DollarShaveClub.com - Fastlane!!

[AcquireCurrency]

Great branding and marketing. I also like the use of the subscription/continuity model.

[video=youtube;ZUG9qYTJMsI]http://www.youtube.com/watch?v=ZUG9qYTJMsI[/video]

Dollar Shave Club

How This Improv Actor Is Going To Make Money Selling Razors For $1 A Month - Business Insider

 

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[MJ DeMarco]

Love it, as well as I love that he's going after the BIG GUYS where the average person would think... Gilette? Shick? They've got the marketspace cornered. Nope, Fastlaners don't care as long as they provide a better product, service, or value.

Thanks for sharing.

 

[Thrive]

This was amazing. It helped me with some thoughts I have been having about my own business. And now I have a model of what I could do to look at. Thanks!

 

[deepestblue]

And THIS is why the Fastlane forum rocks. GREAT POST TY.

"Competition" is just an easy excuse by those who don't want to go for it. The thought of the "big" companies would stop 9999 out of 10,000 from starting a company like this.

 

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[Deleted8938]

Very clever ideas indeed. Like Jacob said above it makes you look at your business in a whole new way!

 

[hedgehog757]

That was awesome!

 

[cliqflip]

Saw this thread for a while but, never watched the video.

I just did ....


And it was awesome!!! That guy definitely did a great job marketing that product. I think I might sign up right now

 

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[kurtyordy]

1 question- what is the pedo bear doing to my razor before I get them? He seems to be a pretty prominent part of the business which leaves me a little concerned. Will I open my new razor each month only to find pedo bear fur caught in the blade?

 

[pro]

It's still a crappy business with a lot of razor burn. Let's assume 12,000 units per viral launch with $0.50 profit/unit sold and a 6 month average stay period.

12,000 * $0.50 profit/unit * 6 months average life = $36,000/6 months gross margin before fixed expenses

The video cost $4,500.
Servers/hosting for 6 months = $600
Support = $3,000/mo * 6 months = $18,000
Design costs/viral launch: $2000
Minimum Expenses: $25,100

Best case profit before tax: $10,900

It's semi-fastlane--a commodity viral hit.

 

[kurtyordy]

dollar beard club

<iframe width="560" height="315" src="http://www.youtube.com/embed/6fw6snAf0bc" frameborder="0" allowfullscreen></iframe>

 

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[MJ DeMarco]

Best case profit before tax: $10,900

How is this "best case"? What if he has 1,000,000 clients? Or 100,000? What if those 12,000 clients like it and tell others? Before you sell a million anything, you first have to sell 12,000.

 

[Jake]

They sell $6 and $9 blades as well

 

[Likwid24]

Sorry pro but I think your looking at worst case scenario. You have to figure they mak much more off the expensive blades and even on the dollar blades, your going to need more than 1 a month. I go through 4 5-blade razors per month. The cheap ones ate 2 blade. I think this has huge potential. L

Plus you never know what he spent on expenses. I'm getting a high quality video made for my site for hardly anything. If you know how to network right, you would be amazed at what people will do for free or very very cheap.

 

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[pro]

How is this "best case"? What if he has 1,000,000 clients? Or 100,000? What if those 12,000 clients like it and tell others? Before you sell a million anything, you first have to sell 12,000.

Agreed. I'm just saying this is not a reliable acquisition model and it's a viral hit. My post was just meant to be educational and give an alternative POV to cut through the "sexy and viral" hype.

Bottom line: I'll admit the execution is awesome but if you're a BOOT-STRAPPED entrepreneur, and have a $4,500 marketing budget, are you going to risk it all on a viral video?

This is the type of viral/sexy thing that they feature in popular business schools but makes for a misleading lesson for entrepreneurs who want a real large business. Cute and funny is what they teach in business schools to get good grades -- all the people you see that typically making these type of vids remind me of my 9-5 classmates working in corporate America.

Excellent execution of an "okay" model, similar to what you describe in your book.

Let's say if he did acquire 120,000 from this (quite possible from this 1 video), that's $360,000/year before fixed expenses. That's okay but this should not be a teaching model.

It would cost more in advertising to acquire a customer than it would be in a customer worth, let's be generous and say $3*6 months = $18 best case.

It's a pain in the a$$/nightmare of a business below $100,000/year in gross margin (let's say 33,333 customers).

Jake: Also, I know they sell higher ticket blades -- I assumed a constant margin of $0.50, which might be reasonable after merchant account expenses and a high proportion that might opt for cheaper blades. I'm assuming they are bad negotiators since they don't come from the blade industry and are not "huge volume purchasers" from day 1.

I cringe when a business decides to engage in a price war with a commodity product and viral videos.

 

[hedgehog757]

Seems like it is a fastlane concept to me. They have to start somewhere and how many people are on this forum alone who might sign up just to see if it is worth it? And if it is good, then they tell other people. Word of mouth is the best advertising you can ever get when someone likes your product.

 

[bmw12321]

Also, I know they sell higher ticket blades -- I assumed a constant margin of $0.50, which might be reasonable after merchant account expenses and a high proportion that might opt for cheaper blades.

What pro is missing out on is the ability for DollarShaveClub to upsell. If the people who sign up for this service won't be going to the store to buy razors anymore then that means they won't be going to the store to buy shaving cream and after shave either. You can bet this company will be adding them to their product line sooner or later.

 

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[deepestblue]

I also follow the 'meat and potatoes' approach outlined by a poster above, however how do we know this entrepreneur is 'boot strapping' (this may be his 10th business, who knows). How do we know how much the video cost (it may have been free), etc. The potentially thin ongoing margins are concerning but the business model is built on continuity (huge), I can think of worse ways to get off the ground than a viral video that reaches millions and I'm just glad to see examples of people taking action rather than "my dream" or "my invention" or "is this fastlane". Also this video is a (humorous) direct response ad, not some silly viral video where you have no clue what the product is or what to do next.

 

[InMotion]

Great video. Its a looks like the model diapers dot com uses. They have loss leaders for regular products, cheap blades in this case, in hopes reoccurring customers can be up-sold to more profitable items. Not sure how the diapers site is doing but they expanded into a ton of products very quickly.

 

[BrandonAg]

This article may give some additional insight

Dollar Shave Club Interview

 

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