Source: The Drum
Consumer goods giant Unilever is positioning itself in the burgeoning field of on-demand toiletries after snapping up Dollar Shave Club for a cool $1bn.
The e-commerce platform distributes high-quality razors direct to subscribers’ homes for a monthly membership fee of between $1 and $9. According to Venturebeat the acquisition is likely to see Dollar Shave Club chief Michael Dublin remain in post while bringing its 3.2 million members under the Unilever umbrella.
The innovative male grooming business generated revenues of $152m in 2015 by offering razors for just a few dollars per month after launching in 2012 on the back of a viral Youtube video.
Since then the company has gone from strength to strength and now offers a range of products including body wash, skin cream, lip balm, shave butter and butt wipes. Full terms of the deal have not yet been disclosed but it is expected to conclude in the third quarter.
On the other side, P&G is trailing a subscription service for its Tide washing powder as it presses ahead with its plans to be “more present” in direct-to-consumption e-commerce channels.
But, beyond that, the FMCG-giant was reportedly caught off guard by how popular the Dollar Shave Club proved to be among consumers, and the resulting effect it had on sales of its own razor brand, Gillette. Now, with Unilever having confirmed that it has bought Dollar Shave Club for some $1bn the reasons for P&G to up its game in this space are more apparent.
The popularity of subscription models and people’s propensity to sign up if they feel they are getting value have been proven by the success of Amazon Pantry and its dash button – which Tide was also quick to embrace.
However, the success of the Tide Wash Club model will live and die with how competitively it prices against traditional retailers. Currently, in comparison to buying directly from Amazon, for example, P&G works out more expensive.
