Most manufactured products are sold through retailers and typically include a mark-up. This is necessary for the retailer to earn profits from carrying the product on their store shelves. It also gives consumers a “one-stop shop” to find all products they need. Online retailers and companies that sell directly to consumers cut out the retailer and thus can sell their wares at lower prices. This is the case with Dollar Shots Club, an energy drink company that recently sprouted up that cuts out the retailer. BevWire recently caught up with Darin Alpert, the Chief Marketing Officer of Dollar Shots Club.
BevWire (BW): First of all, what is Dollar Shots Club? Are you guys product manufacturers, product distributors, or a combination? How long have you guys been in business?
Darin Alpert (DA): Dollar Shots Club is a monthly membership for great tasting, affordable energy shots. We officially launched in September 2014. We are a combination of manufacturers and distributors. We don’t see a reason for consumers to pay for retail markup of their energy shots.
BW: How did you guys come up with the idea for Dollar Shots Club? Did the success of “Dollar Shave Club” play into the decision and business model?
DA: Dollar Shave Club was a great motivator. We saw that one company owns 90% market share of the energy shot market and charges $3 each for their shots. The reason they are $3 each is because of all the layers of distribution. We cut out those layers and know how much consumers enjoy products online over retail.
BW: Who is your target market, and how do you plan on communicating with them? And what makes Dollar Shots Club’s energy shots unique from other energy shots on the market?
DA: Our target market is people that drink energy shots or energy drinks and want to save money. We communicate with them via social media. The biggest differentiation is price, taste and convenience. Ours cost less, taste better and are shipped right to your door without having to wait in line at the store.
BW: Seeing that cultivating a strong subscription base is critical, and finding new customers are equally important, what are some of your biggest challenges toward business growth? What are some strategies Dollar Shots Club is using to overcome these challenges? What consumer marketing campaigns can we expect to see in the future?
DA: One of the biggest challenges we have is getting consumers to taste our shots since taste is so crucial. We offer our first month for free so people can try the shots. Once people try the shots they love them! As far as customer base, we are signing up 5-10 people per day and have been doing so since September. Our retention rate is currently above 80%.
The biggest strategy for increasing business exposure has been giving away the first month for free. We don’t want to build the infrastructure of going to events and taking on additional costs so our online advertising promotes the first month for free. We’ve also partnered with like minded partners that can help us get the word out. We’ve got a few things in the works that will increase our exposure 🙂 We can’t talk about them yet though.
BW: Seeing that the business model currently supports one flavor and one market (the 48 contiguous states of U.S.), how would the expansion plans look like?
DA: We chose our one flavor (Berry) because it is the most popular energy shot flavor. We will expand flavors depending on demand from our membership. We’re here to serve our members needs. We don’t want to take on international expansion until we dominate the United States.
Certainly an interesting approach toward selling energy shots revealed in this interview with Darin. While many people prefer instant gratification from product purchases, there are a growing number of consumers increasingly comfortable with stocking up and buying online. Certainly looking forward to seeing Dollar Shots Club change up the energy shots segment.