Analysis: Unilever acquires online retail startup Dollar Shave Club
The Unilever-Dollar Shave Club deal reflects the growing importance of emerging brands, vertical integration, and the consumer direct route to market favored by new CPG market entrants such as Dollar Shave Club, Honest Co., and NatureBox.
The acquisition may also signal more consolidation in the near future. Technology has lowered barriers to entry for new market entrants like Dollar Shave Club, enabling them to drive awareness, build brand equity, and target shoppers with precision more quickly and cost effectively than in decades past.
But shoppers still value the convenience and choice of shopping for full baskets of diverse categories, brands, and products, capping the scalability of pure direct-to-consumer models. Top-tier, fast-moving consumer goods companies like Unilever offer economies of scale and sophisticated channel development practices that can serve as a platform to drive future growth for emerging brands like Dollar Shave Club.
The deal gives Unilever immediate volume and share in an adjacent category (Unilever offers shaving creams and aftershaves, but doesn’t have its own razor products), along with the complementary capabilities and expertise that are driving Dollar Shave to its $200 million plus in annual sales.