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.