Razor wars: Shave clubs slicing into billion dollar industry

Men who shave every day know paying for fresh blades is nearly as painful as using them without cream, but a new wave of start-ups that deliver fresh, inexpensive razors to your doorsteps is revolutionizing the $13 billion dollar shave industry.

“It’s a big deal,” said Ali Dibadj, a senior analyst at Sanford C. Bernstein & Co. “This is a clear disruption of a historically defined category.”

Two of the most popular start-ups, Dollar Shave Club and Harry’s, offer alternative to buying brand-name cartridges at the local drug store by delivering fresh blades to your house every month for as little as $4.

“I think it makes sense,” said Andy Goodling, 46, of Toledo, Ohio. “I love that I don’t need to worry about having razors and I love that I don’t have to budget my razor usage like I used to.”

Goodling says he’s been a subscriber to Dollar Shave Club for nearly two years and pays $9.99 a month for four fresh cartridges “instead of $60 every few months at Costco.”

Dollar Shave Club promises the quality of its razors is “really (expletive) great.” Customers apparently agree. The start up now boasts 2 million members with a projected revenue of over $140 million in 2015.

”We’ve changed the way they think about shaving,” Dollar Shave Club founder Michael Dubin told Fox News. “We’ve reinforced how great it feels to shave with a fresh blade, and guys are recognizing that and changing behavior. Before joining DSC, 28 percent of our members changed their blades once a week. Now, 66 percent change their blades once a week.”

The discounted blades might feel as good as a clean shave to the consumer, but it’s not good news for the big guys at Proctor & Gamble, whose $20 billion Gillette brand controls 70 percent of the global razor market, according to Forbes.

“We are clearly seeing it have an impact on the Gilletes and Schicks of the world,” Dibadj said. “[Dollar Shave Club] is gaining share, consumers are satisfied with their quality and the large incumbents are trying to copy cat.”

Dibaj said the rising popularity of the Dollar Shave Club has forced Gillette to compete by introducing similar delivery services.

Gillette has been in the shave club business since it partnered with Amazon in 2007. The company would not comment on any recent lost market share or business strategies but says the “shave club industry has grown as of late.” The company has recently improved its model to offer options that are arguably similar to the Dollar Club.

“A few months ago we updated the Gillette Shave Club, including full customization of delivery frequency from two to four months, depending on how frequently a guy shaves,” said Gillette spokesperson Kurt Iverson.

The success of the Dollar Shave Club can be attributed to its “common sense” deal. But, the popular start-up first burst onto the scene about 3 years ago not by the merit of its offer, but with a wildly popular comedic YouTube video that has since been viewed nearly 20 million times.

“Our first video became a hit on YouTube,” Dubin said. “Social media is integral to how we communicate with our members.

Dibaj says that interaction with millennial has given the shave clubs a direct  advantage that the aging Gillette so far does not have.

“In our minds, it’s never been easier to reach the consumer through e-commerce and social media,” Dibaj said. “For the old players it is really hard. What your breeding is fragmentations of brands.”

It isn't only about getting a bargain. On the opposite end of the inexpensive razor subscriptions is a growing trend of men spending up to $50 on professional salon shaves. At Elliott & Co., an upscale men's barber shop in Las Vegas, up to 50 customers a day get pampered with a hot towel and expert shave.

“Your skin feels relaxed, a massage, it’s moisturized," said John-Mark Mallory. "Much more than I would on my own at home, for sure."

Elliott Chester, the owner of the shop says his store has been in business for seven years, but has seen a big uptick in the past two.

“As a matter of fact, I’m looking to expand," Chester told Fox News. "This is a great time to be in this business.”

Mike Gilman is the founder of the Washington, D.C.-based Grooming Lounge. He recently did a nationwide survey on men's grooming habits and found they are spending more than ever on themselves.

“We’ve seen exponential growth every year," Gilman said.

Gilman said men now realize what a quality shave looks like and are willing to pay for it. And, a resurgence of neat "Clark Kent" 50's-style cuts might be added pressure to keep hair and beards looking fresh.

“Guys take note of other men’s haircuts and want their hair to look that good or their skin to look that good," Gilman said. "Maybe that didn’t exist as much before but certainly he past couple of years its been on rise.”