Case Code: BSTR532
Case Length: 11 Pages
Pub Date: 2018
Teaching Note: Available
Organization: Birchbox Inc.
Industry: Beauty and Personal care, e-commerce
Abstract Case Intro 1 Case Intro 2 Excerpts
In January 2016, Birchbox Inc. (Birchbox), a New-York based beauty products subscription start-up, laid-off 15% of its workforce. The company said the layoffs were done to rebalance the organization and attain profitability and were in line with the demand from its investors. Katia Beauchamp (Beauchamp), co-founder of Birchbox, said, “It’s 100% the right decision for the company.” Earlier that month, Birchbox had had to shelve its plans to expand because it couldn’t draw additional funding from new investors. But Beauchamp remained bullish on the company’s future growth prospects. She said subscriptions were growing and orders of full-sized products had doubled year-on-year.
Birchbox was founded in 2010 by Hayley Barna (Barna) and Beauchamp when they met at Harvard Business School . The idea was to enable consumers to discover great products at their convenience. The concept was popularized as discovery retailing. Birchbox sold curated monthly boxes containing five beauty samples (Skin Care, Hair Care, Make-up, Body Care, and Fragrance) for a fee of $10 a month. The contents of the boxes were assorted and were in accordance with the profile and preferences of the customers, which were captured when they registered on the website. Birchbox also sold full-sized products through its site. By 2016, around 35% of the revenue came from subscribers who went on to buy full-sized products of the samples they had tried. In 2014, Birchbox set up its first physical store in New York and had plans to expand its retail footprint through other similar stores.
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