Ten years ago, Dollar Shave Club wouldn’t have stood a chance against the titans who control the men’s razor market.
With only about $1 million in seed funding and five full-time employees, the tiny e-commerce start-up can’t afford celebrity endorsers like Roger Federer; it can’t buy television advertising during high-profile sporting events; and it can’t secure marquee placement in the aisles of top retail chains. Ten years ago, that kind of marketing disadvantage represented an insurmountable obstacle. If a startup had a Goliath’s market share in its sights, it needed far more than just a slingshot.
But in the age of social media the free market is, if not free, then at least one with significantly lower barriers to entry—and Dollar Shave Club is leveraging that fact to subject Gillette, Schick, and Bic to a nick, if not a lethal cut. Armed with little more than an engaging YouTube video, a direct-to-consumer approach, and a message that stands in stark contrast to competitors’ selling propositions (is it an authentic business model to nearly give the razor away at the expense of a high-priced blade addiction?), the company is positioning itself as an up-and-comer in the $13 billion men’s shaving industry. It enlisted 12,000 customers in just the first two days its e-doors were open.
Dollar Shave Club’s nascent success serves as a signal that our capitalist model is evolving. The balance of power may not be immediately shifting away from established brands, but certainly small ones who think differently, are authentic, and express passion have a chance to grow beyond startup status.
Dollar Shave Club’s shaving success offers three lessons well worth every company’s consideration:
1. "Our blades are f—-ing great!": Humor helps social media rival traditional advertising.
It’s no revelation to state that social media are fundamentally changing the advertising game, but to date, the most successful social marketing campaigns have been a combination of digital and traditional advertising strategies. Dollar Shave Club stands out because it is taking a social only approach—and it’s attracting eyeballs at an enviable rate nonetheless. The YouTube video that introduced the company has garnered more than 4 million views in just over a month. Some might argue that this figure pales in comparison to what television advertising is still capable of but this is more than just a numbers game.
Unlike traditional TV advertising, people are watching Dollar Shave Club video because they want to; not because they have to. The 94-second spot is entertaining, engaging, and hilarious—featuring shots of CEO Michael Dubin riding a forklift, dancing with a bear, and avowing that "Our blades are f——— great!" With such a creative approach, the company has won itself a captive online audience online, rather than the passive and relatively disconnected audience that TV delivers.
At the same time, Dollar Shave Club’s total focus on YouTube and other social media platforms means that all of its content is eminently shareable. Four million people have watched the spot not because they stumbled upon it during a routine Google search for the term "razors" but because someone in their circle of social media connections went to the trouble of sharing it with them. For all the costs associated with TV, print, and radio advertising, those avenues don’t offer that kind of viral potential (a.k.a. consumer commitment)—nor are they designed to build the community of online brand loyalists that The Dollar Shave Club is now amassing.
Traditional advertising is a lecture. Social media is a conversation.
2. Consumer endorsements rival retailers’ and celebrities’ stamps of approval.
Big brands still pay big bucks for top placement in the aisles of major brick-and-mortar retail establishments. But as the imminent death of the Big Box is amply demonstrating, that real estate isn’t as valuable as it once was. There was a time when the supermarket end-cap display was the be-all end-all of consumer visibility— and only the top brands could afford to present themselves so boldly. With the advent of digital and social media, the barriers to market entry don’t stand as tall.
Dollar Shave Club realizes that viral is the new definition of visible and that a brand doesn’t need a retailer's blessing if enough consumers step in to fill the void. Every time a consumer shares its videos or engages its social media profiles, the company attracts eyes to its virtual display case. Equally important, the company and its products also earn the implicit endorsement of that consumer—which is far more personal and powerful than a retailer’s (or even a six-time Wimbledon Champion’s) stamp of approval.
In the age of social media, start-ups can win visibility and trust without a retailer acting as middle man. That goes a long way toward leveling the consumer products playing field.
3. Be authentic.
The most compelling aspect of Dollar Shave Club’s marketing approach is the way that it taps into an undercurrent of inauthenticity in men’s razor advertising. Twenty years ago, men were told that three blades were the minimum required for a close, comfortable shave. Then it was four. Then it was five. Then it was six. Now—if the major razor marketers are to be believed—men need seven blades, a lubricating strip, a pivoting head, and a vibrating handle. Really? As Dollar Shave Club points out, "Your handsome grandfather had one blade" and Pop-Pop was "looking good."
At the same time, The Wall Street Journal reports that Gillette’s own research shows that men are up in arms over the high costs of today’s razors. Consumers shell out around $12.00 for the company’s Fusion ProGlide Power razor; but then, each package of four replacement cartridges costs around $19.00 – and most men go through the four cartidges in less than a month. Contrast those figures with Dollar Shave Club’s offerings that range from three to nine dollars a month, and it’s clear that this is one case where the big guys can’t price the little guy out of the marketplace.
Dollar Shave Club is leveraging the skepticism that surrounds the high price of razors and the "technological advancements" that make one model obsolete just months after it supposedly revolutionized shaving forever. It is doing so because the dominant players in the men’s razor market can no longer disseminate their marketing messages unopposed. Transparency is the hallmark of the social media era. When industry heavies fall back on inauthentic selling propositions, fresh faces are now able to present consumers with more genuine options that confirm what the marketplace has believed, but been unable to act upon.
The New Capitalism
Great companies need to remain great. Constantly thinking differently, staying authentic, and maintaining emotional connections with customers are not easy tasks as companies grow. It is made all the more challenging when creative startups can exploit inauthenticity in 30 days.
Natural selection has always been a tenet of the free market, but before the digital revolution, the governing principle was often survival of the biggest, not the fittest. Now, market dominance doesn’t provide the marketing advantage that it used to, and as a result, those companies that don’t adapt to the new capitalism only take steps toward extinction.
Follow Richard Levick on Twitter @RichardLevick, where he comments daily on the ways that social and digital media are impacting the marketplace.
Richard Levick, Esq., President and CEO of Levick Strategic Communications, represents countries and companies in the highest-stakes global communications matters — from the Wall Street crisis and the Gulf oil spill to Guantanamo Bay and the Catholic Church. Mr. Levick was honored for the past three years on NACD Directorship’s list of "The 100 Most Influential People in the Boardroom," and has been named to multiple professional Halls of Fame for lifetime achievement. He is the co-author of three books, including The Communicators: Leadership in the Age of Crisis, and is a regular commentator on television, in print, and on the most widely read business blogs.