Pioneering Beauty Startup Birchbox Turns Profit After Tough 2016
Status: Available Now!
Type: News
Date: Wednesday 12 April 2017, 12:00 AM
Media: Forbes

About the organization Birchbox:
Type: Business
Sub-Types: Website, Retailing Agent, Internet, E-Commerce, Cosmetics, Beauty, Online Store, Subscription Service
Notable Organizations: Birchbox, Forbes
Beauty sampling startup Birchbox has turned a profit for the first time after a year marred by mass layoffs and buoyed by an inside round. Cofounder and CEO Katia Beauchamp described 2016 as a "scary" time for the business, which had been bleeding cash thanks to high operating costs and a focus on growth through pricey customer acquisition. The pioneering company kickstarted the subscription box craze with its 2010 launch, spawning hundreds of copycat competitors as well as inspiring successful iterations like Dollar Shave Club. Beauchamp called the past 12 months a "retraining," with the New York-based business shedding 30% of its U.S. staff and cutting out tens of millions of dollars in costs, including overhead, marketing spend, and logistics. The company automated some of its procedures, removing human contact to cut the cost of, for example, assembling its $10-per-month curated boxes of sample-sized makeup, skincare, and haircare products. Birchbox's merchant team also renegotiated margins with its partners, which range from small beauty brands to multinational cosmetics conglomerates. "Our generosity wasn't sustainable," Beauchamp said. "Itís like letting people move into an apartment and never raising the rent."
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