Birchbox disrupted the cosmetics industry with a subscription business model that allows customers to discover and try new beauty products monthly without leaving home. Since launching in 2010 with 1,200 subscribers, Birchbox has grown to over 1 million subscribers and 800 brand partners in six countries. Birchbox's value proposition is providing customized beauty boxes targeted to each customer's preferences using a combination of e-commerce, social media, and marketing strategies. While competition is high from companies like Glossybox and Ipsy, Birchbox utilizes partnerships, customer data, and targeted samples to maintain its leading position in the subscription cosmetics market.

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The subscription business model that disruped the cosmetics industry
Romy Gingras, Caitlin Todd, Lisa Troy, Mia Vollan
Darpan Agarwal Borislav Blagoev, Darko Smilevski

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AGENDA
• INTRODUCTION
• BUSINESS MODEL
• COMPETITIVE STRUCTURE
• VALUE CHAIN
• HOW THEY USE I.T.
• INTERNET MARKETING
• CHANGING INDUSTRY STRUCTURE
• CONCLUSION

3. WHAT IS BIRCHBOX ?

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BIRCHBOX DEVELOPMENT
 2010 : Birchbox launched with 1,200 subscribers, 20 brand partners, and 6
employees
 2012 : Birchbox for Men
 2014 : Store opening in NYC & Washington D.C.
 2015 : Over 1 Million subscribers, 800 brand partners, 600 employees in six
countries
 Valued at $ 485M with $ 71.9M raised.

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BUSINESS MODEL
Key Partners
Brands
Key activities
Curating and creating
relevant beauty boxes
targeted for each
consumers
Value proposition
Help customers to
discover and try the best
new beauty products
from the comfort of their
homes
Customer
relationships
• High level of
customization
• Strong community
built on social media
• Reward system
Customer segments
• Women who enjoy
beauty products but
don't want to work too
hard to find them
• Men aged 25-35 who
are willing to try new
things in regards to their
shaving routine, hair,
and skincare
Key resources
• Partnerships with
brands
• Beauty knowledge
• Customer data
Channels
• Mailbox
• Website
• Social media
• Brick-and-Mortar
Stores
Cost Structure
• Logistics
• Technology
• Marketing
• COGS
• Labour & HQ
Revenue Streams
(Estimated in 2015 $170M a year)
• Subscription fees
• Online Sales (30%)

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COMPETITIVE STRUCTURE
 Five forces analysis:
Buyer Power
Low
Threat of
Substitution
High
Threat of New Entry
High
Supplier Power
Low
Competitive Rivalry
High

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Direct Competitors
GLOSSYBOX
BEAUTY
ARMY
IPSY

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Value Chain

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Primary Activities
Operations
Outbound
Logistics
Marketing
& Sales
Service
Inbound
Logistics
• Selected Samples
• Outsourcing of
Packaging
• Free
Samples/partnership
• Inventory Wholesale
• Outsourcing of
distribution
• E-commerce Platform
• Targeted samples
• Surprise effect
• Product category
• Discount points
• Feedbacks
• Editorialized
description
• Tutorials

10. + How they use IT
Push Communication
Customer Satisfaction
Conversion Rate
Optimization Problem

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Internet Marketing
” Starting with the content will reward you as you grow, as well as later on. “

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E-mail Marketing
 Still one of the most important lead
sources.
• Follow up emails
“We forgot something in your February box”
• Sense of urgency
“HURRY!” “SAVE TO DAY!” “LIMITED
NUMBER”
 Holidays/seasons
 Rating
 Customer purchasing journey

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Affiliate Marketing
 Commission when they generate
a sale
 Outsource
 Pros and cons

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Website development
 Inverted news writing pyramid
 Informal tone
 Videos
 Personal profile
Its likable, sweet, demonstrative, simple and focuses on content.

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Social Medias
 Content created for Social Medias
 Tailor to each platform
 Tutorial videos
 Influencers
• Instagram takeovers
 Birchbox points

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Changing Industry Structure for Cosmetics
PAST
PRESENT
FUTURE
-Limited options for
retailers
-Trends driven by
celebrities
-Internet used only in
the marketing strategy
- Bloggers and
trendsetters play an
important role
- E-commerce as
another way to reach
customers
- Customization and
recommendation
software
- Omni-channel
retailing
- Innovation through
technology for
engaging client
- Blurring borders to
reach new markets

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Thank you for
listening !