Brief

Birchbox reaches profitability, launches new TV campaign

Dive Brief:

  • Following a record customer acquisition month in December and continued best-ever growth in Q1, Birchbox is now profitable, the beauty subscription startup told Retail Dive in an email.

  • Birchbox this week opened a brick-and-mortar store in Paris, which joins its flagship New York location. The company now has more than 1 million subscribers globally and 4 million customers total, noting that its brick-and-mortar customers have a lifetime value three times higher than its e-commerce-only customers.

  • Birchbox is also rolling out a series of new initiatives, including a beta launch of a subscription design dubbed “Birchbox Select” that allows for more customization in monthly boxes as well as a new TV advertising campaign premiering this week. 

Dive Insight:

Birchbox, founded in 2010 by Harvard classmates Katia Beauchamp and Hayley Barna, essentially sparked the subscription beauty trend. At a time when beauty shoppers got their samples and testers from department store counters staffed by representatives of major brands, Birchbox seized on the chance to connect with customers online, devising the idea of a monthly shipment of sample collections.

The idea was a hit, though its initial brush with success inevitably attracted competitors, including the likes of big-name brick-and-mortar competitor Sephora, rival beauty subscription service Ipsy (which outpaces Birchbox with 1.5 million subscribers) and even Target. Those pressures conspired to stall Birchbox's expansion into overseas markets, led to the dismissal of 80 of its 300 employees, and ultimately threatened its ability to fill its monthly curated boxes.

But on Wednesday, Birchbox said it has moved to profitability with a leaner staff, and now offers 800 beauty and grooming brands. “I’m proud to share that Birchbox is now profitable, self-funding accelerated growth, and standing on our most solid ground ever,” Beauchamp, now the sole CEO, said in a statement. “Birchbox has evolved and adapted many times, and in 2016, we had to completely change our operating behavior to fast-track profitability and ensure our long-term sustainability as a business.” That fast track included removing “tens of millions of dollars of operating costs,” Beauchamp noted. 

In addition to profits, customer acquisition is often one of the most elusive goals for any startup, and Birchbox appears to have ramped up significantly. Birchbox broke its own previous customer acquisition records in each month this year so far, despite a significantly smaller team and 30% less marketing spend each month, according to the company’s email.

Birchbox has staked its success on what Beauchamp calls the “beauty majority” — women (and men) who care about beauty, skincare and grooming, but aren’t necessarily completely comfortable with traditional beauty outlets.

“As we move forward and continue to grow, we’re laser-focused on reaching the enormous population of consumers who have been underserved by the beauty industry,” Beauchamp said. “We believe that all women, even those who aren't passionate about beauty, deserve an enjoyable, efficient shopping experience, and we’re committed to delivering that in new, evolved ways this year and beyond."

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Filed Under: Corporate News