{"id":1342,"date":"2015-12-05T18:57:23","date_gmt":"2015-12-05T23:57:23","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/harrys-shaving-men-in-an-age-of-razor-robbery\/"},"modified":"2015-12-08T22:48:15","modified_gmt":"2015-12-09T03:48:15","slug":"harrys-shaving-men-in-an-age-of-razor-robbery","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/harrys-shaving-men-in-an-age-of-razor-robbery\/","title":{"rendered":"Harry\u2019s: Shaving Men in an Age of Razor Robbery"},"content":{"rendered":"

Overview<\/strong><\/p>\n

Harry\u2019s is a direct-to-consumer shaving company focused on bringing exceptional design, value, and simplicity to the men\u2019s shaving industry. It is a fantastic example of how a firm can create outsize value by aligning its business and operating models. Investor confidence mirrors its explosive growth: Harry\u2019s has raised $287 million in just four years, most recently raising a $76 million Series C valuing the company at more than $750 million.<\/p>\n

Business Model<\/strong><\/p>\n

Harry\u2019s sells a limited line of razors, skincare consumables (gels, creams, and moisturizers), and accessories through its website, harrys.com. Its business model is built on three pillars: direct-to-consumer distribution, vertically-integrated manufacturing, and subscription service.<\/p>\n

Direct-to-Consumer<\/strong><\/p>\n

\"Harry's<\/a>
Harry’s Relative Pricing<\/figcaption><\/figure>\n

Harry\u2019s looks familiar to those aware of the recent trend behind direct-to-consumer internet-enabled brands like Warby Parker and Bonobo\u2019s (in fact, Jeff Raider co-founded Harry\u2019s after being a co-founder of Warby Parker). The model is also reminiscent of less-recent direct-to-consumer companies like Dell or Apple, who used methods like catalogue mail-order to escape demanding and margin-dilutive retail channels. Going direct allows Warby to take value that traditional brands like Gillette give up to retailers and return it to consumers in the form of lower prices.<\/p>\n

Harry\u2019s razors are therefore 2-3x cheaper than similar retail-distributed competitors\u2019 products (~$1.50-$2.00 vs. $3.00-$4.50) at the same level of quality.<\/p>\n

Vertical Integration<\/strong><\/p>\n

However, unlike Warby, Bonobo\u2019s and some of its own direct competitors like Dollar Shave Club, Harry\u2019s owns its manufacturing facilities. Rather than outsource the design and production of its shaving products to private-label manufacturers overseas, Harry\u2019s has poured over $100 million of investor money into acquiring Feintechnik, a 93-year-old German razor factory.<\/p>\n

Owning Feintechnik allows Harry\u2019s to capture manufacturer margin in addition to the retail margin it realizes from going direct-to-consumer.<\/p>\n