Birchbox Profile Summary
1. Targets:
It’s targeted to those who “enjoy using the best products” but who “don’t want to have to work too hard to find them” and promises to “sort through the clutter to send you what works.”
2. “Discovery Commerce”
It isn’t subscription commerce because it doesn’t live and die by the box. It isn’t media because it makes money through the old fashioned selling of actual goods. It is really good marketing with a seamless transition to buy. And bonus — it’s got all the analytics to prove it and can provide increasingly strong targeting for the brands it sells.
3. Business Model
Major revenue streams:
Subscription revenue. For $10/month, a user receives a Box with product samples. This subscription fee needs to at minimum cover the marginal cost of shipping each box (the shipping cost), and also help to cover some of the other major expenses (marketing, overhead, etc.) "Affiliate" fee. When a customer purchases a sample at full price from one of Birchbox's suppliers, Birchbox shares revenue on the total amount of product purchased. Over time, I think this will become a more and more important source of revenue for Birchbox as they understand their users' tastes better and increase the available supply of product samples that they can provide to users. Birchbox was making a bet that some percentage of the company’s customers would leap to pay for full-size products after trying out the samples.
There are also full-size e-commerce orders that come from non-subscribers. About 15 percent of the company’s orders come from customers who don’t get the monthly box of sample products now.
Suppliers have been providing samples to Birchbox as a way to reach potential, long-term customers. Suppliers offer the samples as a marketing expense.
Birchbox is “both a marketing partner and a retail partner”.
Engagement:
When you are ready for more of the products you sampled, you can purchase full-size versions
It’s targeted to those who “enjoy using the best products” but who “don’t want to have to work too hard to find them” and promises to “sort through the clutter to send you what works.”
2. “Discovery Commerce”
It isn’t subscription commerce because it doesn’t live and die by the box. It isn’t media because it makes money through the old fashioned selling of actual goods. It is really good marketing with a seamless transition to buy. And bonus — it’s got all the analytics to prove it and can provide increasingly strong targeting for the brands it sells.
3. Business Model
Major revenue streams:
Subscription revenue. For $10/month, a user receives a Box with product samples. This subscription fee needs to at minimum cover the marginal cost of shipping each box (the shipping cost), and also help to cover some of the other major expenses (marketing, overhead, etc.) "Affiliate" fee. When a customer purchases a sample at full price from one of Birchbox's suppliers, Birchbox shares revenue on the total amount of product purchased. Over time, I think this will become a more and more important source of revenue for Birchbox as they understand their users' tastes better and increase the available supply of product samples that they can provide to users. Birchbox was making a bet that some percentage of the company’s customers would leap to pay for full-size products after trying out the samples.
There are also full-size e-commerce orders that come from non-subscribers. About 15 percent of the company’s orders come from customers who don’t get the monthly box of sample products now.
Suppliers have been providing samples to Birchbox as a way to reach potential, long-term customers. Suppliers offer the samples as a marketing expense.
Birchbox is “both a marketing partner and a retail partner”.
Engagement:
When you are ready for more of the products you sampled, you can purchase full-size versions