How razors changed the way we shop

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For many years, razor marketing was all about the add-ons: extra blades, vibrating handles, moisturizing strips.

But six years ago, Dollar Shave Club disrupted industry stalwarts like Gillette and Schick with a model based on simplicity and ease.

Michael Dubin founded the company — where customers subscribe for cheap razors sent by mail — by capitalizing on consumer frustration with high prices and too many choices. A catchy viral marketing campaign led to a surge in sales.

Last year, Dollar Shave Club sold to Unilever for $1 billion.

"That would have turned a lot of heads," Financial Times writer Alan Livsey tells The Current's guest host Piya Chattopadhyay.

Gillette recently launched its own subscription razor service to compete. But Livsey says the implications go beyond the razor business.

"It's about stodgy consumer companies sort of waking up to the fact that [they] cannot be complacent," says Livsey.

This isn't the first time the humble shaving instrument has shaken up economic models. 

In 1904, King Camp Gillette patented a double-edged safety razor with disposable blades that changed the look of razors.

But it was Gillette's later innovation — two-part pricing, or the razors-and-blades model, where the razor handle is sold cheaply, but the replacement blades are expensive — that spread through many industries. It's now seen in everything from printer ink cartridges, to video games, to coffee pods.  

"In each of these cases, the idea is we're being kind of hooked, we are drawn in and then we don't really realize how much it's going to cost until later," Tim Harford, the presenter of the BBC podcast 50 Things That Made the Modern Economy tells Chattopadhyay.

"[It] seems to be exploiting consumer inertia."

Inertia is also a driving force behind the continuation of gender pricing, which sees women pay more for many consumer products marketed to them, even if they're virtually identical to the men's version. 

Ivey School of Business marketing professor June Cotte calls razors "one of the poster children" of this kind of differential marketing. Unlike a hair cut, where women may be paying for more detailed work, it's easy to see that men's and women's razors are very similar.

But even if women know this, they often continue to pay more for razors.

"You go to the same aisle of the same store most of the time that you need blades, and you won't see the men's version right there," Cotte tells Chattopadhyay.

"That's key, because if you could see both versions side by side, you'd probably be cued to consider changing your behaviour," she explains.

"But habit is very powerful."

Listen to this segment at the top of the web post.

This segment was produced by The Current's Karin Marley and Calgary network producer Michael O'Halloran.