Anglo-Dutch multinational consumer goods company Unilever has decided to throw its major brand name hat into another facet of the male grooming market, to complement its successful Axe product brand. It has done this by snapping up the remarkably popular American start-up company Dollar Shaving Club in a flat 1-billion dollar deal that was announced only on the evening of Tuesday July 19.
According to a Forbes report, the acquisition was something of a standout for the year, and also one of the largest transactions for a company engaging exclusively in direct e-commerce, after Amazon’s buyout of Zappos for a similar $1 billion deal in 2009 and the 2015 purchase of public online site Zulily by the QVC shopping network for $2.4 billion.
Dollar Shave Club was founded in 2011 by Michael Dubin to sell disposable razor and assorted male care products online for as little as a dollar a month directly to customers, and became something of an internet hit after a marketing video posted by the startup on YouTube went explosively viral. At present the Dollar Shave Club has a presence in the US, Canada and Australia. While not exactly making any significant profits off the venture, it managed to drum up 2015 revenues of $152 million, with this year’s sales expected to hit $200 million.
Unfortunately this has garnered the Dollar Shave Club some legal heat from Procter & Gamble’s Gillette Company which accused the startup of using a special coating on its razor blades that is supposedly patented exclusively to Gillette. Interestingly, the well-established shaving brand started its own take on DSC’s marketing model with the Gillette Shave Club, the better to stave off the increasing chunks of market share being taken from them by the California-based e-company.
It was this “innovative and disruptive” success that attracted Unilever into acquiring DSC and turning it into a means with which to take on rival PG’s Gillette Company. Unilever North America president Kees Kruythoff says of this, "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".
For their part, the Dollar Shave Club is enthusiastic with Unilever’s interest in their company, valued at $615 million as of their November venture capital funding thanks to support from firms such as Andreessen Horowitz, Venrock, Technology Crossover Ventures, and Forerunner Ventures. Dubin, who shall remain as CEO of DSC under Unilever, remarks that they “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.”
The acquisition deal is expected to be finalized in the third quarter of this year.
Photo Credit to www.unilever.com.ph