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Web-Based Subscription Businesses Surf A New Wave

Sep 5, 2012
Originally published on September 5, 2012 7:43 pm

The newspaper boy and the milkman might not come around as often as they used to, but the days of subscription and delivery aren't over. The Internet and overnight delivery have combined to make a new type of subscription business possible. The sales pitch is part convenience, part price and part cool factor.

Making Razors Cheap, And Cool

Some of the most successful business ideas are born out of frustration. For Michael Dubin, that frustration was buying razors.

"You have to go in the store; you have to find the razor fortress; it's always locked behind some Lucite case," Dubin says. "You've got to find the guy with the key; he's always texting his girlfriend; it takes five minutes. And then you get to the register, and it costs 20 bucks — and who wants to do that?"

Dubin is now CEO of Dollar Shave Club, which he launched last March with a video of him walking through a warehouse.

In the video, Dubin says "And do you think your razor needs a vibrating handle, a flashlight, a back-scratcher and 10 blades? Your handsome-ass grandfather had one blade. Stop paying for shave tech you don't need."

The ad went viral. Within the first week, Dollar Shave Club had 25,000 new members. Dubin says the site crashed, and orders were put on hold. One person who signed up early was Russell Holly.

"The first time I saw it, I absolutely thought it was a joke. But it really was a legitimate service they were offering," Holly says. "And I was amazed at how [inexpensively] they were able to deliver the exact same thing that I was already getting from the store."

Before he signed up, Holly spent between $20 and $25 a month on razors. And like a lot of men, he'd run out and end up paying top dollar for brand name blades at a local convenience store. Now, he pays seven bucks a month — including shipping and handling — for a set of four razors.

"By the time I'm down to one razor, another one has shown up on my doorstep," Holly says.

New Growth For Subscription Businesses

The subscription-based business model is nothing new. But right now, e-commerce subscriptions are exploding. Just name the item you're looking for — socks, T-shirts, baby toys — and there's a company that puts it in a box and will deliver it to you monthly.

Or, in one case, it delivers every 28 days. That's the schedule for Sent Her Way, started by Bryn Jurkens. The business delivers inconspicuous packages of panty liners, tampons and pads to women each month.

Jurkens has been called the female version of the "Dollar Shave Guy." And like Dubin, she and her roommate got tired of paying high prices for personal hygiene products at corner stores — in her case, in New York City.

"We would fly home and bring extra suitcases, and then we would stock up at Costco," Jurkens says. "And my roommate and I were lucky enough that we had storage bins on our rooftop on our apartment."

That's right: Desperate for a good deal, she stored tampons in storage bins on her roof.

"When it would rain, we would always go out and check, to see if there was anything leaking or anything," Jurkens says with a laugh.

At SentHerWay.com, you customize your box of goodies and choose how often you want it shipped. The cost is about a dollar more than what you'd pay at a local drugstore.

Benefits For Customers, And Entrepreneurs

"From the consumer's side, it's a wonderful timesaver," says Jim Schleckser, who runs a business-coaching firm called the CEO Project. Over the past few years, he says, he has seen a lot of young entrepreneurs embrace the subscription model.

"They love to have submodels because they can predict how much volume they're going to have, they know how much revenue is going to come in," he says. "And they can build an efficient way of supplying it. So their costs are lower."

The model is particularly attractive in a down economy. Once you lock customers in, there's no need to worry about them coming back for another purchase.

Last year, online retailer Amazon got in on the game with its Subscribe and Save program. Schleckser says there's no way a small company like Sent Her Way or Dollar Shave Club can compete on price with giants like Amazon.

"They can't make it about the product; they have to make it romantic somehow," he says. "They have to make it cool, hip, interesting, fun."

Forming A Connection

Which brings us back to Dollar Shave customer Holly. Other than razors, it turns out that he uses Amazon's subscription service for pretty much everything from light bulbs to air filters and crayons. The reason? In part, it's because of the little postcard that comes with each package.

"Two months ago, I got one where the postcard was bragging about a new label-maker that they'd gotten, and how proud they were of this label-maker," Holly says. "And there was a blurb that said, 'Five labels a second — what up.' It's a real quick thing, but it makes me laugh. And it reminds me that I'm spending money with guys who have a good sense of humor."

If startups like Dollar Shave Club and Sent Her Way expect to compete with big retailers, they'll need to make grooming and personal hygiene not only convenient, but also entertaining.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

The newspaper boy doesn't come around so often anymore. The milkman - in those neighborhoods - stopped coming around generations ago. But the days of subscription and delivery are not behind us. The Internet and overnight delivery services have combined to make a new type of subscription business possible.

