BIRCHBOX the Perfect Subscription Business Keys to success
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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
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This work may be used for non-commercial purposes only. You can contact authors at anna@subscrea.com