Case Study Questions
1. What is Dollar Shave Club's business model and how does it differ from its competitors?
Dollar Shave Club’s business model is a B2C model that uses e-commerce to fulfill a subscription-based service to provide its product directly to customers’ doorstep. The subscription service is provided at a significant savings over what the other companies charge. Additionally, Dollar Shave Club has bypassed traditional retail outlets and distribution chains to pass saving on to its customers while gaining market share. Now Dollar Shave Club is promoted more as a lifestyle brand as compared to a simple delivery service. This is compared to the tradition razor companies that would sell razors at a low price with the target being high priced blade replacements to generate profit. Additionally, the traditional razor companies rely on a distribution chain and retail outlets to get their product to the customer.
2. What are the key elements of Dollar Shave Club's value proposition for consumers?
Dollar Shave Club has a few elements that establish a desirable value proposition for its customers. To start with, Dollar Shave Club has built trust with its customers through outstanding customer service. Additionally, they have listened to what their customers desire. This resulted in their simplistic razor design with a low price. To further create value, they target their advertising to the demographic they serve and do not waste efforts or money on advertising to everyone. Another element that pushes up the value proposition for consumers is their platform. When Dollar Shave Club realized that third party sources could not meet their standards for performance, they developed their own.
3. What revenue model does Dollar Shave Club use and why does it work for them?
Dollar Shave Club uses a subscription revenue model. This model works for them because they focus on cost savings for the customer. As part of the saving, they are removing the retailer and distribution functions by going directly to the customer. With this method of customer interaction, they take advantage of the subscription service to keep their customers stocked with products. Another advantage to this revenue model is it prevents consumers from forgetting to purchase a product and running out. The subscription also helps Dollar Shave Club to have better focus on its customers’ needs.
4. How would you characterize Dollar Shave Club's online business strategy?
Dollar Shave Clubs online business strategy could be characterized as a combination of a focus or market niche strategy along with a customer intimacy strategy. The focus or market niche strategy comes into play by looking at their product. They offer a simplistic designed product that is fits a need for a narrow and specific consumer. The business is tailored to an outstanding customer experience for their target customer. They focus on their customer service to provide the desired experience to keep their customer base. This aspect aligns more with the customer intimacy strategy.
5. How have Dollar Shave Club's competitors responded?
Dollar Shave Club’s competitors have come up with a few new ways to try to protect its customer base and lure back former customers. Gillette has launched an on-demand service that allows customers to order new razors through test messages along with lowering prices and a loyalty program. Their on-demand service is geared to deliver orders within three days. Gillette has also file suit for patent infringement to combat Dollar Shave Club’s success. They have also added new features to their razors without increasing the customers’ cost.
2. Examine the experience of shopping online versus shopping in a traditional environment. Imagine that you have decided to purchase a digital camera (or any other item of your choosing). First, shop for the camera in a traditional manner. Describe how you would do so (for example, how you would gather the necessary information you would need to choose a particular item, what stores you would visit, how long it would take, prices, etc.). Next, shop for the item on the Web or via a mobile app. Compare and contrast your experiences. What were the advantages and disadvantages of each? Which did you prefer and why?
The camera purchase mission has been chosen. Traditionally, hours of research would be conducted online to find out different models and brands of cameras to consider. Next would be head to head comparison of features and price. The first trip to a few local retailers is now in order. Retailers such as Best Buy, Target, Walmart, and photographic specialty store would happen. This would provide the opportunity to feel and see the physical product while talking with a sale representative. It is a very time-consuming process and may take a few days to complete this phase. Then, realizing the model I am looking for is not carried locally, I need to decide if I want to have the retailer order the product or select a model that they carry that may not have all the features I want. This entire process may take a few weeks or more. The prices locally would typically be higher as well.
Same purchase done through the internet would start by me deciding on to purchase a camera. I would Google search for the highest rated models and brands. Next I would find a site that has the models available to compare features side by side on my screen. After deciding on the brand and model that will suit my needs, I would Google search that specific brand and model for websites selling it. After finding the price I am comfortable with from the e-tailer I am comfortable with, I add the camera to the cart and check out. Within a few days to a week, my camera arrives at my door.
The online purchase takes a lot of time out of the equation and allows products to be more easily compared. It also allows a rapid search to find the best price for the product. Overall, online is a lot more convenient. However, by going to the local retailer, I can handle the product to see if it is physically what I like as well. Another benefit locally is I get to interact with people instead of a computer screen. My personal preference comes down to I generally research and compare online and try to purchase locally if the price is relatively competitive. I do this because I feel it is important to keep our local economy healthy. I am supporting my friends and neighbors that work in the local stores. With that said, I do still make some purchases online when it is more cost effective or if I can not find what I want locally.
4. Select an e-commerce company that has participated in an incubator program such as Y Combinator, TechStars, DreamIt, Capital Factory, or another of your choosing, and write a short report on its business model and the amount and sources of capital it has raised thus far. Include your views on the company’s future prospects for success. Then create an elevator pitch for the company.
Flow is a father and son business that I have recently come across. They are from located in Australia and have been raising honeybees for many years. Together, this father and son team designed an innovative product that allows honey to be harvested without disturbing the bees. To help generate the capital for their product, they utilized Indiegogo crowdfunding. After a record-breaking Indiegogo campaign, Flow revealed their Flow Hives to the bee keeping industry.
Flow started with a goal of $70,000 US in February 2015. They broke several records on their way to surpassing $2,000,000 US. In 13 days, the campaign generated over $5,000,000 US. This company has been the most successful Indiegogo campaign launch to-date.
The business model is primarily a B2C E-tailer model. They provide a unique problem that is geared more toward urban and personal apiaries around the world. Flow’s products are produced and shipped from the manufacturer with sales being primarily online. Along with their niche products, they also provide other common bee keeping products to allow consumers to purchase the need accessories directly through their website.
The Flow company has dedicated themselves to improving quality and listening to their customers. This company also targeted a growing niche market that has expanded as more people have become aware of the environment. These are a few of the reasons I think Flow has a strong chance for future growth and prosperity.
We are Flow Hive from Australia with a bee friendly way to extract honey from your beehives. Our innovative designs will also be easier on you. Our high-quality products and craftsmanship are brought to you through honeyflow.com. Our desire is to make your honey harvest a sweeter endeavor.