WhereIsAtlas · Consumer goods

What Happened to Gillette?

The razor-and-blades pioneer taught the world the subscription model — then got disrupted by the very trick it popularised.

Gillette's 'razor and blades' model built a shaving empire that P&G bought for $57 billion — but Dollar Shave Club and Harry's turned the subscription idea against it, and the pioneer is now just another brand in a disrupted market.

The company that invented the subscription

Long before Netflix and Spotify, a razor company figured out the greatest trick in business: give away the thing you sell once, and make your money on the thing people have to keep buying. That was Gillette, and its 'razor and blades' model has been copied ever since.

For decades it worked flawlessly. Then the model itself came under attack — from cheap online start-ups that used the very subscription idea against the company that invented it. This is the story of how a business-model pioneer got out-flanked.

The razor and blades insight

Gillette was founded in 1901 by King C. Gillette, a traveling salesman who had a simple, brilliant idea: a safety razor with a cheap, disposable blade. Sell the handle once — cheaply or even give it away — and make the real profit on the blades people replaced again and again.

It created an almost perfect recurring-revenue machine. The handle was the trapdoor; the blades were the ongoing cash flow. That insight became the 'razor and blades' pricing model that entire industries still copy.

The shipping empire of shaving

Through the 20th century Gillette grew into one of the world's great consumer brands. It absorbed rivals, expanded into deodorants and other grooming products, and built a powerful advertising machine. Its names — Trac II, Atra, Mach3, Fusion — were icons of shaving.

By the early 2000s, Gillette was synonymous with shaving, a dividend-paying giant with a culture of relentless innovation and a commanding share of the market.

The $57 billion P&G takeover

In 2005, Procter & Gamble acquired Gillette for about $57 billion — one of the largest consumer-goods deals in history. The rationale was scale: combine Gillette's grooming brands and the mach3 technology platform with P&G's huge distribution network.

For years it seemed to work. But the deal also made Gillette a small division inside a much bigger corporation, and — crucially — it left the door open for a new kind of competitor.

Dollar Shave Club and the model turned around

In 2012, a start-up called Dollar Shave Club uploaded a video with the now-famous line, 'Our blades are f---ing great,' and mocked the high price of cartridge razors. It sold decent blades by subscription for a few dollars a month, directly to consumers, online.

It was the razor-and-blades model turned against Gillette. Subscription razors via the internet stripped away the retail markups and the advertising bloat that made Gillette's blades so expensive. Harry's took up the same approach.

Where is Gillette now?

Gillette survives — it's still a big P&G brand and still sells a lot of razors. But its once-unassailable dominance is gone. P&G responded with its own online subscription and by cutting prices, and the number of blades per cartridge keeps rising as it tries to justify ongoing markups.

The lesson is deliciously ironic: a company that built its empire on the subscription model was eventually hurt by cheaper competitors using that very model. Sometimes the trap you set for your customers one day gets set for you.

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