17th century practices drive dynamic digital disruption dollars…

Once again this week, I saw another media article about the amazing digital disruptor, the Dollar Shaver Club. By all accounts it is a very successful company. And so it should be. It has taken a 17th century publishing model and used 21st century technology to digitally disrupt an industry. Amazing stuff.

After all, who would have thought people would order a product remotely, rather than walk into a store, and get the company to deliver the product to them by mail? This type of innovative thinking is digital dynamite.

To think that a company can completely disrupt human behaviour by applying one of the most continually successful analogue business models to a digitally-based business, well it’s just business gold.

Let’s analyse this shall we…

ANALYZE THIS, Robert De Niro, Billy Crystal, 1999. © Warner Bros.

The business model is called the subscription model and it uses a negative option offer.

A negative option purchase is one whereby the customer agrees to have goods or services provided automatically, and the customer must either pay for the service or specifically decline it in advance of invoicing.

And this may come as a surprise to some of you dear readers, but Dollar Shaver Club was not the first to offer a negative option. Strange but true.

Columbia-House-Ad1-e1451096912812

Research indicates the subscription model first started in the publishing industry in the 17th century in the UK. Over time it expanded to the US in the 19th century when chapbooks (cheaply printed paper covered books) were sold door-to-door.

Regular readers will know that door-to-door selling is now one of the primary channels for digital distruptors like Uber, Hello Fresh, et al.

door to door

As markets grew and new technology disrupted society – automobiles, telephone, courier services, faster postal services – the subscription industry boomed. By the mid 20th century you could order books, magazines, vinyl records, plates, stamps, collectibles, vitamins, cosmetics and food – all delivered to your home, using a negative option payment method.

By the end of the 20th century in addition to the items above, I’d worked with clients selling wine, nappies, car washes, food, CDs, DVDs, education, tools, newsletters, coffee and more on a negative option subscription model.

In fact, any regularly consumed item is perfect for a subscription model – as long as the cost of delivery is not prohibitive. Many business software programmes are now sold on a subscription service – including this blog platform for example.

So let’s quickly look at Dollar Shaver Club.

shaving

In Australia they provide razors for either $4, $7 or $10 per month. They mainly promote their business using the digital medium of television. You select the offer you want from the website and then keep an eye on your letterbox. Your razors arrive by post and that’s one less item you need to worry about when you go shopping. Marvelous stuff.

These digital disruptors are bloody geniuses. Who’d have thought hey?

But congratulations to the lads who built the business. They understand that technology changes – human nature doesn’t. Humans all love a bargain and as the laziest species on the planet, we love things made easier for us. Tap into those two emotional triggers and you can make money.

Seems the adage is becoming standard practice – the more things change, the more they stay the same…

So in summary, here’s the lesson: if you want to go forward in digital disruption, just look backwards…

I’m off to a meeting, better have a shower – where’s my razor?

9 Comments

  1. Good on yer Mal. Maintain the Rage! We 20th Century dinosaurs have to remind the digi whizzkids that there is nothing new in marketing other than communication channels.

    Actually, wine subscription plans can arguably be said to have MASSIVELY “disrupted” the wine retail scene in the 1980s-90s.

    At one point Cellarmasters, my company Cellar Door Direct, Wine Selectors and The dear old Wine Society would have had at least a half a million subscribers to quarterly deliveries – with many people signed up to multiple plans.

    I really believe that we “lifted” the masses out of cask drinking and gave them confidence to buy bottled wine. In the 80’s rolling out a Big Box concept like Dan Murphys would not have worked, because Mr & Mrs Average did not have the confidence to buy bottled wine in quantity. After 10-15 years of receiving subscription plan wine deliveries they are now happy to shop in the Big Box stores.

    An English wine expert friend of mine, Robert Joseph, said to me recently that he believes Australia has the world’s most sophisticated wine culture… and this has come about in 40 years!

    • Agree Richard, Australian wine companies like yours did pioneer, or should I say ‘disrupt’ subscription wine and educate Aussies about wine in glass as against in cardboard. I certainly learned heaps – I now drink both colours – red and white:) Cheers….

  2. Malcolm, great post!

    Having designed and had many control packages for Columbia House Music & Video Clubs and their Re-TV, Disney Movie Club, Musical Heritage Classical and Jazz Clubs—I’m with Silk Road Reversed.

    It’s amazing how the “digi whizzkids” ‘think they’ve invented something new and that they can measure it’s success.

    P.S. I’m now following your blog—struggled to find your “Follow Blog Via Email” sign-up. I might also add it to the top of you page near your search button.

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