Unilever Gets More Than a Name in Dollar Shave Club

By Saabira Chaudhuri 

LONDON-- Unilever PLC's $1 billion deal to buy Dollar Shave Club is the consumer-goods giant's latest effort to get a leg up on rivals in the fight for customer data.

Dollar Shave Club's direct-to-consumer model--through which it sells disposable razors and other grooming products to 3.2 million members--will give Unilever "unique consumer and data insights," said Kees Kruythoff, Unilever's North America president, in the company's deal announcement early Wednesday.

The acquisition gives Unilever a foothold in the U.S. shaving market, where Dollar Shave Club has been stealing share from Procter & Gamble Co. unit Gillette. That trend could accelerate under Unilever's deep-pocketed ownership. It is also in line with Unilever Chief Executive Paul Polman's strategy to shift Unilever toward home and personal-care products and away from slow-growing foods.

More important, Unilever's decision to buy the unprofitable Venice, Calif., startup gives it further ammunition in the war to harness a burgeoning wave of online data. Companies have been mining customer data online for years, but the race to better understand shoppers has heated up as executives grapple with quickening change. Unilever is facing a growth threat from Amazon.com Inc., which has been expanding in traditional Unilever strongholds such as laundry detergents and tea, as well as with a host of local startups.

In response, Unilever is getting smarter.

The company collects data on 100 million people, allowing it to target products or advertising specifically for them. It listens to about 200,000 conversations by scraping the internet.

Unilever has test-launched an online portal in India connecting shoppers with the plethora of small, physical stores that carry products from Unilever and others.

Unilever runs the site, Humarashop, but local stores fulfill and deliver orders. By playing middleman--often for products that aren't even its own--Unilever gets access to customer data it then uses to refine the promotions it lists on Humarashop.

E-commerce currently makes up just 1% of Unilever's global sales, but grew 50% last year.

Gathering local customer insights helps Unilever stay relevant in various regions, said Alan Jope, Unilever's president of personal care, at a June conference. "We're increasingly capturing huge amounts of information about what really matters to our consumers and feeding these insights virtually and real time to our global and local marketing teams, " he said.

After online data collection helped it deduce that 2016 was going to be the year of the "messy bun"--a hairstyle in which women messily pile hair atop their heads--Unilever embarked on a guerrilla-marketing campaign, paying or helping bloggers to create video tutorials on how to create the look. The bloggers incidentally used an array of Unilever products, such as TRESemmé hair spray and Dove dry shampoo.

In an interview earlier this year, Stan Sthanunathan, Unilever's senior vice president of consumer and market insights, said the company looks for "the words that bubble up to the top" on Google and for things that have "substantial volume." Unilever likes analyzing customer conversations online because it gets less contrived responses, he added.

Unilever noticed that people discussed dandruff more in the winter, leading the company to put more money into advertising its "Clear" range of products during the season.

Trawling through customer data also helped Unilever decide to advertise ice cream brands such as Magnum before it rains. The Anglo-Dutch company discovered that on rainy days in the U.K., people like to stay at home, eat ice cream and watch movies. Changing the timing of its ads has helped sales, it said.

Write to Saabira Chaudhuri at [e-mail]

(END) Dow Jones Newswires

July 20, 2016 07:40 ET (11:40 GMT)

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