Dollar Shave Club founder and CEO Michael Dubin shared a dirty little secret with CNBC reporter Courtney Reagan as the two shared the main stage at Shoptalk on Tuesday, May 17.
Men don’t like to shave.
And that’s why Dubin transformed his 5-year-old company (and four years since Dubin reminded the world that “your handsome-ass grandfather only had one blade, AND polio” in a viral video that really launched Dollar Shave Club) from a commodity into a lifestyle brand that has got men on board with personal grooming.
Dubin said Dollar Shave Club was not the first ecommerce merchant to sell razors online, and certainly is not the last. But Dubin and his team has grown Dollar Shave Club into a lifestyle brand – a lifestyle brand that Dubin said will do $242 million in sales this year. Dubin said Dollar Shave Club employed just 20 people and did $4 million in sales in 2012.
“What we are doing for razors is what Starbucks did for coffee,” Dubin said. “Starbucks made coffee special for you. They turned it from something you had daily, to that deserves a lifestyle around it. Now it’s impossible to think of getting coffee another way.”
Dubin said to be successful in selling something that is a commodity, you have to build a brand experience that evokes emotion from the advertising to the unboxing experience. The ecommerce site now includes content, which gets its members to come back to the site daily. Members receive a monthly magazine (with a circulation of 3.1 million) with their order.
Dollar Shave Club also expanded its product line to include skin care and hair care products, and “One Wipe Charlies” for men to use to, well, wipe themselves (as they say at Dollar Shave Club’s headquarters, “great things happen when your ass smells fantastic.”).
And Dubin said Dollar Shave Club’s retention rate has been pretty impressive. Since March 6, 2012, when Dollar Shave Club went viral, its average retention rate is 3.2 years.
“People stick around,” Dubin said. “Obviously, the products are great, but they feel like they are a part of it. People don’t day they are subscribers, they say they are members.”
Men are the ones signing up to become Dollar Shave Club members, and Dubin said men are the ones who want to control this.
“American men are really paying more attention to what they put on their skin and body and hair because it helps them feel more confident,” Dubin said, adding that 68% of their customers now change their blade once a week.
Dubin said running a company with 20 people is different from 75, which is different from 200. But at each point, Dubin said growth is what the company promised investors it would be. Scaling is Dubin’s biggest challenge.
“Culture is a tricky word for us,” Dubin said. “Are [employees] bought into the mission, do they feel supported by management, do they feel recognized? That’s harder to do as you get bigger.”
Dubin said that as CEO of a small company, you can hide your bad habits.
“But once you bring in high level people, you can’t hide your weakness, you have to build your processes,” Dubin said. “But organizational health is the biggest advantage you can have.”
Shipping is also a challenge, and over time, Dubin said prices go up over time. Dollar Shave Club recently brought its fulfillment in-house in Torrence, CA, and will be opening a distribution center in Ohio in a few months.
But as volume goes up, Dubin said Dollar Shave Club can negotiate better rates with its carriers, DHL and the USPS.