Birchbox: No Longer Just in Your Mailbox
Birchbox was in the news again this week as they announced a 15% cut in employees, shrinking the team by 45 people. The time has come for this venture-funded company to start turning a profit, and one question now remains: Are they slimming down to stay afloat in a sea of other start-up mail order beauty companies, or is this ship sinking?
Katia Beauchamp, Birchbox co-founder and Chief Executive Officer, told PandoDaily that, “The staff reduction at Birchbox was based more on a view of the broader technology and stock markets slide, not on the future of the company.” Sucharita Mulpuru, a retail analyst at Forrester Research, said, “It’s very hard to launch a brand these days that’s just online-only. It’s an incredibly difficult and crowded e-commerce environment.”
Birchbox, founded in 2010 as a start-up, offers inexpensive, curated boxes of makeup and skincare samples that arrive monthly to customers' doorsteps by subscription. Its initial growth was fueled by its genius model—after subscribers tested the sample-size goodies, many would end up purchasing the full-size version of at least one of their products. In 2015, the company reported that 35% of its revenue comes from e-commerce sales of full-size products.
As one of the first ”box of the month" companies, Birchbox found success in a previously untouched market. Competitors like Glossybox and Ipsy quickly emerged and other industries, like the pet supply sector (BarkBox), soon adopted this new retailing approach.
Birchbox's New York City shop at 433 West Broadway, between Prince and Spring. Image credit: Birchbox.
Before Birchbox began laying off its employees, they did consider new ways to expand business, by establishing storefronts and pop-ups across the states. In July 2014, Birchbox SoHo opened its doors as the company’s flagship brick-and-mortar location, which followed the current trend of online retailers (like Amazon) creating physical retail spaces in addition to their ecommerce stores.
Last summer, Birchbox took its show on the road and created pop-up shops in three major U.S. cities: Atlanta, Chicago, and Los Angeles. They turned two shipping containers into mini shops, allowing customers to browse and purchase full-size beauty, grooming and makeup products, as well as participate in other special events and activities. They are now testing out different geographic markets before selecting which location will be home to their second store.
A Birchbox pop-up shop. Image credit: Second City Style.
Will thinking outside of the box save this low-cost beauty company? Only time will tell.
