I didn’t know it was a problem

When was the last time that you were unsuccessful in your attempt to buy razor blades? In fact, when was the last time that you found that buying razor blades to be a real hassle? According to the commercials on television, buying razor blades has become a real problem.

The reason that I bring this up is not about the razor blades themselves. Instead, I would like to highlight clever and ingenious way that a small little startup company called Dollar Shave Club has successfully gone head-to-head with the two dominant players in the razor market, Proctor & Gamble’s Gillette and Energizer battery company’s Schick brands.

Dollar Shave Club Founder Michael Dubin developed a business model for purchasing razor blades through the internet and having them automatically shipped to your home once a month, based on his actual experience in trying to purchase razor blades in grocery stores. Combining this model with the use of humor in advertising, Dubin landed his first investors in January 2012. In less than three years, Dollar Shave Club has grown into a $140 million business and captured 10% of the $1.4 billion men’s shaving market. To date, the Dollar Shave Club has 1.7 million active members and ships 62 million cartridges per year. This year they have expanded their product offerings to include a line of organic hair care products.

The question is, would Dollar Shave Club have been a success just ten years ago? The answer is probably not. And the reason is culture change. First of all, Shoplifting razors — in particular Gillette’s expensive, ever-evolving “Mach” series — is an international phenomenon. In 2003, they were the most shoplifted item in the world. It’s something that a lot of people want…and small enough that thieves can steal them easily causing retailers to lock them up in cases. Secondly, companies like Amazon have made purchasing products through the internet a more common practice for millions of users.

The questions that you should be asking yourself are: Is your business keeping up with the times?  How easy would it be for another company to utilize technology to take away 10% of your business? Are you in a position to take advantage of a culture shift that could improve your customer base?

If you cannot answer any of those questions, the next step is to develop an expanded business model, including the money needed to put you in the proper position to execute the plan. If you need assistance, call Business Finance Corporation 702.947.3800, we may be able to help.

Your Partner in Success,

David Cabral