ITS 380- E-commerce Business Models and Concepts
Dollar Shave Club
Case Study Questions:
1. What is Dollar Shave Club’s business model and how does it differ from its competitors?
- Dollar Shave Club uses a subscription based business model. What this means is that customers sign up for monthly delivery’s for as little as $1 a month, not including shipping. Dollar Shave Club separates itself by creating it as a lifestyle brand. Users and the subscription base feel as if they need Dollar Shave Club to live their lifestyle. It will also create the perception of being part of a community. This will create loyalty.
2. What are the key elements of Dollar Shave Club’s value proposition for consumers?
- Dollar Shave Club aims to provide certain perks to its users. These perks include an online men’s lifestyle magazine called MEL, a flyer with each delivery called bathroom minutes, a company podcast that tackles quirky and amusing topics. Dollar Shave Club also employs a 100 “Club Pros” who offer grooming advice via e-mail, text, social media, or over the phone. Dollar Shave Club aims to give great advice while at the same time keeping the product simple and more user friendly. One other value Dollar Shave Club uses is personal one on one calls. No scripted calls or automated telephone calls.
3. What revenue model does Dollar Shave Club use and why does it work for them?
- The revenue model is subscription based. The subscription based model works for Dollar Shave Club because it allows the company to have consistent revenue. The other major reasons why this model works is because it adds to the brand and loyalty element of Dollar Shave Club. By having the subscription model, users feel as if they are part of the community/ lifestyle. These are the two major reasons why the subscription revenue model works for Dollar Shave Club.
4. How would you characterize Dollar Shave Club’s online business strategy?
- I would characterize Dollar Shave Club’s online strategy by using social media as a launch pad for their business. It can be clearly tracked back to the viral video that put Dollar Shave Club on the map. Once they were on the map Dollar Shave Club used great story telling, value proposition, and funny and strategic content releases. What I mean by all of this is that Dollar Shave Club was able to harness the power of social media by knowing their audience and creating great content that their audience fell in love with. Within their content Dollar Shave Club was able to introduce and show all of their value propositions that their audience was looking for. Overall Dollar Shave Club used social media content as their main online business strategy.
5. How have Dollar Shave Club’s competitors responded?
- Dollar Shave Clubs competitors include company’s like Birchbox, Stitch Fix, and Trunk Club. They have not been successful in keeping up with Dollar Shave Club business model because with lower penetration rates and customer retention rates lower than Dollar Shave Club venture capital for these companies fell in 2017. With only 3% of U.S. shoppers signing up for subscription services and 59% saying they are not interested in any of them, it is very possible some of these companies will not be around in the next few year.
1. During the early days of E-commerce, first movers were touted as one way to success. Others feel as if a market follower can yield rewards as well. Which strategy has been more successful? Pick two companies and explain how it worked for them?
- The first company I would like to bring up is Dollar Shave Club, they were first on the scene and has been able to capture the largest market segment. I believe that by being first to the stage was a huge part of why Dollar Shave Club succeeded. It takes a fine balance of being the first in the market and also having a great product. I believe that Dollar Shave Club is a company that was able to capture this balance.
- The second company I would like to bring up is Amazon. Amazon was one of the first in the major E-commerce business the a world stage. Amazon is dominating the market due to the lack of competition. By being the first Amazon has been able to obtain most of the market segment while also providing a quality product. Amazon is another company that was able to have the balance or providing a great service while being first to the world.
- I believe there is a fine balance between being the first to the stage and having a great product. I think being on the forefront is a major benefit to any company as long as you can provide a great product, if not you could tarnish your reputation.
2. Examine the experience of shopping online versus shopping in a traditional environment. Compare and contrast the two environments and explain the advantages and disadvantages.
- Traditional Environment:
1. Are able to receive face to face help.
2. Can physically feel and see the cameras.
3. Could buy the camera on the spot and use it the same day.
1. More expensive.
2. Less options.
3. Travel is included.
4. More time consuming.
- Online Shopping:
2. Less time consuming.
3. No travel is included.
4. More options.
5. Can see previous reviews.
1. Shipping time.
2. No face to face help.
3. Cannot receive product the same day.
- I prefer to order online because I would rather save money and wait for the shipment to arrive. I usually don’t need any product instantly. I would also prefer to stay inside and have more options. These are just a few of the reasons why I prefer to shop online over the traditional market.