Ecommerce analysts who’ve been reading the marketing runes over the years will know that the rage for peddling “things in a box” kicked off in a big way a couple of years ago and then fizzled. Many of the ideas — sex toys in boxes, booze in boxes, razors in boxes – turned out to be fads with little longevity. But a few things-in-boxes ideas have gone from strength to strength, proving much more durable. And Birchbox, purveyor of monthly subscription boxes of beauty samples and one of the most successful ecommerce startups in New York, is definitely among them.
Success in a box
It doesn’t take a genius ecommerce analyst to appreciate that if a startup successfully raises $60 million in Series B, as Birchbox has just done, it’s convinced some astute investors that it’s got a honey of a business model. Attracting 800,000 subscribers in three-and-a-half years and generating $90 million in annual sales probably had something to do with it. Add to that the fact that the full-size versions of its products that it sells on its ecommerce site now account for an extra 30 percent of its revenue, and the annual total rises to $125 million.
Not bad for a startup which, prior to the Series B, had raised just $12 million in venture funding. Today, it works with 800 brands and employs 250 staff.
Perhaps the question forming on the lips of the intrigued ecommerce analyst at this point is why a company that appears to be awash with revenue should decide to raise such a huge sum?
A big idea
For Birchbox’s co-founder and co-CEO Kate Beauchamp, it’s all to do with the realization that what started out as a small idea has actually turned out to be a big idea. Birchbox has been actively growing the market in beauty products, not by competing with bricks-and-mortar stores but by transforming passive beauty shoppers to passionately active ones online, (however it did open a bricks-and-mortar store in Manhattan in March).
Big ideas, Beauchamp says, call for big capital. The company will use the money to drive growth. Some will go into increased marketing, probably including TV and magazine advertising, while international expansion will probably gobble the rest (Birchbox is eyeing international markets, including Canada, France, Spain and the UK).