A view from Claire Beale

Disrupting the disruptors: how Unilever plans to rock the boat

It only costs a few bucks to join but last week Unilever spent a billion of them buying Dollar Shave Club in a landmark deal...

The estimated $1bn price tag – roughly five times sales – is one of the most expensive to date of an ecommerce company, and Unilever’s purchase of the subscription service wrong-footed analysts, who had been expecting the FMCG giant to swoop on Wilkinson Sword owner Edgewell Personal Care. 

But when Unilever chief executive Paul Polman took to the podium last week for the half-year results, he was clear that the investment was transformative: "We’re buying an innovative and disruptive brand. We will be disruptors ourselves."

For Unilever, DSC grafts in a sophisticated model that potentially accelerates the company’s transition away from bricks-and-mortar retail dependency: DSC has snared 3.2 million customers and more than half of the online shaving market in the US since its launch in 2011. Polman told analysts that the ecommerce model could work well for 30% of Unilever’s product range, including upmarket skincare brands such as REN and its premium T2 tea line.

Of course, rival Procter & Gamble is implementing a similar strategy. It launched Gillette Shave Club to take on the ecommerce competition after its own share of the US male shaving market fell 10% over five years. And earlier this month P&G kicked off an online subscription offering for premium laundry brand Tide Pods called Tide Wash Club. 

In most cases, though, established companies are playing catch-up as new tech- and data-driven entrants disrupt their markets. So far, P&G and Unilever have been slow to show signs of effecting the complete rebuilding necessary to bake disruption into their own businesses.

Domino’s Pizza has become the totem for the sort of brutal internal remodelling required. Now described as a tech company that sells pizzas, Domino’s rebuilt its company ethos around data- and tech-enabled service and delivery, beginning with the merging of the marketing division and the innovation department into a hybrid marketing/ecommerce technology team. After five years of re-engineering, Domino’s now makes $2bn in ecommerce, more than half of its sales, and has seen double-digit sales growth for six years. 

Whether DSC or Tide Wash Club will prove watersheds that help Unilever and P&G transform into customer-service businesses will depend on how far the behemoths are prepared to knock down internal silos, drive new types of interdepartmental collaboration and reinvent their core corporate positioning. As DSC’s start-up success shows, consumers won’t be waiting around for them to sort it all out.