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A Battle for Your Face: Online Startups Take On Procter & Gamble's Gillette

NEW YORK (TheStreet) -- Procter & Gamble (PG - Get Report) Gillette unit dominates the razor market, but it now faces competition from startup e-commerce companies that offer subscription models.

Two such companies are Dollar Shave Club and Harry's. Dollar Shave Club offers monthly subscriptions for shaving products, ranging from $1 to $9 a month. Its most popular plan is $6 a month. In October, the company raised $12 million in private-equity funding. At the time, it had 330,000 subscribers.

The company was started in 2012 and became a sensation on Google's (GOOG) YouTube with videos of CEO Michael Durbin doing wacky things such as dancing with a bear and with its motto, "Our blades are f--- great."

Harry's was started in March of last year by Jeffrey Reider, who was also a co-founder of Warby Parker, an eyeglass retailer founded in 2010. In January, Harry's bought a factory in Germany to increase its production capacity.

In its first nine months, Harry's sold more than 100,000 shaving kits, which consist of a razor, shaving cream and a set of blades. Harry's has a $10 Truman razor and a $20 Winston. The company sells cartridges for $1.88 each.

Harry's also offers a subscription model. The auto refill offer costs $31 for every two months.

Gillette is working on its own subscription models. Customers can customize subscriptions for Gillette products on Amazon (AMZN), (an Amazon company), and Target (TGT).

Meanwhile, Gillette is introducing a higher cost razor called ProGlide FlexBall, which is designed to shave more precisely. The razor will cost $11.49 to $12.59.

On Wednesday, Procter & Gamble reported a slightly higher profit for its fiscal third quarter ended on March 31. Volume from the company's grooming unit rose 2% during the quarter. The unit made up 9% of P&G's overall revenue, but 18% of its unit, and so if competitors take market share from Gillette, P&G's profits and stock price could suffer.

Shares of P&G closed Thursday at $81.15. The stock is about flat during the past year, compared with 20% rise for the Standard & Poor's 500 index.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


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