Tip of the Week #107 – What Can Razors Teach Us About ERP?
Sales Manager John Mullins joins us this week with some insight on forward-thinking business models.
Gillette has dominated the razor business for decades. They have religiously followed a narrow strategy of adding new features and convincing consumers (via advertising) that they are worth the increased price. In the last three years though, Gillette has seen increasing competition in the form of low cost shave clubs. Surprisingly they continued to introduce newer and pricier products; for example, a razor with a swiveling ball hinge that allows the blade to pivot. Its latest move was to file a patent application for a razor cartridge that “heats up.”
Pricing of these very sophisticated engineering tools from Gillette has gotten out-of-hand. For example, a four-pack of its Fusion cartridges carries a price tag of around $19.50.
Spotting rising consumer concerns about high prices and over-engineered products, a new brand named Harry’s started offering low-priced razors and blades online in 2013. The cost advantages were significant: While refills from Gillette for its various razors ranged from $2 to $6 per cartridge, these new online offerings were averaging $0.20 per cartridge. The introduction of Harry’s was soon followed by Dollar Shave Club – and later by Schick. These three brands together had sales of $700 million in 2016 – and that compares to Gillette’s 1.4 billion. Net, the three of them are half the size of Gillette at this point.
Finally waking up, Gillette recently announced that it would be lowering its prices by anywhere from 12 to 20%. The founder of Harry’s summarized all of this with the following: “People trust that our pricing is fair. There is significant, pent up frustration among guys that Gillette has been methodically over-charging them for decades.”
Very recently, Gillette launched its own online razor offerings. But it’s likely too late since for the past three years it has allowed Harry’s, Dollar Shave Club, and Schick to establish solid online franchises that are growing significantly. They have taught guys that shaving should not be as complicated or as expensive as Gillette has made it out to be.
Gillette made a huge mistake three years ago. It violated a core business principle. Namely, never let a competitor run away with a desirable feature that you are not also immediately making available to consumers to counter your competitors’ growth.
Surprisingly, we’ve seen many companies make the mistake of allowing competitors to get way out in front before they react. Blockbuster watched the development of Netflix for years, reacted very late, and went bankrupt. Blackberry watched the Apple iPhone provide a board set of apps while it stuck with its classic email machine and became irrelevant. How many times does the business world need to be taught this basic lesson?
PrintVis and Microsoft Dynamics – Shaving Down Deployment Costs
And what does all this talk of razor blades have to do with ERP? Well, over the years as PrintVis has worked toward developing a fuller, more robust print management system – and strived to show graphics businesses the benefits of having the complete functionality of a full ERP – it is true that some companies struggled, felt it was too big, became disenfranchised, or resigned to simply go live with smaller portions of the system (what constitutes a “go-live” is a discussion for another day!). The implementation scope of full ERP can be intimidating and of course, costly. But gargantuan scale and exorbitant price tag are no longer inherent with ERP.
With the arrival of Dynamics 365 the pendulum seems to be swinging the other way…people expect quick and cheap and are increasingly willing to consider the faster, leaner approach of cloud deployment. Every day we move closer to having a product (or series of products) that delivers all of that. We are working to establish implementation plans which expedite the customer’s set up and launch of the the system as the business model evolves into selling more subscription software and fewer consultancy services. It is an exciting time for sure as we move into this new ERP world.
As we progress toward launching our subscription software with almost no barrier to entry, I hope that the Partner Network is equally responsive to this new business model – we all have a real chance of being the “Harry’s” in this story!
Thank you John!