It was recently announced that European giant Unilever purchased the Dollar Shave Club, to the tune of a cool $1 billion. This signals that a disruptive shift in the economy has come of age. It also means that wineries should take a long look at modern subscription models to keep up with best practices when it comes to their own wine clubs.
As we mentioned in our previous white paper on subscription services, Dollar Shave Club (DSC) has been a success story worth emulating. Their model is simple: Send a small quantity of razors for a low monthly fee. CEO of DSC Mike Dubin launched the company four years ago with a hilarious tongue-in-cheek YouTube video that mocked the industry and quickly went viral. (If you’ve never seen it, you should.)
Although DSC is still working toward profitability, their subscription service boasts 3.2 million members to date. According to sources at Unilever, DSC had revenue of $152 million last year and is on track to exceed $200 million in 2016.
Most importantly, DSC has been able to chip away at the goliath in the room: Market leader Gillette (owned by Procter & Gamble). Gillette responded to the outsider, first by suing them (claiming that one of DSC’s razors was a patent infringement) and then by launching their own subscription service, Gillette Shave Club.
The move makes sense for Unilever (the European consumer products company behind Dove soaps and AXE body sprays), which now has a backdoor to the North American razor market. More importantly, the deal will give Unilever unparalleled data and consumer insights, as it will have access to DSC’s aggregated data on subscriptions, attrition, cohorts, and so on.
It will be interesting to see how much free reign DSC is given to “be itself.” Its viral videos, its hipster-esque newsletters, and its no-nonsense selling style have made it the brand it is today.
So, before DSC changes with the transition, we thought it would be helpful to look at a list of all the things it has done right in the past four years, noting that wine clubs and gift services are increasingly following suit.
7 Things DSC Did Right (and You Can Too)
(Note that all 7 of these things are strategies that your wine club and your brand can implement to grow membership and profit):
- It was funny and memorable. So, the mechanical act of shaving is, itself, not that interesting. While other brands touted the latest “technology” needed for a good shave, DSC went for the humor angle with their videos and newsletters. This allowed them to tap into customer pain (expensive blades, over-the-top advertising) while staying memorable.
- It created a brand that resonated with the market. DSC knew its market: Men aged 22 to about 40. This was a demographic that was increasingly interested in beard style, and that had a quirky, don’t-take-yourself-too-seriously sense of humor. Their communications reflected what this market liked and resonated with.
- It was reliable. The packages available represented three easy-to-understand tiers that changed little in quality and price over the years. Razors went out like clockwork, and customer satisfaction stayed high.
- It was flexible. Consumers are becoming increasingly demanding when it comes to personalizing their service. Flexibility in offerings is key. For example, consumers could choose from three basic packages and then request various “add ons”: Gels, shaving butter, soaps, and so on. Simple and intuitive web forms allowed consumers to change their package and frequency of delivery, or suspend delivery for a few months.
- It found the right price points. Monthly fees were modest and allowed three pricing strategies that were readily distinguishable in terms of value.
- It communicated with each shipment. Each shipment came with a newsletter filled with stories, humor, and, of course, new deals. Sometimes shipments came with free samples as well. Every monthly delivery was an opportunity for reaching out to the subscriber.
- It made offers that had value—without pressure. One email that DSC sent our simply said, “Your new razors are about to ship. Can we throw in anything else for you?” This was followed by pictures and prices of three popular add-ons. The offer was brilliant: It was an upsell that didn’t try to disguise itself with a complicated deal or a “Buy now while offers last!” pressure tactic. It simply offered further products in a friendly way and made buying those products very, very easy.
If you would like to read more about category leaders in the subscription services area, or about what recent experts had to say at the ShipCompliant “DIRECT 2016” panel on subscription services, follow these links to our white papers. You can also see the PowerPoint presentation here. and the video here.
Copper Peak Logistics is a 3PL service specializing in craftsmanship fulfillment for specialty products. We handle a number of subscription club services, maintaining a high degree of customer satisfaction.
If you would like to discuss what you can do with a new or existing wine club, please contact us!