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In the News: A Razor-Sharp Strategy for Distribution

dsc-logo-emblemDollar Shave Club, a company specializing in grooming and personal care products, saw a wide-open market opportunity in giving consumers an alternative to buying high-priced shaving products in stores. In 2011, it launched a direct-to-consumer subscription razor blades service, shipping high-quality products at low prices—just a few bucks a month—right to the customer's door.

Like many e-commerce startups, Venice, Calif.-based Dollar Shave Club initially contracted with a third party to handle its order fulfillment. That worked well enough for a time. But as business took off, the company grew increasingly dissatisfied with the arrangement. Eventually, it became clear that the retailer had outgrown its third-party provider, says Lori Jackson, Dollar Shave's director of operations and fulfillment.

More importantly, the company felt the arrangement did not guarantee the kind of service it felt it needed to provide. (Dollar Shave Club's objective is to ship every order within 24 hours of receipt.) After giving the matter due consideration, the company decided the best way to gain the flexibility—as well as the level of inventory control, speed, and accuracy—it sought was to cut the third party loose and bring distribution in house.



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