the question remained, how could a small internet company with a single commodity product realistically take on entrenched giants like Gillette, CVS, and their category brethren? From day one, the answer given by founder and chief executive spokesman, er officer, Michael Dubin was consistent – it couldn’t. To win this massive market, Dollar Shave Club would have to own the entire bathroom, not just the face.

Today, Dollar Shave Club has more than 200,000 active subscribers, paying an average of $6 per month for its mid-tier razor option – which pencils out to annual revenue in the neighborhood of $14.4 million on just blades. The company keeps its profit margins close to the vest, but given the fondness of business schools for teaching the “Gillette model” – giving away the razor body but selling the replacement blades at a hefty markup – it’s likely that its gross margins are healthy. Customer acquisition costs, on the other hand, are more difficult to estimage and can be significant in the early stages of building an ecommerce brand.

In April of this year, the company introduced its second ever product, Dr. Carver’s Easy Shave Butter to better than expected adoption. Dubin claims that he expected between 2.5 to 5 percent of all members to give it a shot in the first month after receiving a free sample in the mail, but was pleasantly surprised to see more than 20,000 upgrades (for uptake of greater than 10 percent).

Today, Dollar Shave Club is moving beyond the face, to another slightly less PC body part – the butt. The third product in the company’s portfolio is One Wipe Charlies, aka flushable “butt wipes for men” in company marketing parlance.

It would be easy to dismiss the toilet paper and wipe market as unsexy, but at $9 billion annually in the US according to figures from IRI, it demands respect – and compares favorably to the $6 billion men’s shaving and grooming market. Even cutting that market in half to reflect the men’s-only segment, it’s still a massive opportunity. And while shaving and toilet tissues are typically two very different categories, they both are highly consumable and lend themselves well to subscription replenishment.

Neither Dr. Carver’s Easy Shave Butter or One Wipe Charlies are sold on subscription today, although that is clearly where this is headed. At launch, the company chose to make both an optional upgrade each month. As it gathers more data on the rate at which men need to replenish each it will begin offering them multiple appropriate subscription options, Dubin says. One Wipe Charlies are sold in a 40 pack for $4, while the shave butter will set you back $8 for a 6 ounce container.

Before launching its wipes, Dollar Shave Club conducted a market study, surveying 1,000 men aged 18 to 45. The results indicated that 51 percent of men in this demographic already use flushable wipes and 16 percent use them exclusively in place of toilet paper. Finally, the company found that 24 percent of all men who use wipes hide them from view out of embarrassment.

In other words, the market needs a flaunt-worthy wipe. Dubin is confident that Dollar Shave Club is the company to deliver it to them, complete with a fresh video – which is predictably high on swagger – to introduce the product.

“[Men] swear by the experience, but yearn for something designed for men, not their infant children,” the company writes in a blog post announcing today’s product launch. “Something they can be proud to put on display. One Wipe Charlies answers the call. Of Doodie.”

Despite all the manly talk, the description of the materials that go into One Wipe Charlies reads a bit like a page out of cosmo – “100 percent viscose” (plant-based) rayon; a “soothing” surfactant (soap); multiple “soothing and calming agents” including cucumber, oat kernel, aloe, marshmallow extract, chamomile, and vitamin E; and an “appealing” peppermint fragrance.

But remember, these are “designed with men in mind; not babies, not women.”

So, this begs the question: Will men buy “butt wipes” online, regardless of their branding? I’m betting yes. It’s unlikely that many men will sign up to order them as as a stand alone product, at least until Dollar Shave Club’s brand awareness grows significantly. But it’s not a stretch to think that existing members will at least give them a shot – once again, each will receive a free sample. If the results of the company’s market study prove accurate, it’s fair to assume that many will appreciate the convenience and brand messaging enough to continue to buy regularly.

You won’t find many arguments that Dollar Shave Club is changing the world. After all saving a few dollars and a few hours time per year buying razors and toilet tissue is hardly curing world hunger. But, with existing revenue on the order of $14 million and a solid foundation of loyal customers, the company has a realistic shot at building a sustainable and significant business. Dubin and crew plan to continue adding new product with the goal of “making life better in the bathroom,” while also offering an alternative to the “primitive, frustrating, and costly exercise” of going to the store.

As we’ve pointed out in the past, the subscription business model isn’t a magic pill that can be ingested by just any business. But in the right cases, where products are highly-consumable and commodities in nature, it’s a natural fit. Adding in sticky and highly-targeted brand, and it’s possible to supercharge this effect. Dollar Shave Club takes this to the extreme, with the result being a bit like a hybrid of Guthy Renker (Proactive) and Axe Bodyspray, as interpreted by the cast of SNL.