Dollar Shave Club was sold to bath product powerhouse Unilever for the monster sum of $1 billion Tuesday night. The news undoubtedly came as a relief to Dollar Shave Club founder Michael Dubin, who has been struggling to turn a profit and is engrossed in a legal battle with razor competitor Gillette.
Michael Dubin founded Dollar Shave Club in 2011. The mail order shave club touts quality razors for as low as one dollar each as well as other shave products at discount prices. According to Forbes, while Dollar Shave Club is on pace to pull in $200 million for 2016, last year it still had yet to turn a profit despite its membership of more than three million monthly subscribers.
The success of Dollar Shave Club caught the eye of razor giant Gillette after executives noticed a dip in their own revenue. While Gillette continues to sell their razors for around $4 per blade, they also rely heavily on retail sales. Dollar Shave Club not only recognized the change in shopping habits that have increasingly relied on online purchases, but the overcharging of a disposable product. Though the Wall Street Journal indicates that Dollar Shave Club only held a five percent share of the market last year, a 12 percent drop in Gillette’s market while Dollar Shave Club continues to rise indicates that the company might be on to something.
In December, Gillette filed a lawsuit against Dollar Shave Club, stating that the company had stolen one of their patents intended to slow down the wear and tear on the sharpness of the razor blade. Dollar Shave Club countersued in February stating, “We prefer to have the Dollar Shave Club experience speak for itself in the marketplace, and we are not intimidated by Gillette’s attempts to thwart competition with litigation,” in a statement according to GQ.
The lawsuit apparently didn’t scare off Unilever, either. The coupling of Dollar Shave Club with Unilever, a well established consumer goods company that produces such bath products as Dove soap and Axe body spray, could mean a product crossover is on the way and that Dollar Shave Club will experience its first profitable year since its inception.
But could this also mean the end of those dollar razor blades?
Dollar Shave Club founder is reportedly staying on as CEO for the company and is excited about the possibility of getting his razors on the global market considering that Unilever is a European owned company. In a statement released today, Dubin stated:
“DSC (Dollar Shave Club) 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. We are excited to be part of the family.”
But neither Unilever or Dollar Shave Club seems to be speaking out quite yet on how the merger will effect consumer prices. Considering the marketing and manufacturing resources Unilever has at its disposal and the fact that Dollar Shave Club grew so rapidly from its humble beginnings as a viral YouTube video, it would seem they would stick to the formula that’s working.
Watch Michael Dubin’s viral video that started the Dollar Shave Club empire below:
With that being said, the probability that Dollar Shave Club will go global and the possibility its shaving products could eventually include Unilever products such as Dove or Axe make it possible Unilever could raise prices and as long as they continue to undercut Gillette, with the hope that consumers will continue to buy in. As Amazon has proven, consumers today are sold on not only quality, but convenience.
Only time will tell how long you’ll be able to get your shave in for a dollar, in the meantime, reap the benefits of the consumer niche market.
[Image via Shutterstock.]