http://www.nytimes.com/2016/07/28/technology/these-stores-didnt-develop-websites-they-started-there.html 2016-10-18 00:41:43 How Companies Like Dollar Shave Club Are Reshaping the Retail Landscape Dollar Shave Club, recently acquired for $1 billion, typifies online-only companies that have upended traditional models of stores and advertising. === The world might be a mess, but look on the bright side: Men’s shaving products are much better than they used to be. Thanks to several online shaving start-ups, razors, creams, gels and other paraphernalia are now cheaper, of higher quality and are more convenient to purchase than ever before. Last week one of the upstarts, This column usually focuses on the technology industry, an area that sounds far removed from shaving. But the Dollar Shave acquisition signals something bigger than a mere improvement in shaving — it also underscores a consumer products revolution that would not have been possible without technology. Hilarious online ads The same forces that drove Dollar Shave’s rise are These kinds of online brands aren’t new. Dollar Shave is five years old, and For you and me, this is a boon. By cutting out the inefficiencies of retail space and the marketing expense of TV, the new companies can offer better products at lower prices. We will get a wider range of products — if companies don’t have to market a single brand to everyone on TV, they can create a variety of items aimed at blocs of consumers who were previously left behind. And because these companies were born online, where reputations live and die on word of mouth, they are likely to offer friendlier, more responsive customer service than their faceless offline counterparts. “We think it’s a unique moment in history where you can create brands that can be scaled quickly thanks to technology, but you can still maintain a one-to-one connection that delivers an elevated level of customer experience,” said Philip Krim, chief executive of Mr. Krim and four friends started Casper two years ago after studying the traditional mattress industry. They discovered it was plagued by inefficiencies and With Casper, you simply buy the mattress online and it’s shipped to you in a comically small box (the compressed foam expands into a full-sized mattress, like a magic trick). You have three months to try it out, and if you don’t like it, the company will come pick it up free. Casper’s business model offers a break from the annoyance of offline mattress shopping. It also works out for the company. Casper advertises on social networks, on Google, podcasts and a variety of other places online; the ads are creative, convincing, targeted and cheap. By selling directly rather than through retail middlemen, the company also creates a connection with customers that allows it to test and develop new products — it now sells sheets and pillows, too. After two years in business, Casper is on track to book $200 million in sales over the next year, but its success isn’t ensured. Precisely because the internet has lowered barriers to entry, Casper is facing a surge of new mattress start-ups like Of course, competition could be great for consumers if it continues pushing down prices for all mattresses, and if these companies invest in better products and customer service. But competition could result in evaporating profits, too. Remarking on the Dollar Shave deal, Ben Thompson, an analyst who writes a tech-business newsletter called Stratechery, Value destruction could be on the table. But there’s another view that new online brands could unlock profits through products aimed at people who are not well served by incumbents. Consider Unlike Dollar Shave, Mr. Walker does not aim to compete with traditional consumer product companies on price alone. “We want to build a very profitable business,” he said. He will do so, he said, by fostering a deep, lifelong connection with an audience that is getting wealthier and more influential — and whose influence, thanks to social networks, can now be tapped. “Global culture is led by American culture, which is led by black culture in the U.S. — look at music, dance, et cetera,” he said. “So if we’re catering to an audience that are the most culturally influential demographic group in the world, we can use the internet to promulgate our message across the board, whether it’s Twitter, Facebook, Instagram — and that gives us amazing leverage.” Walker & Company declined to provide sales numbers; a spokesman said revenue had grown 300 percent over the last year. I spoke to several other online start-ups that echoed the idea of serving untapped new markets. One was “We’re offering a solution to busy parents that’s just not out there in the marketplace,” Ms. Carbonell said. “It’s not about some new style every day, it’s something you can count on.” It’s striking how few of these online companies could have taken off in the presocial age. At the very least, they would have been sunk by the inability to target ads to the demographics they’re aiming to serve. “Look at Dollar Shave,” Andrew Bosworth, Facebook’s vice president of ads and business platform, told me. “They were just trying to reach men. If they’d started advertising on TV, they definitely would have wasted half their money.”