November 27, 2021
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After a decade of beauty boxes, Birchbox’s fire sale – Fast Company

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For a decade, we’ve known Birchbox as a beauty brand that delivers samples in pretty boxes. But its recent $45 million acquisition by FemTec Health, a new female-focused startup, marks a major turning point for the company.

Birchbox cofounder Katia Beauchamp will leave her post as CEO and sell her remaining stake in the business to become a strategic advisor. FemTec plans to relaunch Birchbox as a product-discovery service that goes beyond beauty, expanding into personal care and wellness. Birchbox’s journey over the last 10 years mirrors the shifting beauty landscape—but also reveals some inherent pitfalls in the subscription model.

[Photo: courtesy Birchbox]

Birchbox launched in 2010 as a monthly subscription box that gave women (and eventually men) a curated selection of beauty samples. The boxes solved a specific problem: In a world where people were increasingly shopping online, Birchbox allowed consumers to sample beauty products at home, much like they would at a department-store beauty counter. When they found products they liked, they could buy full-sized versions on its marketplace. The concept quickly took off, allowing Birchbox to raise nearly $100 million in VC funding over the next decade. Birchbox also inspired hundreds of other copycat subscription boxes for everything from sex toys to socks.

But the acquisition price for Birchbox, which was once valued at nearly half a billion dollars, is less than half of the funding it took on.

Lauren Bitar, head of insights at the analytics firm RetailNext, said Birchbox struggled to find a business model that really worked. She points out that the goal of the subscription was to help consumers find products they liked. But once this happened, they didn’t need the subscription box any longer. And since they could purchase these products anywhere, they didn’t need to stick with Birchbox.

“It’s a difficult model to keep up long-term,” she says. “Customers would eventually feel inundated with new products.”

Beauty subscription boxes were easy to copy, quickly leading to fierce competition in the market. Ipsy offered monthly samples, but it also leveraged an army of beauty influencers on social media to keep consumers connected to the brand, and now has 3 million subscribers. And bigger beauty retailers like Sephora and Ulta also launched boxes that were virtually identical to Birchbox, which reportedly has around 300,000 subscribers.

Bitar says that while the subscription model alone is not enough to keep a brand afloat, companies that have combined subscription commerce with technology or content have fared better. FabFitFun, for instance, a quarterly box that delivers a selection of lifestyle products along with a magazine and digital content, has generated 2 million active subscribers. Stitch Fix, which sends monthly or quarterly boxes, has 4.2 million.

“Stitch Fix is effectively a data-science company that has managed to curate clothes that its customers really like,” Bitar says. “They also meet the needs of people in the middle of the country who don’t have access to some of these brands. The subscription model can work, but it can’t be the core selling point.”

Birchbox eventually moved into retail, launching its own stores that focused on sampling and curating beauty products. In 2018, it sold a minority stake of the business to Walgreens, and partnered with the drugstore to launch Birchbox branded in-store experiences. When Birchbox launched, it was relatively inexpensive to acquire customers online. But the cost to acquire customers became steeper as more players entered the market, so it made sense, Beauchamp said, to open stores that would immerse …….

Source: https://www.fastcompany.com/90692072/after-a-decade-of-ups-and-downs-birchbox-is-sold-heres-what-we-learned

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