For the longest period of time, many people believed that the Gillette blade business was one of the best businesses in the world. And it was.
What better than having very high margins, dominate a market and get consumers that are loyal and constantly use your products. Quite rare in any business and a real cash machine.
But then Dollar Shave Club came along disrupting the status quo. By correctly assuming that people didn’t need all the marketing bells and whistles around their razor but simply wanted to be able to shave with a great razor and blades at a much lower price, they managed to successfully compete with Gillette.
Dollar Shaving Club also cleverly understood than men don’t really like to spend their time shopping for blades at the supermarket and hence, created an automatic delivery for them. They nailed it big time with their subscription system.
Now Gillette (owned today by Procter & Gamble) is feeling the pain. So much in reality that they created a similar service (Gillette Shave Club) and they have just now sued Dollar Shaving Club for patent infringement. You can be sure that this might be a long legal battle.
Competing with a large company can be a positive for a young and nimble company. You are quicker, you don’t have all these decision layers which can impede fast turnarounds and you can take risks. Risks that multi-billion dollar companies can’t take easily. On the other hand, a company like Procter has so much cash that they can fight you on many fronts at once. The key is to be smart and focus on the areas where you can really make a difference.
Let’s see how the future plays out between the two but one thing is for sure: you can’t never rest in your laurels even if you have the best business in the world.