Netflix changed the way people rent movies. Amazon upended the big-box bookstore. Other online retailers grabbed market share in niches as diverse as contact lenses and pet medications.
Why not razors?
That's the question posed by a Catonsville firm — along with about half a dozen other online upstarts. They're trying to make inroads in a market dominated by Gillette and still largely driven by sales in supermarkets and other brick-and-mortar stores.
800razors.com, the new local competitor, is the brainchild of serial entrepreneurs Philip Masiello and Steven Krane. With their luggage lost on a business trip, they had to stop at a Walmart to buy toiletries.
"We're standing there, going, 'How in the world in this day and age can we still be spending $36 for eight razor blades, and why has no one disrupted this on the Internet?'" Masiello recalled.
That was late 2011. Several months later, a startup called Dollar Shave Club went viral with an irreverent online ad featuring its improv-comedy-trained CEO.
"Do you think your razor needs a vibrating handle, a flashlight, a back-scratcher and 10 blades?" Dollar Shave's Michael Dubin asked in the video. "Your handsome-ass grandfather had one blade. And polio."
Now the online razor field includes entrants such as ShaveMOB, Manpacks, Club ShaveMate and Harry's, all trying to capitalize on discontent with brand-name razor prices. ("Save 70 percent," ShaveMOB declares on its site.)
800razors, which launched its site in July after beta-testing for several months, hopes to differentiate itself as the quality alternative.
Its prices are basically middle of the pack among Gillette's new competitors, not the absolute lowest. But Masiello argued that his company's American-made, ceramic-coated blades are on a par with Gillette products and better than what his fellow would-be disrupters are selling.
800razors has a money-back guarantee that Masiello said only two customers have taken him up on. And the company doesn't require a monthly subscription, as some competitors do.
But while 800razors takes a few shots at its fellow startups — "the internet razor guys with the funny video burn people by importing crappy razors from Asia and screwing Americans out of jobs," it declares on its website — it's largely aiming at Gillette.
And no wonder. The company had 62 percent of the U.S. razor market last year, according to market-research firm Euromonitor International. Some estimates are substantially higher. Even a small portion of that customer base could put a new firm in a very comfortable position.
800razors has two products for men and one for women. Its five-blade men's razor, aimed at Gillette Fusion customers, costs $17.99 for eight cartridges — the handle, and shipping, is free. Fusion prices vary, but it's typically about $30 for eight if not on sale. And that doesn't account for the $11 or so you'd have to shell out first for the "system," the handle and original cartridge.
Amazon sells the Fusion at below list price. But the online retailing giant still charges more than $30 for the eight cartridges and the original razor.
Steve Schneid, an optometrist from Potomac, was among 800razors' early customers — he saw a beta-tester deal of four cartridges for a penny in March and figured he'd give it a try. Now he's a convert. He figures he saves about $25 every time he buys a 14-pack.
Schneid has one of the vibrating-handle Fusions and went so far as to shave half his face with that razor and the other with 800razors' product to get a close comparison.
"You can't tell the difference," he said. "Why pay more?"
Gillette declined to comment. But Tim Barrett, who follows the men's grooming industry for Euromonitor, said the company should definitely be worried by its lower-priced competition.
U.S. razor volumes have fallen for the better part of a decade as customers cut back, he said. The rising popularity of facial hair is partly to blame. But Barrett said a negative feedback loop is the main driver. Gillette raised prices to deal with lower sales, customers reacted by using fewer razors, and so Gillette raised prices, he said.
It reached a point where competitors — new and not-so-new — saw their chance.
"Those guys are all chipping away at Gillette's share," Barrett said. "People don't think it's worth spending $30 on razors."
Barrett thinks the companies posing the biggest threat in the suddenly competitive shaving industry aren't the new startups but rather Bic and private-label companies such as Dorco, a Korean razor firm that also sells products under its own brand. Dorco launched a "Great Shaving Rip-Off" campaign in the U.S. last year to shine a light on "overpriced brands."
Barrett said he switched to Dorco to save money — he goes through a lot of razors because he shaves his head — and noticed a "negligible difference" in quality.
"I think these online guys will find their niche," he added. But he expects a shakeout: "There just seems to be too many of them."
Luke Williams, executive director of the Berkley Center for Entrepreneurship & Innovation at New York University's Stern School of Business, figures a lot of people buy certain razors out of habit. He's used Gillette's Mach3 for a long time.
But he said "little tension points," like customers annoyed about the price of something they use every day, can be fruitful for businesses to exploit. Established players ignore such competition at their own peril, he said.
"Every business is a Kodak, I like to say," he said, referring to the film and camera pioneer that had to restructure itself in bankruptcy court after the digital revolution. "And Gillette is no different."
800razors' Masiello sees the appeal of the online challengers as more than just savings. People might be accustomed to buying razors while they're at the grocery or drugstore, he said, but it's a bother. To deter shoplifters, stores typically lock up the products.
Some of his customers told him they ordered from him — via smartphone, while in a store — because they got tired of waiting for help.
"It's happened multiple times," he said.
800razors doesn't have a lot of overhead. Its headquarters is in Masiello's Catonsville house, at least for now. (He's moved to the Lutherville area and plans to sell the house in Catonsville.) The company contracts out its manufacturing to a factory in Tennessee. The finished products come to 800razors' small distribution facility in Catonsville, where part-time workers fill orders as needed.
Masiello figures he and his partner eventually will need to seek outside capital to fund more growth, perhaps next year. But for now, the shoestring budget seems to be working.
They've got a slick website, some cheeky marketing — they're trying to persuade ballplayer Brian Wilson to shave his massive beard — and a growing clientele.
"Our goal … is to end the year at around 40,000 customers," Masiello said, "and we are well on our way to achieving that."
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