Angel Shave Club
Why do pink products for women cost more than a man's product that is functionally identical? The entrepreneurs behind the Angel Shave Club from San Diego, CA, don't think that this kind of "pink tax" is fair and started their own shave club for women at prices comparable to the major subscription (or box) services already out there.
During the demonstration, the entrepreneurs showed off their their introductory box which included several blades and a pink razor handle. The box service will then send subscribers four or eight new razors every two or four months.
The business has already seen sales. In two year of business, the company has attracted 9,000 subscribers. These subscribers pay $18 every two or four months for their razor subscription. In the previous year, Angel Shave Club grossed $390,000. In the current year, the company has already grossed $220,000 and project reaching $700,000 in gross sales by the end of the year. The entrepreneurs, however, have not seen any profit as every dollar has been re-invested into the business.
In terms of cost, the introductory box costs $10 per box to manufacture. The cost of the blade manufacturing was not disclosed.
Unfortunately, the entrepreneurs stated, their biggest problem is subscriber drop-off, stating that between 10% or 12% of customers unsubscribe between deliveries.
The sharks quickly latched onto this drop-off number as well as the number of blades shipped in every delivery. Several of the sharks stated that receiving six or eight razors every two or four months is just too many to be reasonably used. The entrepreneurs stated that they were adding a "pause feature" to their service so that subscribers who have a backlog of razorblades can stop receiving new ones for a short time without unsubscribing and being lost to the churn.
Lori stated that she specifically likes box services, specifically because they typically involve a little surprise in each delivery. However, she thought the concept of a razor subscription service was too pedestrian and didn't see any surprises so she dropped out.
Barbara dropped out because she said it just wasn't a service that appealed to her. She stated that she shaves once a month and that just the number of razors from the introduction box would last her for the next ten years.
Mark was next to drop out, stating that he hadn't seen enough of a marketing plan to distinguish Angel Shave Club from its competitors and that he just knew the business would require more money in the future. Mr. Wonderful, likewise, exited the deal saying that if they were on a path to success that it was too long for him and not profitable enough. Lastly, guest shark Sara Blakely left the deal because she saw it as far to simple for the businesses larger and more established competitors as being able to compete for the same market by simply adding a segment to their existing businesses.
The entrepreneurs behind the Angel Shave Club left the tank without a deal.
This deal appeared in Episode 10.11.