Why This Hot U.S. Razor Startup Just Made a Leap Across the Pond
The New York startup takes aim at the multi-billion dollar men’s grooming sector.
Four years ago, Warby Parker co-founder Jeff Raider saw the opportunity to do for razors what his first startup had done for eyewear: Take a traditional product, and sell it inexpensively on an e-commerce store, shaving away market share from incumbent players such as Gillette or Schick. Now, that business--Harry's--is poised to become an international player.
On Wednesday, Harry's launched officially in the U.K., its first location outside of North America. The New York-based company built a team of 10 employees at an office in London. The company will sell shaving kits online for 14 or 24 pounds apiece ($18 or $31) while a refill of eight blades will cost 15 pounds ($19). Customers can subscribe for regular deliveries of blades and shave gel for a cheaper rate, and have the option of testing out the razors for just under 3 pounds ($3.88).
"We believe that the U.K. is a great market for Harry's," co-founder and co-CEO Jeff Raider tells Inc. via email. "Guys there are sophisticated about grooming and consumers are comfortable finding and buying brands online. The same market dynamics that existed in the U.S. prior to Harry's exist in the U.K. today, where a couple of brands dominate and charge very high prices for their products at the customers' expense," Raider adds.
The U.K. men's grooming market carries promise for Harry's. Total sales in 2016 were 1.7 billion pounds ($2.2 billion), according to market researcher Euromonitor International. In the U.S., meanwhile, men's grooming is slated to grow to reach $3.3 billion in U.S. sales by 2021. (The researcher didn't assess the U.S. market for 2016.)
The news comes just 10 months after the company inked a deal with Target to sell its razors in more than 1,800 stores nationwide, as a growing number of e-commerce companies recognize the limits of selling online. Although Raider refused to disclose sales in Target stores, he notes that the majority of the company's revenue continues to come from the website. Since launching in 2013, Harry's has sold more than six million razor handles; last year, sales grew by nearly 100 percent.
To be sure, Harry's is not the only company peddling razor blades at a cheaper-than-standard price. Last year, the Venice, California-based subscription service Dollar Shave Club was acquired by Unilever, the consumer products giant, for $1 billion, giving the startup greater global reach. At present, Harry's accounts for roughly 10 percent of the online razor market, according to research firm Slice Intelligence, while DSC captures more than half (51 percent.) Gillette's subscription offering, meanwhile, captures around 23 percent of the market.
Raider insists, however, that Harry's is targeting a different customer: One just as interested in quality and aesthetic as he is in price. To his point, while DSC does not manufacture its own razors--and therefore can afford to sell them starting as low as $3 per month---Harry's in 2014 bought a century-old German factory for $100 million, where it now makes its own products. "Because we are vertically integrated, we can make the products we know our customers want, and offer them at an exceptional value across channels in the U.S., Canada and now the U.K.," Raider says.
Although the recent sale of DSC would suggest that Harry's, too, could be courting a potential acquirer, the entrepreneur insists that an exit is not in sight--at least not yet. "We believe we are building a company and a brand that's fundamentally changing this market, and will independently have long lasting impact," he says.