Day 54 in MIT Sloan Fellows Class 2023, New Enterprises 3, Dollar Shave Club
Power of viral video
Dollar shave club is the brand all the people in the marketing industry know.
However, no one knows why it is excellent and why it is not worth.
This video cost just $4500 and generated countless leads for his subscription service.
Power of subscription and rediculously low CAC
The beauty of this service is as follows.
- D2C: Cutting middle men, getting more margins and handle more data. Countless space for upsell/cross-sell(Shaver cream, after shaving lotion etc)
- Subscription: Continuous revenue stream. Easy to predict future.
- Great pitch: As a Youtube video showed, it was a great presentation.
- Low CAC: Thanks to ridiculously cheap lead generation($0.1 per person)
- Golden timing: Amazon, Google and facebook makes tailwind to lower the purchasing barriers and hack marketing.
The timing was really the best. Gigantic companies(Amazon, facebook, Google, Netflix) started changing the landscape in 2012.
Crucial mismatch in value proposition and target persona
So, was this service successful?
Unfortunately, no.
Let's think about customers' persona.
Their main customers should be communicative, posh, sales guys(probably). Then, cheap, low quality lasor doesn't make sense at all for them. Who wants to use $1 cheap shaver to your most precious diamond, your face.
There is a clear mismatch between their marketing and value proposition.
Results / Other examples
So, Dollar Shave Club sold them to Unilever for $1B.
Dollar Shave Club Sells to Unilever for $1 Billion - The New York Times
However, the true winner in shave industry is not Dollar Shave Club. It was Harry's.
The $1.4 Billion Deal to Buy Shaving Startup Harry's Has Fallen Apart
Moreover, Chewy, the pet goods e-commerce, was undervalued in 2012, but it is one of the most successful D2C firms in 2022.
