[Case by case #4] Karin Kollenz-Quétard: Dollar Shave Club – disrupting the shaving industry

What did the global shaving industry look like before the arrival of Dollar Shave Club (DSC) ?

Prior to Dollar Shave Club's entry, the global shaving industry was dominated by major players such as Gillette and Schick, with a strong retail presence. Customers typically bought razors and blades in stores, influenced by brand recognition and loyalty. Gillette, in particular, led the market with a strategy of selling razors at low prices while charging high price for replacement blades.

The industry heavily invested in marketing to persuade consumers that newer blade technologies offered superior shaves. Gillette's notable investments in R&D, including the development of multi-blade razors like the Fusion — which had 75 design patents and was priced 40% higher than the previous model, Mach3 — were part of this strategy to commit customers to their unique razor handles. Despite these high investments, the industry has only seen sustaining innovation, incrementally enhancing the same product over time. In 2012, DSC's arrival significantly reshaped this conventional business model.

How did « Dollar Shave Club » disrupt the shaving industry and threaten Gillette?

DSC entered the market as a disruptor, using a Direct-to-Consumer (D2C) business model and challenging Gillette's century-long dominance in the shaving industry. DSC's subscription-based model for razors capitalized on consumer frustration with the rising costs of razor blades, offering a more cost-effective and consumer-centred solution.

The company's growth was also propelled by a strong brand and effective marketing that resonated with consumers. They created memorable branding that differentiated them from traditional players. DSC's marketing campaigns were inventive, engaging, and often humorous, which helped in building a significant online presence and capturing market share. DSC's strategy was highly consumer-centric, focusing on convenience, affordability, and customer service, which appealed to a wide audience and improved customer loyalty.

By directly challenging the established giants in the industry, DSC positioned itself as the brand for the ‘smart' consumer, which helped in creating a strong community around the brand.

What came out of this confrontation?

The confrontation between Gillette and Dollar Shave Club led to significant changes in the market landscape, with Gillette facing increased competition and the need to adapt its strategy in response to the disruptive business model introduced by DSC.

Gillette used multiple strategic options to respond to disruption: it defended its market position by filing a patent-infringement lawsuit. At the same time, Gillette increased the competitiveness of its own blades by significantly reducing their price. Additionally, Gillette started to experiment with its own direct-to-consumer model: first under the ‘Gillette Shave Club’ brand selling via Amazon, then selling via its own online-shop under the ‘Gillette on Demand’ or ‘Gillette Club’ names. Additionally, Gillette started diversifying into niche markets, such as assisted shaving (Gillette Treo). Despite these measures, Gillette's market share dropped from above 70% in 2010 to 54% in 2016, after the emergence of DSC and other D2C shaving brands.

And then DSC was acquired?

Indeed, in a strategic move, Unilever acquired DSC in a deal worth about $1 billion. This acquisition was part of Unilever's strategy to gain a foothold in the male grooming market and to challenge Gillette's dominance, Gillette being part of Procter & Gamble, the main rival of Unilever. The acquisition also posed a new threat to Gillette as Unilever planned to use DSC’s direct-to-consumer competency as a vehicle for other product categories within the Unilever group.

However, this move seems not to have been successful. As evident from the sales of the DSC brand to a private equity firm this end of October 2023, Unilever has not been able to capitalize on the specific resources and capabilities of DSC. But this is another story – which might lead to a B-Case…

The DSC case has been a bestseller for three consecutive years (3). What makes the « Dollar Shave Club » case study (1) so successful?

This case is highly versatile and also fun to teach, making it one of my favourites. You can teach it in Innovation courses, but also in Strategy, Marketing or Entrepreneurship courses. The case can be discussed with many audiences, such as MBA/Master Level students, but also with executive or undergraduate audiences. This is also a case that arouses the audience's interest, as it can be told like a « David versus Goliath » story in three acts : a starting situation, a confrontation, and a resolution.

It can serve as a basis for discussion for sessions lasting 45 minutes as well as for 6-hour sessions. It allows changing topic or activity very fast, using tools such as polls, quizzes, and role plays. As we have used it online during COVID, we have included specific tips for teaching it in online sessions in our teaching note.

And last but not least, it is a case that makes everybody laugh, when watching the hilarious DSC’s commercials. After all, there is no better way to learn than by having fun!
 

References

(1) Dollar Shave Club: Disrupting the Shaving Industry - By Nader Tavassoli, Karin Kollenz-Quétard, Jamie Anderson (2018) London Business School case study CS-18-017

(2) Award winner 2021: Dollar Shave Club: Disrupting the Shaving Industry - www.thecasecentre.org

(3) Our 2023 bestselling cases - www.thecasecentre.org