Birchbox Breaks into New Markets to Compete in Subscription Commerce

4/16/12Follow @jpruth

It takes a touch of finesse to win over consumers in a market crowded with e-tailers eager to ship products to one’s front door. Now New York’s Birchbox is finding out whether it has that touch.

The e-retail company, which ships curated wares, made its first splash offering assorted cosmetics and beauty products for women delivered in monthly doses to its subscribers. The company has diversified this month into grooming and lifestyle items for men with its new offering, Birchbox Man, and is weighing other ways to connect brands with customers. “We’re trying to redefine the rules of retail,” says Birchbox co-founder Katia Beauchamp.

Birchbox Man uses the same subscription model the company launched with in 2010. Because of the heft of the items shipped through Birchbox Man, those subscribers pay $20 per month compared with $10 per month charged for the service for women. Birchbox also offers an online store that lets customers shop for additional products such as backpacks and gadgets. In the highly competitive subscription commerce sector where some players have already faltered, Beauchamp says, Birchbox has positioned itself as a place for consumers to discover new products. The website is populated with lifestyle articles, on topics such as how to mix cocktails, to keep buyers coming back.

“We think e-commerce, marketing, and editorial can live together harmoniously and be a way for brands to connect with the right customers,” she says.

Extending Birchbox’s reach into products for men may help the company exploit a largely untapped market. Beauchamp says men, as well as women who buy gifts for men, previously expressed interest in a version of Birchbox that caters to guys. Last November Birchbox offered a limited edition box delivered to men for the holiday season. “We recognized there was pent-up demand,” she says. “When we looked at who was buying, 50 percent of the buyers were men buying for themselves.” That led Birchbox to gather more data on consumer interest in a subscription service for men and then roll out the new offering.

Birchbox has grown to more than 100,000 paid subscribers since its inception in 2010, Beauchamp says. The company, backed by Accel Partners, First Round Capital, Lerer Ventures, Harrison Metal, Forerunner Ventures, Consigliere, and others, has thus far raised some $11.9 million in venture and seed funding.

And the company is continuing its evolution with a new partnership with a popular television show that may be a sign of things to come. Last Wednesday, Birchbox announced it would offer subscribers a “Gossip Girl”-themed promotional package of products timed with the show’s season finale in May. The partnership puts a different spin on how brands get marketed to consumers by pairing items with the characters and drama on screen. The agreement is somewhat reminiscent of House Party working with cable channel AMC to offer products tied to the season premiere of “Mad Men.” Such matchups aim to create real-world reminders for fans long after watching shows. “It’s a way to engage a customer on a deeper level,” Beauchamp says. “You will be seeing more partnerships from us.”

Though businesses such as Birchbox help introduce brands to new potential customers, not every player in this sector is gaining traction. His Black Box, launched last year ostensibly to be the male-themed rival to Birchbox, was acquired in February by MenScience Androceuticals in Miami. MenScience distributes skin care products for men, and through the deal it picked up customers, inventory, and product contracts from His Black Box. However, MenScience said via e-mail that it does not currently plan to continue the monthly service that His Black Box once provided.

New York-based GuyHaus emerged last August to also take a stab at this sector, offering shaving products and other items for men but has since gone on hiatus and stopped taking orders. GuyHaus had no comment on its status.

Birchbox plans to stay competitive, Beauchamp says, by helping generate more demand for the products it sends to subscribers, which pleases the brands it works with. “You go from being something anonymous to being a real product [in the customer's] life,” she says. The company is working quickly to tailor its offerings for men with a balance between grooming and lifestyle, to keep them talking about the products. “There might be a hesitance to talk about an amazing pomade,” Beauchamp says, “but we could imagine them saying, ‘Aren’t these cool headphones?’ or, ‘Check out this great pocket square.’”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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