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BIRCHBOX the Perfect Subscription Business Keys to success


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This work may be used for non-commercial purposes only. You can contact authors at anna@subscrea.com


“

Most of us know Birchbox. Birchbox delivers beauty and lifestyle samples to your door for $10/month.

Hayley Barna and Katia Beauchamp are the founders. They met at Harvard.

Birchbox has become one of the most popular subscription-in-a-box services in the world.

„


Birchbox is not a small company anymore‌

12 60 164 k

million venture capital money

k paying subscribers

full-time employees

likes


We believe that Birchbox’s performance was driven by its perfect execution of the subscription model

What’s Birchbox story?


Subscriptions in different categories already existed on the market

XIXth century

2007

Traditional categories •

Magazine and

2010 Expansion to other categories

Introduction to apparel •

Shoedazzle disrupted the

Copycats of Shoedazzle

newspaper subscriptions

market by selling new pair

started to appear on the

Telcoms and TV

of shoes in subscription

market (JustFab)

Software as a service

for $39.90 •

The model has spread to

Shoedazzle raised $60M in

other categories, e.g.

funding

male essentials (Manpacks)


Birchbox twisted subscription model … Katia Beuchamp

„Every woman wishes she had a friend who lived in New York and she had an access to the editor’s closet. That was the customer side of the inspiration”

Value to the customer • Ability to discover new products

and trial them before buying

Value to the brand • Control over samples distribution

(who receives the samples)

• „Surprise effect”

• Ability to collect feedback

• Personal curation

• Additional distribution channel


…and did 3 things right

Product

Cosmetic products is a cluttered industry with a wide variety of suppliers. Therefore it was a perfect choice for a subscription discovery service.

Community

Haley and Katia quickly understood that their product has potential for virality and developed tools to nurture it.

Operations

Both founders were introduced to „MVP product idea” early on and continued with that approach.


Two big questions before launching…

• Would consumers pay for samples? • Would brands work with us continuously?


Birchbox started as perfectly lean startup Hypothetical moves

Test

Growth

Future

2010

2010-2012

2012+

• 10/27/10 Birchbox receives Seed funding $1.4M • 8/17/11 Birchbox receives Series A funding $10.5M • Full-time employee base grows to 50

• Expansion to other product categories (Birchbox has its male subscription in beta and tests lifestyle categories) • Geographical expansion beyond US • Strategic deals with cosmetic shops, corporations (Birchbox as a perk)

• 2 months tests • 8 participating brands • 200 customers • WordPressbased website


1. The product


Birchbox chose perfect industry for a discovery service

Market Share in Global Sales (2007) • Almost 50% of all 12,7%

Procter & Gamble Co

cosmetics sales are made

L'Oreal Group

47,9%

10,1%

7,1% 4,0% 3,9% 3,3%

2,5% 2,8% 3,1% 2,6%

by the companies from

Unilever Group

the long-tail

Colgate-Palmolive Co Estee Lauder Cos Inc Avon Products Inc

• This leads to great

Beiersdorf AG

product variety and a lot

Johnson & Johnson Inc

customer choice

Shiseido Co Ltd Kao Corp

• Frequent new product

Others

Source: Global Insight available at:http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=4561

releases


Birchbox resembles a present and its products are nicely wrapped


Samples are reclosable and reusable and from all accross categories (skincare, haircare, fragnance)


Products are curated based on personal profile and come from top cosmetics brands

Popular:

Selected brands

Niche:


2. Community


Birchbox engages a lot in community discussions

Birchbox magazine featuring articles, videos, blog, trend and how-to tutorials - content that is valuable for the target audience

Very active social media accounts, with over 165 000 Facebook followers


Thousands of video testimonials, discussions and opinion sharing on various services


3. Operations


Birchbox relied on analytics and was growing steadily together with its two revenue streams

Analytical approach

Sustainability

Double-headed revenue

BIRCHBOX

Analytics + testing

Low fidelity MVP

examples: adding

(WordPress based

lifestyle samples to

website with shopping

Birchbox, initial tests

cart pluging)

with 200 customers

Slowly growing employee base

E-commerce & affiliate programs

Subscriptions


Thank you for reading! Visit us at subscrea.com

This work may be used for non-commercial purposes only. You can contact authors at anna@subscrea.com


Birchbox The Perfect Subscription Business