Unilever struggled to grow sales at Dollar Shave Club and the brand was later than rivals to establish itself in brick-and-mortar retailers. Unilever did not move quickly enough to balance what Dollar Shave Club spent to acquire a customer — through ads and discounts, for example — with what that customer spent. Balancing acquisition costs and customer spend is a main challenge for DTC brands.
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GLOUnilever is selling a 65% stake in Dollar Shave Club, the subscription razor service it acquired for $1 billion in 2016. Dollar Shave Club, the brand known for its quirky commercials and affordable razors, is undergoing a change in ownership as its multinational parent company, Unilever, has decided to part ways with it.
The sale marks the conclusion of a somewhat uncomfortable seven-year partnership. Unilever encountered difficulties in expanding Dollar Shave Club, as per previous reports. While the innovative brand played a significant role in shaping the direct-to-consumer market, it never truly integrated with the more traditional multinational corporation.
Unilever has announced the majority of its stake in the brand is being sold to the private equity firm Nexus Capital Management, with Unilever retaining a 35% ownership. The exact financial details of the transaction have not been disclosed.
Fabian Garcia, president of Unilever Personal Care, commented on the sale, stating, “This is another step in our effort to reorient our portfolio toward our primary strategic growth areas.” He also acknowledged that Dollar Shave Club maintains a dedicated membership and following.
Nexus owns a portfolio of other consumer brands, such as shoe maker Toms.
Dollar Shave Club got its start in 2011, when Michael Dubin and Mark Levine founded the company to undercut the prices of razors offered by brands like Gillette and Schick. An early ad for Dollar Shave Club featured Dubin riding around on a forklift, extolling the virtues of the company’s cheaper razors and blades.
“Do you think your razor needs a vibrating handle, a flashlight, a back-scratcher and 10 blades?” Dubin asked in the ad. “Your handsome-ass grandfather had one blade — and polio. Stop paying for shave tech you don’t need.”
Unilever acquired the brand for $1 billion in 2016 because it had “a very distinctive appeal to a growing number of largely millennial men,” CFO Graeme Pitkethly told investors at the time. Deodorant brands Native and Schmidt’s Naturals were both acquired in 2017, by Procter & Gamble and Unilever respectively.
Unilever struggled to grow sales at Dollar Shave Club and the brand was later than rivals to establish itself in brick-and-mortar retailers. While it introduced new products, many, such as a $50-a-bottle cologne, were too expensive for the budget-conscious consumers that Dollar Shave Club had attracted with its pitch for inexpensive razors.
“You’ve created the cheapest way to buy razors in the world,” one source familiar with Unilever’s acquisition strategy told Insider in 2022. “You’ve chosen the Groupon consumer.”
Another source told Insider last year that Unilever did not move quickly enough to balance what Dollar Shave Club spent to acquire a customer — through ads and discounts, for example — with what that customer spent. Balancing acquisition costs and customer spend is a common concern for DTC brands, but less so for the more established brands under Unilever’s umbrella.
Even former CEO Alan Jope admitted that the acquisition hadn’t worked out. “Dollar Shave Club did not deliver as expected, and the economics of the DTC model changed,” then-CEO Jope said during an earnings call in 2022.
Nexus, Dollar Shave’s new owner, is hoping it will succeed where Unilever failed.
“We see growth potential and will invest in cutting-edge marketing, product quality, and new innovations,” Nexus partner Michael Cohen said. “Dollar Shave Club will also serve as a platform for additional brands with a similar DNA.”
