Unilever Buys Subscription Box Dollar Shave Club for $1 Billion Cash

Recurring revenue of loyal members enables quick ROI

Subscription News: Unilever Buys Subscription Box Dollar Shave Club for $1 Billion Cash

Source: Unilever

Last week Unilever announced it would buy Dollar Shave Club (Dollar Shave Club), a direct-to-consumer male grooming subscription box service. Founded in 2012, Dollar Shave Club provides fresh razor blades on a subscription basis, ranging from $3 (with shipping and handling) to $22 a month. There is also an every-other-month option for subscribers who shave less frequently. In addition to the razor blades, Dollar Shave Club sells shaving products and other male grooming items including cleansers, creams and lotions, making it an attractive purchase for Unilever.

Subscription News:Subscription News: Unilever Buys Subscription Box Dollar Shave Club for $1 Billion Cash

Source: Dollar Shave Club

While the announcement did not disclose the sale price, TechCrunch says this is a $1 billion deal for Dollar Shave Club. In 2015, Dollar Shave Club had revenue of $152 million and is on pace to grow revenue to $200 million this year, according to the announcement. DSC boasts 3.2 million members.

“Dollar Shave Club is an innovative and disruptive male grooming brand with incredibly deep connections to its diverse and highly engaged consumers,” said Kees Kruythoff, President of Unilever North America, in a press release. “In addition to its unique consumer and data insights, Dollar Shave Club is the category leader in its direct-to-consumer space. We plan to leverage the global strength of Unilever to support Dollar Shave Club in achieving its full potential in terms of offering and reach.”

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Dollar Shave Club founder and CEO Michael Dubin commented on the sale. He will stay on as CEO.

“DSC couldn’t be happier to have the world’s most innovative and progressive consumer-product company in our corner. We have long admired Unilever’s purpose-driven business leadership and its category expertise is unmatched. We are excited to be part of the family,” Dubin said.

Subscription News: Unilever Buys Subscription Box Dollar Shave Club for $1 Billion Cash

Source: Dollar Shave Club

Bloomberg speculates that the reason for the sale is that Dollar Shave Club is more than just a subscription box company that can beat the retail razor prices of Schick and Gillette. The company has been successful in connecting with a specific target audience that is highly engaged. For example, subscribers love DSC’s Bathroom Minutes, written about a range of topics (bodily functions, skin care, jobs and money, etc.), included in each monthly box and on DSC’s blog.

Prior to the acquisition, Dollar Shave Club had raised over $160 million in venture capital funding and last fall was valued at $539 million, according to Fortune.

Insider Take:

$1 billion in cold hard cash. That’s a lot of money for fresh razor blades, but clearly the four-year-old startup has a good thing going, and Unilever wants to clean up. Sure, the annual revenue is attractive and will cover Unilever’s acquisition costs in short order, but it seems more likely that Unilever wants access to DSC’s 3.2-million-member audience and to harness the winning subscription box formula.

While DSC has competitors in the male grooming space (Gillette, Bevel, Wet Shave Club, Birchbox for Men), it has made a name for itself and identified and honed a niche unlike anyone else. It has taken a needed product, made it convenient and affordable, and simple to buy. No more traipsing to Walmart or Walgreen’s for fresh blades each month. Members get good quality products, and upsells if desired, delivered straight to their door. This simple formula has proven successful for Dollar Shave Club and turned its membership into loyal shoppers and advocates for the brand. Unilever is getting a deal.