OPENING THE BOX
Birchbox’s popular beauty-product subscription service is now a major business. Here’s what it’s planning to unpack next.
Katia Beauchamp and Hayley Barna, co-CEOs of Birchbox and best friends, are unusually connected to the millionplus people who currently subscribe to their beauty e-commerce service, headquartered in New York. Founded in 2010, Birchbox has ballooned into a multifaceted, international retail business that has attracted $71.8 million in venture funding and pulls in an estimated $170 million a year.
The company is mostly known for its oft-mimicked subscription concept: For $10 per package, Birchbox mails customers a monthly selection of five samplesize high-end beauty products. The model has proven popular — that aspect of the business alone generates a conservative estimate of $10 million a month — and has spawned imitators like BarkBox (pet products), Blissmo (organic snacks), and BlushBox (sex toys).
But Birchbox is much more than those monthly pink cardboard cartons. According to the company’s CEOs, the subscription service has always been a tactical play — a gift-wrapped Trojan horse that lets Birchbox slip into its customers’ medicine cabinets and bedside vanities. The question now is what to do with that access. “The box,” says Barna, “is just the beginning.”
Birchbox is actually a web of interwoven businesses, each one crucial to the brand’s growth. In addition to the subscriptions, Birchbox runs a more traditional retail operation, selling products through its website and a brick-andmortar store in Manhattan. In order to get into a Birchbox, partners have to be willing to sell their full-size products in Birchbox’s online store. “That’s been a really hard part about the business model for us,” says Beauchamp, who met Barna on their first day as students at Harvard Business School in 2008. “We’d have great brands say, ‘We’d absolutely give you samples! But you can’t sell (full-
Beyond the box:
Now that Birchbox has attracted a loyal customer base, it needs to figure out how to expand. One of its biggest growth areas is men’s products. Launched in 2012, Birchbox Man isn’t a huge part of the subscription business, but the category in general is booming and there’s far less competition in the space than in women’s beauty. Birchbox charges $20 for each men’s box — double what the company charges for female-targeted products. And men’s shopping habits are more consistent and predictable. “It’s very clear that it’s a major opportunity for us,” says Beauchamp. “Men are relatively small from a subscriber perspective, but they’re meaningful from a revenue perspective. Also, guys are shopping more: They shop sooner and therefore more often.” Barna looks at her and smiles. “It’s like they discover their new favorite bar soap,” she says, “and then they’ll buy a dozen.”