Products and Services ... The matter of shaving
Some business history

The challenge from Dollar Shaving Club

Burgess COMMENTARY

Peter Burgess

Products and Services ... The matter of shaving.

The Gillette brand has been a dominant part of the shaving industry for a very long time. The business model that made Gillette money was talked about when I was learning economics in the late 1950s ... give away the razer, and make your money selling the blades.

Early in my accounting career I worked on the IPO of Wilkinson Sword in London. The stainless steel blade introduced by Wilkinson a few years before had disrupted the industry and a big part of Gillette's dominant share of the market was taken over by Wilkinson's blades. Pricing this IPO was something of a challenge. In the early 60s 'going public' was a much more staid activity than it has been in more recent years, and valuing a company that had almost no sales five years before, and was now in control of about half the market was more than a little unusual.

Eventually Gillette came out with its own stainless steel blade, and the challenge from Wilkinson was slowed down somewhat.

As Wilkinson lost market share back to Gillette its stock value declined ... that is the way the market works.

Subsequently Gillette took over Wilkinson and the challenge to the Gillette franchise from this quarter was ended.

There have been challenges from electric razers. That challenge seems to have disappeared.

Subsequently Gillette was bought by P&G.

With Gillette (owned by P&G) dominant in the market it has been possible for the price of razers and blades to go up substantially.

And now maybe, possibly there is another opportunity for disruption. https://www.dollarshaveclub.com/blades