Most beauty brands target women who are make-up buffs. Women who are happy to experiment, who take an interest in browsing cosmetic counters and who watch YouTube’s beauty gurus for recommendations. Birchbox was not designed for those women.
"Birchbox taps into a new market of consumers. We are really focused on women who are not passionate about or obsessed with beauty," Katia Beauchamp, co-founder and chief executive of Birchbox, explains.
Beauchamp and fellow co-founder Hayley Barna (who left her role as co-chief executive in 2015) established the monthly-product-box subscription company because they were themselves "average beauty consumers" who found discovering and shopping for beauty items far too challenging.
"There’s so much friction at all the touchpoints between beauty products and the consumer. Many customers were just opting out. The number of products out there is overwhelming – trust me, I’m selling them," Beauchamp says with a chuckle.
Fresh out of Harvard Business School, neither Beauchamp nor Barna had any experience in the beauty industry or in marketing. In 2010, when the duo first launched Birchbox from an on-campus apartment, they had to cold-call and cold-email every beauty brand chief executive they could reach.
A different customer
The problem, as Beauchamp views it, is that the beauty industry is grounded in new products and launches – a process that relies on women who already care about, say, the latest lipstick. "We’re not looking to change our subscribers’ relationship with beauty," Beauchamp says. "We want to tell her: ‘We’ll do the work for you; you can stay passive.’"
Birchbox’s customers are not scared or bewildered by make-up – they’re just not that bothered. So why would 100,000 of them in the UK subscribe to the service?
Beauchamp replies: "Because they’re smart women who have been relying on the same products for a while and are wondering if there’s anything better out there. At the same time, they don’t want to invest too much time and money in the search, so they let us curate it for them… with a bit of fun surprise thrown in."
Hybrid retailer
The model seems to be working. Globally, Birchbox has a million monthly subscribers and a total of four million customers – thanks to an online shop where people can buy the brands that have been sampled in the beauty boxes. Currently, 35% of revenue comes from online shopping, and 50% of Birchbox subscribers will buy full-sized products from the store. "We view ourselves as a hybrid marketing media retailer," Beauchamp says.
The success of the subscription service is a combination of product curation and designer tie-ups that lead to limited-edition boxes and partnerships. For its April box, Birchbox partnered fashion retailer Boden to cross-promote to each other’s customer base.
Birchbox’s ability to personalise products in each box for the subscriber is also key to its appeal. "We take their profile data, what they buy, what they ‘favourite’… it’s our own way of scrolling for happiness. We look for what makes people happy, convert and stay," Beauchamp says.
Word of mouth
The company also adds value for its customers with content on its website, which includes a lifestyle blog, articles about products and how-to videos –created by the team as well as by influencer partners. The site also hosts "unboxing" videos from others.
"The product itself [the box] has to recruit customers for us," Beauchamp says. "It has to be so good that customers want to share it, talk about it, post online… our growth is driven by word of mouth."
This strategy is partly to do with building a brand image of intimacy and trust, and partly because there is no easy way to reach its target audience, she says: "Many of the women we target don’t trust the beauty industry. But when a customer is the one talking about you, they become your biggest ally because they started out as someone sceptical."
Birchbox amplifies its reach with digital marketing, which is currently handled by Grow. But it doesn’t target beauty-focused influencers, finding its customers are more likely to be interested in lifestyle bloggers or parenting sites where beauty is part of a lifestyle, not the main topic. In the UK, products that perform best tend to be those that also tackle problems. "Dry shampoo tends to do really well – and suncare," Beauchamp notes.
Another trend is the "no make-up" look: "It means skincare has become an obsession because the look relies on great underlying skin. Brow products, too, have become very significant as the look also demands a naturally defined brow."
There’s an element of discovery with each box as Birchbox partners new and independent brands as well as more established ones such as Benefit.
Bricks and mortar
This approach to beauty was crystallised with the launch of Birchbox’s first physical store in Soho, New York, last year. Another shop opened in Paris in April.
The stores are organised by type of product, not by brand. They also offer beauty classes, makeovers and the opportunity for customers to build their own box in-store.
Beauty brands were "super-reluctant" to move away from the brand-merchandising format they are so familiar with, Beauchamp says: "It wasn’t easy at first, but we’ve now proven our reputation. We’re not doing this to be cute or contrarian – every customer we bring them is an incremental customer they can’t reach any other way."