$1bn for razor blade subscription company

It was announced yesterday that Unilever is purchasing Dollar Shave Club for $1 billion. Not bad for a company which has only been in business for five years and which makes its money ($152 million turnover, last year) from selling razors and blades on a subscription basis.

Retail Consigliere has had its (collective) eye on the increasing use of retail subscription models for some time now. The different models available include:
Replenishment – providing a regular supply of products (e.g. household supplies)
Sampling / curation – sending regular, curated samples of a particular type of product, often with the hope that if the customer enjoys the samples they may buy more of the products (e.g. beauty products, spices, tea, chocolate)
Services and digital content – making services (such as delivery) and digital content available over an agreed period of time, on an all-you-can-eat or limited basis (e.g. Amazon Prime)

Dollar Shave Club is not alone: other subscription model start-ups have made it big too. Two that Retail Consigliere is keeping a particular eye on are Birchbox, which offers sample size beauty products (which are presumably obtained at a reduced price from the manufacturers wishing to promote their products), and UK company Graze, which has expanded to the US and works on a non-subscription basis too by selling its snacks through retailers like Sainsbury’s.

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