Online Razor Sales Cut Traditional Retail Sales

Online business models have been disrupting “traditional” channels of direct-to-consumer sales — and now it may be shaving’s turn, The Wall Street Journal reported Tuesday (June 23).

The shift online has been a heady one, as online sales of men’s shaving equipment has jumped to $263 million in the past 12 months, WSJ said, citing numbers according to estimates from market researcher Slice Intelligence. That works out to about 8 percent of the $3 billion market.

“It’s kind of incredible that happened all in a year,” Tim Barrett, an analyst at researcher Euromonitor International, told WSJ in an interview. And in just the first five months of this year, sales online have touched $141 million, more than double the tally of last year.

That has taken a bit of momentum away from companies like Gillette, noted WSJ, which has seen strong sales in the U.S. via the Internet, yet rivals are growing relatively more quickly than that Procter & Gamble unit. At present the company’s market share stands at 60 percent in traditional retail and at about 20 percent online. And, perhaps no surprise at the moment, the upstart and online leader the company must grapple with is Dollar Shave Club, which earlier this week commanded a valuation of $615 million after closing a $75 million investment round.

Under the Dollar Shave Club model, the company has 2 million subscribers paying between $1 and $9 for its blades, at least every other month, and could pull in $140 million in revenues. That sales figure comes from the Dollar Shave Club CEO. And, of course, there are other online venues that sell shaving implements, including Harry’s and Shave Mob.

Going neck to neck to neck with these online-only companies, Gillette has been pushing its own online subscription plans, claiming its top-of-the-line blades are cost effective versus challengers including Dollar Shave Club. And that math depends on the frequency of shaves, notes WSJ.

P&G sees online razor sales logging a 25% CAGR over the next five years, according to Sonia Fife, head of Gillette’s North American business.

WSJ notes that Energizer Holdings Inc., maker of Schick blades, says Gillette’s approach is hurting overall industry sales.

And fashion trends themselves have been hurting razor and blade sales. WSJ reports that more men are wearing facial hair (or stubble) at work. Sales in the U.S. fell to $2.9 billion in 2014 from $3.1 billion in 2012. That data comes from market research firm IRI, which polls physical stores.

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