What Dollar Shave Club Can Teach You About Innovation

The men’s razor business has been a battle among giants for the last century. Since the 70s in particular, brands like BIC, Gillette, and Schick have cleverly competed for market share using elaborate marketing campaigns.

When the first completely disposable razor was introduced by BIC, competition flared and forced competing brands to get real creative. Over the last few decades new razors with new gimmicks were introduced every few years. New aloe strips, more razor blades, and shaving cream with moisturizer have given consumers more options of the same thing. Call it trickery, call it clever marketing, call it whatever you like – safety razors cost between 5 and 12 cents to make – approximately 5000% less than what they are sold for.

So why should consumers root for Dollar Shave Club? Because they are a David standing before Goliath – and if there’s a lesson to be learned from them, it is this: no giant is too big to fall, provided you are armed with the right tools.

A Little Fish In A Big Pond

Gillette, now owned by Proctor and Gamble (P&G), leads the razor pack with the most market penetration, highest price per pack, and the most spent on marketing and endorsements. Since the 90s, Gillette has introduced an intriguing line of safety razors, each emphasising an innovative and in some cases blatantly useless feature.

The continuous addition of these new features have even become somewhat of a pop culture running joke. It started in the early 90s when Gillette launched its double-bladed Gillette Sensor with spring loaded blades. Gillette claimed the blades receded in and out, allowing the razors to smoothly glide along the contours of a man’s face. By the late 90s, a third blade, microfins, and a pivoting head were introduced under Gillette’s new line, Mach3.

Although Schick and BIC also make razor blades, over the last three decades, they’ve succumbed to being followers and simply counter Gillette’s new releases with similar products and features. Following the Mach3 was Gillette’s latest razor craze, titled “Fusion Power.” This motorized razor blade uses micropulses and a fifth blade to allow for a smoother shave.

The claims of the benefits of these product features have been criticized by competitors like Schick, but that has not stopped Gillette from making more outrageous statements, introducing new features, and pricing their product approximately 20% higher than the competition.

Despite the high price, Gillette’s market share still represents 80% and annual sales in blade replacement averages approximately $1 billion.

The Dollar Shave Club, a tiny company in this game of razors, is taking aim at giants like Gillette by offering what Gillette cannot – convenience, affordability, and a start-up flare that people can’t help but root for.

Dollar Shave Club offers customers a mail-order blade replacement subscription for as little as a couple of bucks per month, including shipping. The website is easy and likeable. In less than a minute, customers can sign up and start receiving their new blades, along with other cool men’s products, on a monthly basis.

The convenience of placing orders online and a steady flow of affordable blades right to a customer’s door make Dollar Shave Club a very competitive choice against the Goliaths of the razor world. The company, with the help of venture funding, has been using social media and marketing so effectively that it is gaining significant traction.  With no high priced mega star endorsements or big time ads, Dollar Shave Club is doing it the grassroots way – hysterical online videos and quirky product names.

How Anyone Can Start The Next Dollar Shave Club

Dollar Shave Club might not want to be an underdog in this tale, but regardless of its wants, it cannot deny the truth – it’s still a small fry in the razor industry. Still, the way it conducts business has a lot to teach business owners.

Market penetration like Gillette’s is outright scary for new entrepreneurs under most circumstances. When young entrepreneurs look to make a name for themselves out in the market, the first mistake they make is to try and develop an entirely new product. This desire for product exclusivity is misleading. When you build something completely new, you need to convince people they need it. When you build something that’s better than the guy next door, you just need to convince his customers that yours is better.

There are many variables at play when trying to be successful, and most of the time, developing a completely new innovative product, like a new app, isn’t necessarily one of them. Sometimes, being successful is about taking a chance at taking down the Goliath, even if the Goliath is 80% bigger than you. This is what makes Dollar Shave Club’s tale inspiring. It is innovative in its method and delivery, but its product is simpler, plainer, and might even be inferior (not likely, but possible).

In business, the risk involved in going after a giant is far lower than the risk of avoiding that same risk. Giants will keep trolling along, dragging their knuckles on the ground, leaving traces of themselves and opportunities that keen young opportunistic upstarts can seize. When something already exists, the tendency for new entrepreneurs is to move on, but it can be that very thinking that causes them to miss opportunities. Let the giants like Gillette lead the way, and then when the sling and aim are ready, take a shot - it’s the only way to ever really know if an idea will make it.

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