For Katia Beauchamp, cofounder and co-chief executive officer of Birchbox, digital is a key driver behind her business’s success.
This story first appeared in the March 20, 2015 issue of WWD. Subscribe Today.
“We think of ourselves as a platform that sits between companies and consumers,” said Beauchamp of her business, cofounded with her Harvard business school classmate Hayley Barna. “Four and a half years ago, when we came up with this idea, we thought about beauty inside a box, which was truly different to both consumers and brands.”
Subscribers receive a box monthly containing samples of beauty products. She noted that Birchbox now has more than 800,000 subscribers and extended into men’s products in May 2012 with Birchbox Man. “Our vision is to become the global leader in e-commerce for beauty and grooming, and that won’t be achieved by simply sending a monthly box.”
Within two months of its founding, Birchbox was in all 50 states, said Beauchamp, and in 2012, the brand expanded to France, Spain and the U.K. In 2014, Birchbox added Canada and Belgium to that list. It also has inked many deals with outside partners including a recent one with JetBlue that provides amenity kits to first-class passengers.
Given that there are “hundreds of thousands of launches yearly in beauty,” Beauchamp noted that consumers naturally have issues navigating what has become an ocean of products. As well, she says, that’s complicated because Internet shopping is inherently challenging for beauty companies. “Beauty is a category that consumers want to touch and try and feel,” she noted. “What online’s great at is transactions, when you know exactly what you want, like a favorite moisturizer. But the Internet still lacks the ability to really experience the product.”
That observation spurred Beauchamp and Barna to recognize a problem — and a market opportunity. “We asked ourselves how we could create a retail experience online that brings the delight of offline and the parts of that that are great — like an amazing store associate who makes you feel excited about the category — but the efficacy of online, using data. You get a box monthly of four to five products geared to you, and we create content to teach you about those products, then make the path to purchase seamless by going to birchbox.com. It’s not drop-ship, it’s not affiliate, we are the retailer you buy the product from.” In fact, 30 percent of Birchbox’s revenues come from full-size product sales, said Beauchamp.
The Birchbox consumer’s median age is about 30, said Beauchamp, with a high household income and living in an urban area. That customer is also highly engaged in social media, which contributes to the 500 million monthly impressions on birchbox.com and social media.
After filling out a Birchbox survey, customers receive a personalized “surprise package” of products monthly, containing every category — hair, makeup, skin care and fragrance. “It’s not that there are no two boxes alike, but the box your neighbor receives could be vastly different from yours. We also service a wide range of ages, from teenagers to more mature customers.”
The next step is largely digital, Beauchamp said. “You have the box and we’re on your mind, and then we deliver the content, so you can make the best choices — you’re able to learn what these products can do for you,” she said. “Then, when you’re ready to make that purchase, you’re going to feel great about it. The whole point of Birchbox is to drive that demand — and to capture it.”
A core part of what Birchbox does is capture and analyze data, Beauchamp said. “The vision was always about how can we make this efficient while still making it delightful to consumers,” she said. “Data is the backbone of that. Our aim is to get the products that are most likely to convert [to purchase] to the right people. So we ask customers on the way in to give us a little bit of information, but then as you engage with Birchbox, we learn about you, which means your profile is not a static thing — you are not a static thing, preferences change. As you search products, comment on products and buy products, we’re learning about you through the algorithm we use to give you the right products.”
That data also helps make marketing efforts by companies more transparent, she said. “You can really make a splash without spending a lot of money and be able to measure the outcome [of it],” she said. “We send the products to the most engaged consumers, people who are raising their hand and saying they want to discover [new products and companies], because they are paying to discover. We measure everything, and share it with our brands — we can tell you what this asset generated in ROI [return on investment]. This is something we’re really devout about, and something we feel is a real change — a retailer interacting with our partners like this.” Birchbox’s systems also identify which of the hundreds of thousands of potential customers in their database would be likely consumers of any given brand and thus effective for a sampling campaign.
In July 2014, the retailer opened its first bricks-and-mortar location in New York City’s SoHo neighborhood. “If you’d asked us when we started if we’d go into bricks-and-mortar, we would have said definitely not,” said Beauchamp. “But what we realized, as we were growing the business, was that Birchbox was attracting a new beauty consumer. There were a lot of women who were underserved by the current retail options for beauty, and that inspired us.” Birchbox began testing the concept via pop-up shops and offline shopping events. “What we realized was that having a bricks-and-mortar store was going to benefit our online business significantly. It’s early for us, but we’re excited about what we’re learning offline.”
The bricks-and-mortar door, like its online counterpart, is intended to offer a welcoming, informative, easy-to-shop experience. Thus far, Beauchamp said, the physical door’s customers and the online door’s customers do not overlap much. “We have a different merchandising strategy that feels more online — specific to category, so if you’re looking for a lip or cheek or dry shampoo you can find all of those products together instead of by brand,” Beauchamp said. You can build your own Birchbox there — it’s the only place where you can do that. We also pair content throughout the experience, specifically through our Try Bar, that we change all the time. Editors choose looks that you can try on your own.” And Birchbox will collate data and use it to improve the shopping experience, Beauchamp said.
So what’s next for the retailer, especially given the rising competition in the category? “You’ll see us exploring offline for Birchbox, new markets and we’re definitely going to keep evolving our product as well.”