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A few days ago it was announced that Harry’s, a 10-month old company that manufactures and sells shaving sets, had raised a $122.5 million round from Tiger Global, Thrive Capital, Highland Capital, SV Angel and other firms. The company plans to compete with iconic brands like Gillette and Schick and recently purchased a 93-year-old factory that produces razors to do so.
Warby Parker, the 4-year-old startup that produces stylish eyewear, is now valued at $500 million.
A company called Tuft and Needle is doing what Warby Parker did, and changing the way people buy mattresses. The mail-order-only company is cutting the middleman out of the transaction, who typically puts a 1000% markup on each bed sold.
With venture funding sources becoming available for these decidedly non-high-tech businesses, consumer product companies are now able to offer higher quality products and provide better customer service. It is raising the bar for e-commerce companies while allowing founders an opportunity to disrupt an industry.
For consumers, these startups focused on household goods are providing a breath of fresh air with typically superb customer service and trendy new products. By breaking the pattern of reliance on big box retailers for a few select products, these companies allow buyers to purchase items that have a more customized feel.
For founders, it is an opportunity to scale faster with venture capital available. In the Harry’s example the funding was put to use by purchasing a factory, ensuring independence from overseas manufacturers and avoiding wait times, shipping costs and often mediocre quality control. It also allows more marketing agility, such as a chance to emulate the “buy a pair of shoes, give one away to someone in need” pioneered by Toms.
To put it simply, “Warby Parker adopted another differentiating business model in a commoditized world: Build a separate ecosystem for a product, walled off from everything else, and a commoditized item suddenly becomes unique, coveted, and not subject to comparison with comparable products,” wrote Aaron Shapiro in his article Emerging Business Models Become The Norm. While there are thousands of eyeglasses, razors and beds on Amazon and eBay, these emerging product startups give something consumers want: less commoditization and more customization, for which buyers are willing to pay a premium.
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