The Rise and Fall of Birchbox

Birchbox is a subscription service that sends members specially-curated boxes of beauty products. It was established to save women time and money by taking away the stress from shopping for cosmetics, haircare products, and other grooming essentials.

In 2016, the company cut back on staff and expenses as it reshaped its business to focus on e-commerce sales. According to co-founder Katia Beauchamp, the business is now profitable.

How it got started

Birchbox is a subscription box service that sends its subscribers sample-sized beauty products each month. Founded in 2010 by Harvard classmates Katia Beauchamp and Hayley Barna, the company sends subscribers complimentary items each month.

Both founders possess backgrounds in finance and business, which allowed them to develop an innovative subscription model that is both user-friendly and cost-effective for brands. The service emphasizes personalization, enabling customers to choose products tailored specifically for their skin tone, hair type, and style.

According to Birchbox, approximately 50% of its subscribers purchase full-sized products after receiving their boxes. Customers can use the samples they get from Birchbox as a basis for purchasing more expensive items on the company's e-commerce site.

The company's business model is based on a combination of online and offline sales, with the majority of its revenues coming from the latter. When customers sign up for Birchbox service, they fill out what's known as a Beauty Profile which asks questions about personal style and measurements to help Birchbox determine which products would work best for them.

Once a customer opts in, Birchbox will send them a monthly beauty box featuring five to six samples selected based on the information provided in their Beauty Profile. These products will be tailored specifically to each person's taste and preferences.

As the company grew, it faced growing difficulties. It had to compete against other businesses in its space and prioritize profitability over community building.

In an effort to regain momentum, Birchbox began transitioning away from its own stores and into partnership with Walgreens - who acquired a minority stake in the company last year.

Birchbox now has 11 boutiques at Walgreens, opened since November 2018. In addition to Birchbox products, these shops carry other brands as well.

Though they are only in their early stages of partnering, Birchbox already reports an uptick in customer spending due to its carefully curated assortment. With hopes of expanding into more stores over the next five years, the brand plans to double down on this initiative.

Its founders

Birchbox was established in 2010 by Harvard Business School alumni Hayley Barna and Katrina Beauchamp and revolutionized how consumers discover and shop for beauty products. Its monthly subscription service pairs a personalized sample box with carefully curated e-commerce offerings, while earning revenue through advertising and selling customer purchasing data to brands.

Birchbox's business model, which involves customers signing up for a subscription plan that sends them product samples each month, has been successful; the company was valued at nearly $500 million in 2018. Yet growth and profitability have been an ongoing struggle for years.

Now, the company needs an infusion of capital to help it get back on track. They have raised $15 million in new investment funding which will be used for improving their balance sheet and turning cash-flow positive.

Recode reports that the new money will come in the form of a convertible note from existing investors - an equity-like loan which can be converted to ownership in Birchbox. This move helps Birchbox strengthen its finances and position it for growth.

In the meantime, Birchbox has several strategies for increasing sales and attracting new customers, such as expanding its e-commerce platform to include full-size product lines. Furthermore, Birchbox is testing out a subscription store experience that allows users to build custom sample boxes from scratch in pilot stores.

Birchbox subscribers have the unique ability to customize their monthly box by selecting from an array of luxurious products. Plus, you have the freedom to decide how many samples you receive as well as how long you want to commit to your subscription.

Signing up for Beauty Profile requires filling out questions about your skin, hair and personal style. These answers are then used to match you with the ideal products and make recommendations. Furthermore, you have complete control over these settings at any time.

Once your profile is complete, you can start receiving sample boxes that come in vibrant boxes featuring fun designs each month. Plus, you get to preview the contents of your box before it ships so that you know exactly what you're getting.

Its business model

Birchbox, once valued at nearly $500 million, offers an intriguing case study. Katia Beauchamp and Hayley Barna had envisioned a subscription model that would let customers sample beauty products from various brands without having to buy full-sized versions.

Beauty companies and others quickly adopted this idea as a way to draw in new customers with the convenience of sampling products on demand. It became an incredibly successful form of discovery retailing, inspiring a wave of copycats across the industry.

Birchbox's business model was initially successful, however its profitability has since declined. It makes money through advertising and by selling consumer purchasing data.

Data allows Birchbox to match subscribers with suitable product samples and track customer behavior for further insight into brands. Through an iterative process and constant customer feedback, this data helps improve each box's curation process as well as provide insight into how its algorithms could better target future subscribers in the future.

Moreover, the company's subscription boxes are unique and packed with cult-favorite products to surprise and delight customers. Plus, each box includes info cards describing what each product contains as well as how much the full-sized version costs.

Birchbox boxes are an excellent way for consumers to test out new cosmetics, particularly from lesser-known brands. Unlike traditional department stores and specialty retailers, Birchbox's products come in smaller amounts so they're more budget friendly for customers to purchase.

Subscribing to this subscription service is free, and customers receive a monthly delivery of 5 deluxe-sized samples curated by an expert team. They select only the top selling and highest rated items based on an individual's profile.

Additionally, the company's site offers customers a feature that allows them to preview each month's shipment before it ships. This gives them the chance to see what might arrive and decide if it's something they want to keep.

Birchbox boasts an impressive online presence, boasting one million monthly visitors and millions of followers on social media platforms. This allows the company to sell products through its e-store, which accounts for most of Birchbox's revenue.

Its competition

Established in 2010, Birchbox was a pioneer of the beauty subscription box business, sending subscribers boxes of carefully curated makeup and skincare samples each month. At its peak valuation of nearly $500 million, however, this once-promising startup is facing financial trouble; it has laid off more than 10% of its employees and may be sold to Walmart according to Recode's report.

The company built its subscriber base through marketing and the distribution of beauty products via mail, much like women's magazines have done for decades. They adhere to a stringent selection process when selecting brands to send subscribers, guaranteeing only the best are included. Furthermore, each shipment also comes with info cards providing details about each item as well as its full size price point.

Each month, Birchbox sends its subscribers a carefully curated box of six samples from top brands like MAC and Benefit or indie beauty products. All samples have been thoroughly tested before being sent out to customers; their small sizes make them perfect for testing before investing in larger-sized items.

Birchbox stands out among other beauty subscription services due to its personalized approach. It uses data and machine learning to guarantee subscribers receive the right products and remain loyal to the service.

Birchbox also strives to attract a wider range of customers, including those who don't prioritize beauty or grooming as an important priority. That is why they are teaming up with Walgreens, which has 11 pilot stores where Birchbox will create branded experiences for customers.

The partnership will enable the company to leverage more data for machine learning and other algorithms that can accurately predict what will work well offline. This marks a major shift for the business, which had so far relied heavily on online marketing to expand its reach and raise brand awareness.

Birchbox is in the throes of a transformation as it strives to reach a wider audience. That's why they've recruited retail veterans to help build their physical presence; however, without sufficient funding this strategy may prove challenging.