How Dollar Shave Club makes the cut
May 13, 2015 12:38 PM
Few retailers lay claim to any part of their customers’ bathrooms, but then much of what Dollar Shave Club has done to grow its business is off the main trail. The online seller of razors and grooming products wants to control its customers’ bathroom cabinet, and if 2014 web sales are an indicator the web-only retailer is at least staking out a shelf in a bunch of them.
Dollar Shave Club’s online sales rocketed ahead by 242% to $65 million in 2014, from $19 million in 2013. It did so with continued use of humor in social media and TV infomercials, along with new technology, which enabled the merchant to continue along the upward trajectory it’s been traveling since its launch by founder and CEO Michael Dubin in 2012.
That growth rate led Internet Retailer’s panel of judges to select Dollar Shave Club as a finalist for the E-Retail Growth Award, as part of the inaugural 2015 Internet Retailer Excellence Awards. Internet Retailer will present the award, and awards in nine other categories, June 3 during the Internet Retailer Conference and Exhibition in Chicago.
Dollar Shave Club is one of five finalists for Internet Retailer’s 2015 E-retail Growth Award. The other fastest-growing e-retailer nominees are Choxi (formerly NoMoreRack.com), which sells a broad range of merchandise at deep discounts for limited times; Etailz Inc., a web merchant offering eco-friendly organic, natural products for home and office; Groupon Goods, an offshoot of the daily deal voucher company that sells tangible items; and online eyeglass retailer Warby Parker, a retailer that enables shoppers to upload photos for modeling eyeglass frames and also donates a pair of eyeglasses to the needy for every set of frames purchased through its partnerships with nonprofits.
Dollar Shave Club’s road to success began in 2012 when the company began using YouTube videos and TV infomercials to promote a cheaper alternative to high-priced razor blades. Dollar Shave Club, No. 319 in the Internet Retailer 2015 Top 500 Guide, advertised it would give subscribers simple disposable twin-blade razors with a lubricating strip and a year’s supply of 60 blade cartridges for $1 a month, far below the prices of industry leaders like Gillette, a business owned by Procter & Gamble. For example, Gillette Sensor cartridges sell on Amazon.com for $19.99 for a package of 10.
In addition to relying on humorous videos, reflecting his past life as an improv comedian, Dubin realized there were technology tools available to help grow sales. In early 2014 Dollar Shave Club wanted to strengthen its email marketing program based on customer preferences and turned to Looker Data Sciences Inc. to help organize and analyze consumer data.
Dollar Shave Club doesn’t use Looker to directly personalize emails, but the data filtered through its technology helps with that marketing effort, says Todd Lehr, the e-retailer’s senior vice president of engineering. “We look at the data and make optimizations including decisions around cohorting, cadence and content based on the data we glean from Looker,” he says. “Then we use Looker as a feedback loop to determine performance of our emails. It's a constant loop as we refine our strategy.”
Here’s an example of how it works: Dollar Shave Club was sending samples to customers to entice them to buy new products. “We found that blanket sampling is very costly,” Lehr says. But the company didn’t have a way to analyze data in a way that might help it better target the samples. Once Dollar Shave Club started using Looker, it discovered that customers who buy the Shave Butter pre-shave lathering product are more likely to buy other products as well. So Dollar Shave Club began sending samples only to Shave Butter customers and now achieves a 100% return on investment on its sampling program, Lehr says. Dollar Shave Club’s cyber marketing team also uses Looker to study the company’s email programs. The head of that team is able to use Looker to do A/B testing of email campaigns. “She’s always trying to increase take rates and reduce churn,” Lehr says.
The videos and technology tools are working. The company now has 1.7 million subscribers, Dubin says, men and women who want a cheaper way to shave and the convenience of getting regular deliveries of blades and other personal care products. Dollar Shave Club says its online growth strategy is to become the premier web merchant of a range of quality but affordable skin care products, including unique items such as skin cream and other post-shave products priced at $9 compared with more expensive department store brands.
Dollar Shave Club expects to double web sales in 2015 and aims to become the preeminent online skin care retailer for men. “We want to own the bathroom cabinet,” Dubin says.