Chapter 2: Dollar Shave Club

Case Study: Dollar Shave Club

1.     What is Dollar Shave Club’s business model and how does it differ from its competitors?

Dollar Shave club aims to be a low cost solution to razors and razor blades that relies on subscription services that costs only $1 and sends them directly to your house. This allows customers to save time and money and at the same time has undercut leaders in the industry, such as Gillette. They also will save money by having a factory in South Korea and avoiding the middle retailer.

2.     What are the key elements of Dollar Shave Club’s value proposition for consumers?

Low costs - Attract customers who are looking to save money.

Saving time - The customers do not have to go to a retail store and can get it delivered on a subscription service.

3.     What revenue model does Dollar Shave Club use and why does it work for them?

The company focuses on their subscription services and providing low cost razors. This allows them to gain access to a variety of different customers. E-commerce has become much more popular and has allowed people to find their needs waiting for them at their houses after a long day.

4.     How would you characterize Dollar Shave Club’s online business strategy?

Their online strategy is to show their customers how relatable the company is to their consumers by putting the CEO of the company into advertisements. Not only that, their subscription services are a great price and since they were the only company that was operating this way, they became one of the new leaders in the industry. Additionally, they also provide perks to their customers including an online magazine, a flyer with each delivery, and a company podcast. They also offer grooming advice to attract customers that need help styling themselves through their “Club Pros.” The company’s customer service is their strong point and will answer any questions that their customers ask, even unrelated to their product. Overall, the company is looking to provide a service that reduces cost and time spent on this type of product and become an open business. 

5.     How have Dollar Shave Club’s competitors responded?

Companies, such as Gillette, have responded by launching their own subscription service, which allows customers to order new razors and blades via text message and receive every fourth order for free. Gillette also wants to be competitive and make customers happy so they responded with price cuts. The company is looking to recapture the market and give customers a lower cost experience.

 

Projects

1. Describe a website or mobile apps business model based on the information you find there.

Amazon is an e-commerce website whose business model is to generate revenue through subscriptions, delivery charges, amazon credit cards, and much more. Amazon’s customer propositions are that the store has everything that can be delivered to your doorstep and that they are reliable in the sense that there have been no security breaches or sketchy items. The company doesn’t have many competitors besides other sites like eBay, except these do not compare to Amazon. Finally, the company has an organization structure that represents a hierarchy, which means that every major decision is induced by Bezos, or now his wife, and they have upper and middle management handling everything in between.

2. Traditional vs. online shopping

Traditional - Dragging yourself off of the couch can be a challenge, but you need to put down that bag of chips, dust yourself off, and walk out the front door for the first time all week. Driving to the store can be a challenge since your eyes have yet to adjust to the sun, but eventually you will get used to it or black out from the inevitable crash that is about to happen. You’re probably thinking BestBuy or the back alley where you saw that man throw away a camera last week. Next, social interactions with your fellow humans! This means actually walking up to a sales person, asking a question, and then making a decision. Together these make up the social anxiety that is probably plaguing your mind after the last week of not getting out of the house. After selecting that camera, find the register, wait ten minutes, and then chat with the cashier until they finally pressure you into that warranty that you’ll never need. Then, realize that you’ll have to sell a kidney for to cover next month’s rent. Finally, drive back home, sit down, and who pressured you into buying a camera in the first place.

Online shopping – Click, contemplate, click, regret, and done. You’ll probably forget that you ordered it until it’s on your doorstep.