The founders of Dollar Shave Club, Harry’s, and other direct-to-consumer start-ups adopted razor-sharp strategies.
They focused on consumers’ simple needs and disrupted the old adage “You get what you pay for.” They fearlessly lured customers away from giant corporations’ established brands and succeeded. Their strategy was to offer quality, basic products at much lower prices than the competition’s and connect directly with their customers. However, for all start-ups, easy market entry with a catchy video on a Web site is both an opportunity and a threat: it helps achieve rapid success while leaving the door wide open to other daring, new competitors.
Video Spotlight: The Dollar Shave Club Video that Started It All
This post is based on The New York Times article, They Changed the Way You Buy Your Basics, by L. Ingrassia, January 23, 2020, and the YouTube video, DollarShaveClub.com – Our Blades Are [Expletive] Great, by Dollar Shave Club, March 6, 2012. Image source: Shutterstock / Oksana Kuzmina.
1. In your opinion, what are the competitive priorities emphasized in Dollar Shave Club’s operations strategy? Distinguish between order winners and qualifiers.
Guidance: Review cost, quality, delivery and flexibility. To beat the competition, Dollar Shave Club emphasizes low cost and service quality (connection to customers). Therefore, cost and service quality are order winners. The quality of the blades sold by Dollar Shave Club is comparable to that of Gillette’s. Therefore, product quality is an order qualifier. As for delivery, it can be argued that auto-ships (The Restock Box) are more reliable than remembering to buy blades when shopping at a brick-and-mortar store or even online. If so, delivery reliability could be an order winner for Dollar Shave Club. The increase in product mix has boosted the mix flexibility of the start-up, but it still lags behind Gillette’s.
2. How can Dollar Shave Club, Harry’s, and other start-ups provide quality products at much lower prices?
Guidance: They have very limited overhead: no manufacturing plants, no engineering teams, no merchandising, and low advertising costs.
3. In the article, Neil Blumenthal says “It’s never been cheaper to start a business, although I think it’s never been harder to scale a business.” Explain what he meant.
Guidance: The low entry costs, technology, and globalization make it easy to start a business. The easy market entry drives the constant influx of newcomers and copycats, making it difficult to expand market share and ensure stable growth. When successful, these start-ups are eventually purchased by large corporations such as Unilever and Edgewell.