DAVID GREENE, HOST:

As NPR's Lauren Silverman reports, the sales pitch is part convenience, part price, and part cool.

LAUREN SILVERMAN, BYLINE: Some of the most successful business ideas are borne out of frustration. For Michael Dubin, that frustration was buying razors.

MICHAEL DUBIN: You have to go in the store, you have to find the razor fortress, it's always locked behind some Lucite case, you got to find the guy with the key, he's always texting his girlfriend, it takes five minutes, and then you get to the register and it costs, you know, twenty bucks and who wants to do that?

SILVERMAN: Dubin is now CEO of Dollar Shave Club.com, which he launched last March with this video of him walking through a warehouse.

(SOUNDBITE OF MACHINERY)

DUBIN: And do you think your razor needs a vibrating handle, a flashlight, a back scratcher and 10 blades? Your handsome-ass grandfather had one blade. Stop paying for shave tech you don't need.

SILVERMAN: The ad went viral. Within the first week, Dollar Shave Club had 25,000 new members. Dubin says the site crashed, and orders were put on hold. One person who signed up early was Russell Holly.

RUSSELL HOLLY: The first time I saw it, I absolutely thought it was a joke but it really was a legitimate service they were offering - and I was amazed at how inexpensive they were able to deliver the exact same thing I was already getting from the store.

SILVERMAN: Before he signed up, Holly spent between $20 and $25 a month on razors. And, like a lot of men, he'd run out and end up paying top dollar for brand name blades at a local convenience store. Now, he pays seven bucks a month - including shipping and handling - for a set of four razors.

HOLLY: By the time I'm down to, you know, one razor another one has shown up on my doorstep.

SILVERMAN: The subscription-based business model is nothing new. But right now e-commerce subscriptions are exploding. Just name the item you're looking for - socks, T-shirts, baby toys, and yup, there's a company that puts it in a box and will deliver it to you monthly, or in this next case, every 28 days.

BRYN JURKENS: My name is Bryn Jurkens and I've started SentHerWay.com and what we do is we ship women their feminine hygiene products monthly.

SILVERMAN: You heard her. Bryn Jurkens runs a business that delivers inconspicuous packages of panty liners, tampons and pads. She's been called the female version of the Dollar Shave guy. And, like Michael Dubin, she and her roommate got tired of paying high prices for hygiene products at corner stores in New York City.

JURKENS: We would fly home and bring extra suitcases and then we would stock up at Costco and my roommate and I were lucky enough that we had storage bins on our rooftop on our apartment.

SILVERMAN: That's right, desperate for a good deal, she stored tampons in storage bins on her rooftop.

JURKENS: When it would rain we would always go out and check and see if there was anything leaking or anything.

(LAUGHTER)

SILVERMAN: At SentHerWay.com, you customize your box of goodies and choose how often you want it shipped. The cost is about a dollar more than what you'd pay at a local drug store.

JIM SCHLECKSER: From the consumer's side, it's a wonderful time saver.

SILVERMAN: That's Jim Schleckser, he runs a business-coaching firm called the CEO Project. Over the last few years, he says he's seen a lot of young entrepreneurs embrace the subscription model.

SCHLECKSER: They love to have subscription models because they can predict how much volume they're going to have, they know how much revenue is going to come in, and they can build an efficient way of supplying it. So their costs are lower.

SILVERMAN: The model is particularly attractive in a down economy. Once you lock customers in, there's no need to worry about them coming back for another purchase.

Last year, online retailer Amazon got in on the game with its subscribe and save program. Schleckser says there's no way a small company like SentHerWay or Dollar ShaveClub can compete on price with giants like Amazon.

SCHLECKSER: They can't make it about the product, they have to make it romantic somehow, they have to make it cool, hip interesting, fun.

SILVERMAN: Which brings us back to Dollar ShaveClub customer, Russell Holly. Turns out, he uses Amazon's subscription service for pretty much everything. I'm talking light bulbs, air filters, even crayons - but remember, not for razors. The reason? In part, the little postcard that comes with each package.

HOLLY: Two months, ago I got one where the postcard was bragging about the new label maker they gotten and how proud they were of this new label maker and there was a blurb over the label maker that said five labels a second, what up. It is a real quick thing but it makes me laugh and it reminds me that I'm spending money with guys who have a good sense of humor.

SILVERMAN: If startups like Dollar ShaveClub and SentHerWay expect to compete with the big retailers, they'll need to make grooming and personal hygiene, not only convenient, but also entertaining.

Lauren Silverman, NPR News. Transcript provided by NPR, Copyright National Public Radio.