For the current leader in online razor sales, it has been a remarkable 4 years leading up to this big news. Dollar Shave Club has had a relatively simple business model: provide disposable razors and other male grooming products to consumers for as little as $1 a month. And this company vision has brought the American e-commerce start-up great things: 3.2 million subscribers, annual sales of $153 million - on track to exceed $200 million this year -- and now, a buyout by multinational consumer goods company Unilever (NYSE: UL) for a reported $1 billion in cash. Not bad for a company that seemingly took off overnight, after a hilarious advertisement video went viral, crashed their site, and emptied their whole inventory in 6 hours. Today, the company has operations in the United States, Australia, and Canada.
The 10-figure bid gives Unilever stronger footing to compete in the male grooming market. Dollar Shave Club's innovative and disruptive approach to addressing this market will give Unilever the ability to compete with rivals like Gillette. With Unilever already dabbling in male grooming with their Axe brand, they can leverage their global strength to help ensure that Dollar Shave Club achieves its full potential and reach. And they'll need whatever help they can get. In response to Dollar Shave Club's success, big players like Gillette have formed their own versions of shave clubs. Gillette Shave Club has tried to emulate DSC's model of delivering blades to subscribers, and since its launch in mid-2015, Dollar Shave Club has notably slipped in its dominating share of online razor sales. Other competitors like Harry's, 800Razors, Dorco and Bevel are all similarly eager to eat away at DSC's market share.
Looking at the big picture, the acquisition looks to be a smart move going forward. The male grooming industry appears to be a booming one, as it looks to bring in over $21 billion this year. Procter & Gamble Co (NYSE: PG) remains the clear leader in this market, with over a third of the value share. The aforementioned Gillette is its core shaving brand, and with new technology and the ability to compete with Dollar Shave Club, its future prospects are promising. As we've seen, the major battle will be between traditional retailers and newer online ones (like clubs). Shave clubs may start to increasingly bring in non-shaving products to achieve growth in the face of competition.
With reports of immense growth in male grooming product sales - some as high as 300% - it appears that men are starting to become more knowledgeable about beauty and concerned about their looks. If this trend continues with men actively investing in their appearances, there may be much more growth in store for this industry.