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The subscription business model that disruped the cosmetics industry

Romy Gingras, Caitlin Todd, Lisa Troy, Mia VollanDarpan 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

WHAT IS BIRCHBOX ?

+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.

+BUSINESS MODEL Key Partners Brands

Key activitiesCurating and creating relevant beauty boxes targeted for each consumers

Value propositionHelp 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%) 

+COMPETITIVE STRUCTURE

Five forces analysis:

Buyer PowerLow

Threat of Substitution

High

Threat of New EntryHigh

Supplier PowerLow

Competitive RivalryHigh

+Direct Competitors

GLOSSYBOX

BEAUTY ARMY

IPSY

+Value Chain

+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

+How they use IT

Push Communication

Customer Satisfaction Conversion Rate

Optimization Problem

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

+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

+Affiliate Marketing

Commission when they generate a sale

Outsource Pros and cons

+Website development

Inverted news writing pyramid Informal tone Videos Personal profileIts likable, sweet, demonstrative, simple and focuses on content.

+Social Medias

Content created for Social Medias Tailor to each platform Tutorial videos

Influencers• Instagram takeovers Birchbox points

+Changing Industry Structure for Cosmetics

PAST

PRES

ENT

FUTU

RE-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

+Thank you for

listening !