Response 1

Interest in online-only brands took off roughly five years ago, when Dollar Shave Club was launched. What happened? Why were industry watchers stunned?

Unilever bought Dollar Shave Club as a startup in 2016 and it took over the industry from P&G's razor leader Gillette. [1] Industry watchers were stunned because similar startups got no where near the same interest, and rightfully so. Dollar Shave Club did not even manufacture their own razors, they would certainly fall flat in contrast to rivals like Gillette or Schick. [2] Nonetheless, the deal was an opportunity to gather information on their customers without a middleman. Eventually, it would prove to be more complicated than Unilever expected to grow their customer base with expenses getting them in over their heads. What kept them afloat? Men who were forgetting to cancel their subscriptions despite the fact that they no longer use their razors. Although valuable data was gathered through this purchase, Unilever decided selling staples through online subscriptions doesn't make financial sense for their company. [1]

How did consumer-products companies respond to the new competition? What were their tactics?

Rivals such as Harry's Inc. focus on ample shelf space and flashy displays in Target, this paid off. After only a few weeks of sales in store they accounted for around half of Target's razor handle sales in 2016. Earlier this year the maker or Schick acquired Harry's for $1.4 billion. On the other side of things, P&G tested its own shave club and online subscription services with other products. They were relatively unsuccessful and recently did away with the idea. [1]

What are consumer products companies now discovering? Why is growth in online-only brands not enough? What new strategies are they developing?

It is simple to grow fast, creating value is what matters. Forming a business model that makes money and sustaining that is what is most important. It is about being where the people are shopping, online and in store, in front of their eyes no matter the shop. [1]

More generally, why are retail stores still important? Why is online retail not taking over?

Consumers connection to buying products at retail stores in practical and emotional. It is not merely convenience; people want to have some choice in their shopping still and subscriptions take that away. [1]

 

Response 2

Interest in online-only brands took off roughly five years ago, when Dollar Shave Club was launched. What happened? Why were industry watchers stunned?
Dollar Shave Club "stunned industry watchers by grabbing share from Gillette, P&G's razor behemoth" and gained advantage over Gillette by offering low-cost razors (Terlep, 2019, para. 11). The benefit of online-only brands was multifactorial: consumers signing up for online subscriptions would avoid a trip to the store, and the data from these brands could then be utilized more effectively directly from the consumer. However, the demand for such products to be sold online eventually faded with preference for retail stores.

How did consumer-products companies respond to the new competition? What were their tactics?
Competitors of Dollar Shave Club, such as Harry's Inc., focused their sales in Target and found financial success (Terlep, 2019). P&G tested online subscriptions of their other products, and when this fell flat, instead purchased Native, another previously online-only brand (Terlep, 2019). Focus shifted from direct-to-consumer sales to getting these products on the shelves in retail stores.

What are consumer products companies now discovering? Why is growth in online-only brands not enough? What new strategies are they developing?
Consumer products companies have discovered that it is not enough to grow quickly; a business must also create value (Terlep, 2019). Additionally, consumers want to purchase products where they most frequently shop.

More generally, why are retail stores still important? Why is online retail not taking over?
While online business is growing, retail stores remain important as the consumer's connection to purchasing products in a retail store is both emotional and practical: consumers see the product, know they need the product, and purchase it rather than take the additional step to purchase online (Terlep, 2019). Retail stores have the advantage of a physical space and this is an effective competitive weapon to allow for critical visibility of products (Rigby, 2011; Terlep, 2019).

 

Response 3

1. Interest in online-only brands took off roughly five years ago, when Dollar Shave Clubwas launched. What happened? Why were industry watchers stunned?

Dollar Shave Club was established in 2011 and has since caused a stir in the consumer goods industry by revolutionizing the distribution of low-cost razors and other grooming supplies to end users through the use of a membership-based subscription service. Those who follow the industry were taken aback by the success of the company and the rapid rise of the online-only brand.

2. How did consumer-products companies respond to the new competition? What were their tactics?

As a first step in countering the new level of competition, businesses that sell consumer goods prioritized the establishment of their own online presences and the promotion of their wares via online marketplaces. In addition to this, they launched brand new items and reimagined their packaging in an effort to win new customers.

3. What are consumer products companies now discovering? Why is growth in online-only brands not enough? What new strategies are they developing?

Companies that specialize in consumer goods have recently come to the realization that the expansion of their online-only brand presence is not sufficient to ensure the company's continued profitability. They are in the process of establishing new methods to contact customers, one of which is a concentration on in-store experiences and investments in physical retail locations.

4. More generally, why are retail stores still important? Why is online retail not taking over?

Retail stores are still vital because they offer customers a physical shopping experience and give them the opportunity to see, feel, and engage with things before making a purchase. Customers cannot get these benefits when buying online. The sensory experience of shopping in a store and the chance to see and touch things before purchasing them are still highly valued by buyers, which is one reason why online retail has not completely taken over. In addition, the convenience of purchasing things in-store rather than waiting for delivery is favored by a significant number of customers.

 

 

 

Assume the role of a retail research analyst. Drawing upon the case discussion (response posts)
as well as learning materials, draft a recommendation on what firms should do in terms of
choosing between store and online retailing. Make sure to frame your work in terms of
optimizing how firms should bringing value to the marketplace. What is the future likely to look
like?