Founded by Michael Dubin, Dollar Shave Club is a start-up built on the idea of inexpensive razors, has sold itself for a rich price. The company launched itself with a hilarious YouTube video poking fun at the pain and expense of shaving. The guerrilla YouTube marketing campaign video went viral and created the Dollar Shave Club. Now five years later, this Shaving start-up firm is bought by Unilever.
Unilever PLC, the European consumer goods giant, had reached an accord to buy the four-year-old company. While the monetary terms were not disclosed, the European giant paid about USD 1 billion in an all-cash deal, according to people briefed on the matter.
With the completion of this deal Unilever can now challenge American multinational consumer product giant P&G. Dollar Shave Club has chipped away at market leader Gillette,a P&G product, which has responded with its own Gillette Shave Club and last year filed a patent-infringement lawsuit.P&G’s share of the men’s razor and blade businesses in the U.S. fell to 59% last year from 71% in 2010, according to Euromonitor. Dollar Shave Club had 5% of the market last year.
The deal is a high point for digital commerce start-ups like Dollar Shave Club, which have gained fame for coming up with new ways to sell consumer goods, largely without the overhead of brick-and-mortar stores. Perhaps the most prominent star of the category has been Warby Parker, the hip maker of eyeglasses and sunglasses that has since branched out into physical retail stores as well.
Dollar Shave Club has made a name for itself as a direct-to-consumer subscription razor blades service, which cut costs by eschewing traditional store-shelf space and passing on the savings to consumers. As the brand grew, the company expanded beyond razor blades, offering its own line of shaving cream and after-shave lotion, among other products.
Now Dollar Shave Club’s competition stretches beyond Gillette and Schick. Among its main competitors on the start-up side is Harry’s, which is backed by investors like Tiger Global and Thrive Capital. The other competitor is Bevel, a razor seller that aims at the African-American market and is backed by the likes of Andreessen Horowitz.
Yet Dollar Shave Club is still on the fast track in terms of sales growth. In deal announcement, Unilever said that the razor seller collected USD 152 million in sales last year, and was on pace to pull in more than USD 200 million in revenue this year.
The deal could prove particularly lucrative for Unilever, which among its various properties does not yet own a direct-to-consumer men’s shaving product line. Buying Dollar Shave Club gives Unilever a strong access into the direct-to-consumer online sales space.
Mr. Dubin said, “D.S.C. couldn’t be happier to have the world’s most innovative and progressive consumer-product company in our corner. We have long admired Unilever’s purpose-driven business leadership, and its category expertise is unmatched.”