The document is an undergraduate thesis by Yelena Starikova discussing Birchbox as a pioneering e-commerce subscription business model within the beauty industry. It examines the operational strategies, challenges, and future trends of subscription e-commerce, highlighting its effectiveness in customer engagement and product discovery. The thesis concludes that Birchbox represents a significant shift in consumer relationships with brands and personalized shopping experiences.

1. B I R C H
B O X
The Future Business Model of E-Commerce
Yelena Starikova
September 2013
EUROPEAN UNIVERSITY
Business School
Undergraduate Thesis

2. ~7mln./yr
190
Global offices:
NY, Paris, Barcelona,
London
4
11.9
400.000monthly subscribers
mln.
venture
capital money
employees
revenue

3. AGENDA
• E-commerce
• Subscription Business Model
• BirchBox
• Good & Bad
• Future Trends
• Conclusion

4. 1
E-Commerce

5. econintersect.com

6. B2C Ecommerce
Sales Share,
by Region
2011-2016
source: emarketer.com

7. Michael Aldrich Invents
Online Shopping
1979

8. E-Commerce
BIG Influencers
AMAZON MOBILE TABLET

9. econintersect.com

10. • Overcome Geographical
Limitations
• Lower Costs
• Enable Deals, Bargains, Coupons,
and Group Buying
• Quick search of the product
• Provide Abundant Information
• Open all the Time
• Ecommerce Lacks Personal
Touch
• Waiting time
• Security
&
ADVANTAGES DISADVANTAGES

11. 2Subscription
Business Model

12. Frequent
Infrequent
Freemium

13. CURATION CONVENIENCE TRAIL/
SAMPLING
1 2 3
Benefits of Subscription
E-Commerce

14. 3
BirchBox

15. BIRCHBOX
SURPRISE in EVERY BOX

16. E-Commerce
Business Model Cycle

17. New Business
Model
Copycats
Apply to Different
Categories
Apply Innovative
marketing Strategy
Aggregator
Description Subscription
Companies originates BM
originated from offline
analog.
BirchBox
Other companies clone
good BM with different
branding, geography.
BeautyBox.
GlossyBox
Several companies begin
replicating the BM in
different product
categories.
NaturBox,
ManPacks
Companies will innovate
with pricing, content,
marketing, etc..
Not another Bill
Website that aggregates
specific type of info from
multiple sources.
N/A
Source: E-Commerce landscape 2012. by Josh Yang
E-Commerce Business Model Cycle

18. ONE BIG POINT
HAYLEY BARNA+
KATIA BEAUCHAMP

19. BIRCHBOX
CONTENT

20. BOX CONTENT SHOP
1 2 3
360 Degrees of Discovery

21. Problem
Ideal Target
Unique Value
Proposition
Solution
Channels
BIRCHBOX BUSINESS MODEL
• There is no easy way to acquire beauty samples.
• Consumers need some extra help in picking up a
new beauty product.
• Young woman between 25 to 39 with an
annual income of $35.000-$55.000
• Female who loves beauty and takes care of
looks.
• Beauty products every month at clients
convenience.
• Flat predictable monthly fee.
1.Subscription service
2. Original content
3. Online shop
Monthly roster of articles and videos, daily blog
posts, Facebook, Twitter, Foursquare, Pinterest,
and Youtube

22. Revenue
Stream
Cost Structure
Key Metrics
Early Adopter
Unfair
Advantage
BIRCHBOX BUSINESS MODEL
• Subscription revenue
• "Affiliate" fee.
• Cost to acquire the samples, marketing,
shipping cost, employees salary, warehouse
cost, technology infrastructure cost.
• Number of new subscribers
• Number of cancellations per month
• Number of people buying products
Birchbox has captured the novelty effect which
gave a lot of publicity in media coverage.
1. Unique and original business concept
2. Lead in “beauty product sample” market
3. BirchBox collects feedback from customers
and provides results to suppliers.

23. Value to the customer Value to the brand
• Discovery
• „Surprise effect”
• Personal curation
• Ability to collect feedback
• Additional distribution channel
&

24. CHALLENGE #1
Limited Sample
Amount
CHALLENGE #2
BirchBox requires
special size
samples
BIRCHBOX CHALLENGES

25. 4
Good vs. Bad

26. NATUREBOX
MANPACKS
LACQUEROUS

27. MANPACKS
TARGET
GIRLFRIENDS
TRENDY
PRODUCTS
“SNOOZE”
SHIPMENTS

28. WHY
SUCCESS?
LEAN
OPERATIONS
GOOD
PRODUCT
GOOD
MARKETING
STRATEGY
1 2 3

29. ELLIE
ROCKSBOX
DOLLAR SHAVE
CLUB

30. ELLIE
DIDN’T SOLVE
MAJOR
PROBLEM
POOR
SERVICE
QUESTINABLE
MARKETING
STRATEGY

31. Why FAIL?
Don’t solve real problems
Add no value to the customer

32. 5
Future Trends

33. SOCIAL
COMMERCE
PRIVATE
SALES
MOBILE/
LOCATION
1 2 3
Current Waves of Innovation

34. Data is the beating heart of
E-commerce
Cutting Out the Middle Man
Always-on shopping experiences
Video experience in
E-commerce
Future Trends

35. 6
Conclusion

36. • customers are
willing to spend over
$45 monthly on
subscriptions*
• interest in curated
shopping services
• personalized and
meaningful
relationship with the
brand
BIRCHBOX is the
FUTURE?
“NETFLIX of BEAUTY”

37. Do you want to read 76 pages Thesis as
well as recommendations for BIRCHBOX?
Contact me: starikovayelena@gmail.com