Birchbox the perfect subscription business

BIRCHBOXthe Perfect Subscription BusinessKeys 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 million venture capital money k 60 full-time employeespaying subscribers 164 k likes

We believe thatBirchbox’s performancewas driven by its perfectexecution of thesubscription model What’s Birchbox story?

Subscriptions in different categories already existed onthe market XIXth century 2007 2010 Expansion to other Traditional categories Introduction to apparel categories • Magazine and • 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 Value to the brand• Ability to discover new products • Control over samples distribution and trial them before buying (who receives the samples)• „Surprise effect” • Ability to collect feedback• Personal curation • Additional distribution channel

…and did 3 things right Product Community Operations Cosmetic products is a Haley and Katia quickly Both founders cluttered industry with a understood that their were introduced to wide variety of suppliers. product has potential for „MVP product idea” Therefore it was a perfect virality and developed early on and continued choice for a subscription tools to nurture it. with that approach. discovery service.

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+• 2 months tests • 10/27/10 • Expansion to other• 8 participating Birchbox product categories brands receives Seed (Birchbox has its male• 200 customers funding $1.4M subscription in beta• Magento-based • 8/17/11 and tests lifestyle website Birchbox categories) receives Series A • Geographical funding $10.5M expansion beyond US • Full-time • Strategic deals with employee base cosmetic shops, grows to 50 corporations (Birchbox as a perk)

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 LOreal Group by the companies from 10.1% 47.9% Unilever Group Colgate-Palmolive Co the long-tail 7.1% Estee Lauder Cos Inc • This leads to great 4.0% Avon Products Inc Beiersdorf AG product variety and a lot 3.9% Johnson & Johnson Inc customer choice 3.3% 2.5% 2.8% Shiseido Co Ltd 3.1% • Frequent new product Kao Corp 2.6% Others releasesSource: Global Insight available at:http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=4561

Birchbox resembles a present and its products are nicely wrapped

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

Products are curated based on personal profile and comefrom top cosmetics brandsPopular: Niche:Selected brands

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 opinionsharing on various services

3. Operations

Birchbox relied on analytics and was growing steadilytogether with its two revenue streams Analytical approach Sustainability Double-headed revenue BIRCHBOX • Analytics + testing • Low fidelity MVP • E-commerce & affiliate programs examples: adding (WordPress based lifestyle samples to website with shopping • Subscriptions Birchbox, initial tests cart pluging) with 200 customers • Slowly growing employee base

Thank you for reading! Visit us at subscrea.comThis work may be used for non-commercial purposes only. You can contact authors at anna@subscrea.com

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Birchbox the perfect subscription business

by Anna Pietka on Aug 07, 2012

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