Why Other Direct-to-Consumer Brands Can Take a Page Out of Harry’s Playbook

It's possible that the $1.37 billion acquisition of Harry’s by Edgewell Personal Care is both a win and loss for the once direct-to-consumer shaving company. Sure, the founders are now leading all of Edgewell’s U.S. operations, but at the cost of owning and operating an independent company. When P&G acquired Walker & Company, the chattering class yakked about how it would spell a correction in the DTC landscape, with mergers looking less like Dollar Shave Club's $1 billion deal. However, the Harry’s deal might suggest the opposite. For the legacy/entrenched brands doing the purchasing, there's clearly a pendulum swing to a growth-by-acquisition strategy instead of a build-your-own-brand that has been percolating for years. But either way, DTC brands can learn a thing or two from the Harry’s playbook, experts say—like how the company built a brand that went beyond its products. “What’s awesome about Harry’s versus Dollar Shave Club is they’re focused on product and brand instead of acquisition,” said Erik Huberman, CEO and founder of Hawke Media, a marketing consultancy. “What I see [as Harry’s] brand image is a premium brand that also has the native digital capabilities.” Kiva Dickinson, a partner at CircleUp Growth Partners, the company's equity fund, shared the same sentiment, adding that other DTC brands that want to have the same outcome need to look beyond the product; Harry’s created a brand that responded directly to the consumer, while acquiring data about them that’s “helpful for both driving growth but also helpful to your eventual acquirer.” Edgewell, which owns the Schick shaving brand, can now use those learnings and apply it to its existing portfolio. “Harry’s has been able to build something in a brand—not just a channel strategy—that can be really additive to a struggling incumbent and it won’t be cannibalized,” Dickinson said. Chris Perry, vp, global executive education at Edge by Ascential, a data insight company, cautioned that Edgewell now needs to figure out how to integrate Harry’s “without over-regulating or hindering” what made the company so successful in the first place. But it now gives Edgewell a chance to tap into customers that were either “untapped” or “under-engaged” by incumbents. “[The acquisition] provides Edgewell an incremental growth engine and market share protection plan, allowing Edgewell to capture both incremental growth to its portfolio in net new shoppers, but also re-capture any current and future lost shoppers from its current rebrands who make the switch to Harry’s,” Perry said. “No brand company seeks to lose its shoppers, but smart brand companies ensure they own the new brands and offerings to which those shoppers transition in the same way that retailers must have ecommerce capabilities so that as shoppers shift increasingly online, they both maintain and win in the shift.” Huberman said similar brands already exist out there that are following the Harry’s playbook, such as Glossier, Away and FabFitFun. However, Dickinson said companies like Away and Casper aren’t necessarily in the same camp, as razors and the adjacent products that Harry’s created are “super high gross margin product.” “Your repeat business allows you to grow without necessarily starting from a base of zero customers every year,” Dickinson said. “But the million-dollar question that everyone’s going to have with [Away and Casper] is are the repeat rate dynamics attractive enough for either company to be able to grow without raising all that money to continue dumping into marketing and growing the customer base.” Copying Harry’s playbook isn’t easy either. Harry’s existence in the market for six years gave the company an edge that many brands of today don’t have and leads to all these DTC brands trying to gain ahold of the same customer base. “It’s going to be harder for the brands of today than it was for the brands of Harry’s era,” Dickinson said. “[The acquisition is] an exciting outcome when any disruptor gets validated and acquired in a situation like this. It’s [not] going to be the outcome that every brand gets to have, but it’s certainly a huge victory for the disruptors out there.”