Instead of building its own enterprise, consumer products juggernaut Colgate is turning to an unlikely source to help pedal its products in a new home-subscription service.

As reported by the Wall Street Journal, Colgate is close to acquiring a minority stake in Hubble, a New York City-based contact lens subscription company, whose founders--Ben Cogan and Jesse Horwitz--were named to Inc.'s 2017 young entrepreneurs-to-watch list. As a part of the deal, the startup would help build subscription avenues for Colgate's oral products, like toothpaste and teeth whitening materials.

While this collaboration is a great opportunity for the startup--which will split the revenues from this venture with the potential to expand into other product areas--for Colgate, it is more of a necessity.

As companies like Amazon have redefined retail and turned the tides toward online, overnight delivery models, older players like Colgate that have comfortably operated in brick-and-mortar outlets are struggling to play catch-up. With tech-savvy, sleekly designed startups cornering them from every angle, big companies have begun to adopt a new strategy: If you can't beat them, join them.

This was the case for Unilever, when in 2016 it acquired Dollar Shave Club for a whopping $1 billion. At its pre-purchase height, competition from the razor subscription startup caused Gillette to significantly lower its prices to $15 from $19.50 for a four-pack of razors. With this prospective acquisition, Colgate is hammering the message home and responding to subscription-based startups like Quip and Goby that are hot on its heels.

Other large firms could go the way of Colgate--particularly as offline sales continue to weaken.

Published on: Jul 3, 2018