Kohlton White

ITS 380 Global E-Commerce Systems

Chapter 2

 

Case Study

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

Dollar Shave Club’s business model is to offer customers with a hassle free, no gimmicks, one of a kind shaving experience. They use a subscription base method where customers choose a shaving kit that they would like to receive in the mail and how often they will receive them. Price will vary, but they have options that are cheaper than their competitors. At that time, their major competitors weren’t selling their products online with a subscription. They were mainly sold in brick and mortar stores.

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

Dollar Shave Club’s online presence was key to their success. This is evident with their “Club Pros” who would interact with people on social media by answering questions and take part in silly antics. Also, their marketing was perfect at the time, which influenced many competitors or other companies in different industries to follow suit.

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

Dollar Shave Club uses a couple different methods to generate revenue while lowering the costs. Like operating solely online in order to cut out the middleman (brick and mortar stores), buying everything in bulk from the manufacture, etc. One thing that works out great for subscription models is that you only remember that you have them when you receive your bill and when your package arrives. So, people tend to forget that they have a subscription and don’t cancel right away. This is a proven method that works.

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

Their website is very clean and user friendly, explaining how their subscription service works. The pictures of models show a spectrum of average looking customers, which goes with their whole “we don’t need celebrities or athletes to promote our products.” In short, their business strategy hasn’t change over the years. No gimmicks, just great products.

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

Before, the market and competition were stale. The prices of razors were high for absolutely no reason other than because these companies could charge whatever they wanted. But Dollar Shave Club arrived and offered lower prices. Their competitors were forced to lower their prices and their started offering online subscription services. Their largest competitor started to focus on advancing/innovating their products and reposition themselves as a high-end brand.

Projects

2.) Buying a laptop online versus in store.

Doesn’t matter if I was to buy a laptop in a store or online. I start the process online by going to an e-commerce website to see what products are available. Then I go to YouTube to watch reviews and unboxing videos to see what reviewers are saying about the laptop. Then I scroll through the comment section of the videos and users reviews on e-commerce websites like Best Buy or Amazon to see what kind of experience that the average user has had with it. From there:

               Online: I would purchase the laptop and a warranty, and have it shipped to my house.

               In-store: I would go to the store, test out the product to see if I like the form factor, key travel, etc. If everything is good to go, then I buy the laptop there.

I never buy a rely on using only one form of shopping “online” or “in-store” because online only doesn’t give you the option to try before you buy and that’s extremely important to me when it comes to buying a laptop. At the same time, you can’t rely solely on in-store shopping with zero online research, for obvious reasons. So, I prefer to use both methods when it comes to buying something as important as a laptop.

3.) Trend setter or follower

Looking at Blockbuster versus Netflix… Blockbuster was renting DVDs long before Netflix was even founded, but they were a little late to the game when it came to online rental subscription services. Netflix was able to look at the rental market, see what opportunities there were, see what did and didn’t work, and created a business model that built off that foundation. The pros for Blockbuster was that they were already a household name because they had been on the market longer. The cons for Blockbuster was that they weren’t quick enough to adapt to the changing market and this new competitor. Also, because Blockbuster had physical stores and it ended up cannibalizing itself. People didn’t want to go to their stores anymore when they could just rent movies online.