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| Details |
Case Code: CLBS159
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| Case Length: 6 pages |
| Period: 2016 |
| Pub Date: 2017 |
| Teaching Note: Available |
| Subject :Business Strategy |
| Price:Rs.100 |
| Organization :Dollar Shave Club |
| Industry :Shaving and Men’s Personal care |
| Countries : USA |
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Unilever Buys-out Dollar Shave Club |
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| US-based The Dollar Shave Club (DSC) with its unique low cost business model of leveraging technology, ecommerce and online marketing sold subscription based men’s razor shaving blades, shaving accessories and men’s personal care products. Backed by efficient founders, within two years of its founding DSC had more than 200,000 online subscriptions. Its share in the online men’s shaving and personal grooming was seen growing causing a threat to even Gillette and Schick the established retail brands that dominated the market. In mid-2016, Unilever the company that owned over 400 brands was intending to fill the void in personal care and men's grooming segment and shift its focus from the slow growing food brands. Unilever struck the acquisition deal of DSC for $1 billion the cost of acquisition surprised the analysts, as it was five times DSC’s annual expected sales for 2016. |
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Issues: |
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- Apply how companies can create low cost business model by combining technology, sales and branding and disrupt the market.
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- Understand the importance acquiring a start-up that is showing huge promise.
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- Evaluate how companies can align their brand portfolio.
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| Introduction |
On July 19, 2016, Unilever PLC (Unilever) , the Anglo Dutch FMCG company, finalized the acquisition of the US-based Dollar Shave Club, (DSC), an online subscription-based company selling men’s razors, shaving blades, and other accessories, for $1 billion. Analysts were intrigued by the deal as Unilever had paid five times the annual revenue that DSC was projected to earn in the year 2016. By mid-2016, DSC’s value stood at $ 630 million and it held a mere 1 percent market share in the business of men’s razor blades and the shaving market in the US. DSC had not yet turned profitable although its subscriptions were growing; it had two million members that got its shipment every month.
DSC started with a simple idea of the CEO, Michael Dubin, (Dubin). Instead of paying $10 or $20 a month at a store for disposable razors and cartridges, a customer could have an online subscription with DSC to receive a regular order shipped every month to the customer’s home, at a fraction of the retail cost. With its perfect blend of a cheap and convenient product, and subscription-based home delivery, DSC’s online sales soon grew and it was competing with Procter & Gamble’s Gillette and Energizer’s Schick, the market behemoths. The acquisition was one of Unilever’s strategic moves to fill up the void in its brand portfolio in the men’s shaving business to grow in the men’s personal care category where it did not have much of a presence. |
Keywords |
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Online marketing,Low-cost manufacturer,Online subscription based business,Social media,Acquisition as a growth strategy,Low cost business model,Online order-taking,Disruptive business model,Entertaining advertisement,Customer experience,Acquisition,Buyout,Unilever,Procter & Gamble
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