性视界

Birchbox: a success in redefining beauty

• Since its founding in 2010, Birchbox has experienced significant success innovating consumers鈥� behaviors with beauty 听and e-commerce.
  • Birchbox is estimated to serve over a million customers, earning $170 million annually. The 鈥榙iscovery commerce鈥� beauty company has raised $70 million+ in venture funding, boasting an estimated valuation of $485 million.[1]
  • Organizationally, the company has grown to 150 employees,听while maintaining a positive reputation as an ambitious, 鈥榳ork hard, play hard鈥� culture that is attracting top talent such as ex-Sephora (Philippe Pinatel) and Apple (Ben Fay) execs for recent retail expansion.[2][3]
  • The two co-founders (HBS MBAs 鈥�10) Katia Beauchamp and Hayley Barna have impressed investors (e.g., Viking Global) as well as young female entrepreneurs.[4]

• Birchbox is poised for greater growth 鈥� largely due to constantly assessing its business/operating models鈥� alignment with its vision 鈥� even amidst increasing . It boldly aspires听to reach more of the 44 million US consumers in a $465 billion dollar global beauty industry.[5]

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The idea 鈥� enabling 鈥榖eauty discovery鈥� via redefined 鈥榮ampling鈥�

• It was an image women were used to: Sephora, a beauty retail powerhouse, and their 鈥榝ree samples鈥� with purchase; reps pushing perfume samples. Samples were relatively low cost ways retailers attempted to convert consumers. However, there was limited 鈥榗ustomization鈥� of samples, resulting in greater 鈥榳aste鈥� (i.e., ROI estimates show over $100 million lost on unused samples)[6]
• Enter Birchbox. The business model turned the previously tired 鈥榮amples鈥� business on its head. The company centers on a subscription-based service that delivers a 鈥榖ox鈥� monthly (i.e., $10/month for women; $20/month for men), with samples curated for the subscribers鈥� 鈥楤eauty Profile.鈥�[7] The belief is that with unique, customized samples, consumers are delighted with 鈥榙iscovery鈥� and trial of products, with relatively low commitment, and thus more likely to convert to full-sized purchases (which they can buy on Birchbox鈥檚 site).
  • The vision: to serve those who 鈥榚njoy using the best products鈥� but 鈥榙on鈥檛 want to work too hard to find them,鈥�
  • For whom: young woman/man 25-39 who loves beauty but 鈥榠sn鈥檛 the MAC girl鈥� (i.e., not someone well-versed in the universe of products out there, right for her/him).[8]^,[9]

• Revenue & distribution channels: Initially, Birchbox relied on subscription fees and e-commerce to drive revenue. However, Birchbox has entered brick & mortar retailing 鈥� with its flagship store in NYC to better serve its mission and establish competitive advantage.
• Data & high quality service: both online and offline activity ultimately drive data and comparative advantage via听network effects听(i.e., more subscribers, more brands, more data)

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How it works 鈥� aligning vision with business/operating models

• The business model hinges on three key operating model elements: a) solid infrastructure of beauty product suppliers (e.g., both 鈥榠ndie and customer-favorite鈥� brands) & hooks to keep demand, b) content to encourage product trial-ability, and c) supporting organization.
  • The brands/products: partners are required to provide samples and sell full-sized products via Birchbox. Though this was a difficult term to 鈥榮ell鈥� to partners initially, the founders鈥� commitment to this has paid off (e.g., 50% of subscription consumers purchase full-sized product on Birchbox, where credit card info is already stored, and represents 30% of company鈥檚 revenue).听[10]
    • Partners are willing to collaborate given evidence of increased awareness/sales after being featured (e.g., for niche luxury brands 鈥揷ustom-perfume company Harvey Prince has grown 400% since partnering in 2010). [10]
    • Birchbox exclusives (e.g., partners co-brand products that are exclusively distributed on Birchbox鈥檚 site)
    • Subscribers earn 10% on every purchase made on Birchbox鈥檚 site (e.g., via Birchbox Points and Aces loyalty program)
  • The content: there is heavy attention given to 鈥榤edia鈥� 鈥� i.e., contextualized selling of products via YouTube clips, Pinterest of more than 1 million followers. Birchbox鈥檚 site also features:
    • 3 million+ customer reviews听help in decision making process and customer satisfaction
    • Expert articles and videos for featured products

• The organization: the founders first听focused on only two things 鈥� directly tied to business model and how they structured the org:
  • Get the brands to feature (i.e., Partnerships)
  • Get consumers the products and make sure every customer gets a听response听(i.e., Customer Service/Fulfillment)
• As typical of start-ups of Birchbox鈥檚 tenure, there have been shifts in operating model recently to better support the growing vision
  • Opening of retail stores (trial and immediate gratification). In addition to its NYC flagship, it has a shop in D.C.听where visitors can 鈥淏YOB鈥� (Build Your Own Birchbox) and receive makeup services听[11]

• Change in top team: In August 2015, Barna stepped down as co-CEO when it became clear that long-term success (and ability to keep a clear vision and message) required a single CEO.
• Category expansion (e.g., men. food) 鈥� Birchbox Man launched in 2012; there are rumors that more categories may be on horizon, similar to Gilt鈥檚 expansion (e.g., Gilt Home).[12]
• Global operations (e.g., operations in the UK, France, Spain, Canada, and Belgium)

Brands spend money to connect with consumers, and consumers want the best product. We were asking both sides to change their behavior and it has really amazed us how willing they were.听 — Katia Beauchamp

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[1] http://mashable.com/2014/04/21/birchbox-raises-60-million/#KO3iPEEtysqd

[2] http://www.fastcompany.com/3044266/innovation-agents/opening-the-box

[3] http://www.bizjournals.com/newyork/news/2015/12/01/birchbox-hires-ex-sephora-apple-execs-retail-grow.html

[4] http://www.huffingtonpost.com/laura-dunn/women-in-business-qa-with_b_5811374.html

[5] http://fortune.com/2015/08/11/birchbox-ceo-hayley-barna/

[6] Interview panel with Katia Beauchamp (November 9, 2015)

[7] http://www.forbes.com/sites/hollieslade/2014/06/02/the-pitch-that-launched-birchbox-the-485m-stuff-in-a-box-business/

[8] http://www.slideshare.net/Yelenastarikova/birchbox-the-future-business-model-of-ecommerce

[9] Interview panel with Katia Beauchamp (November 9, 2015)

[10] http://www.fastcompany.com/3044266/innovation-agents/opening-the-box

[11] https://www.birchbox.com/

[12] Fireside chat with Hayley Barna (November 17, 2015)