It’s targeted to those who “enjoy using the best products” but who “don’t want to have to work too hard to find them” and promises to “sort through the clutter to send you what works. ” 2. “Discovery Commerce” It isn’t subscription commerce because it doesn’t live and die by the box. It isn’t media because it makes money through the old fashioned selling of actual goods. It is really good marketing With a seamless transition to buy. And bonus -? it’s got all the analytics to prove it and can provide increasingly strong targeting for the brands it sells. 3. Business Model Major revenue streams: Subscription revenue.
For $10/month, a user receives a Box with product samples. This subscription fee needs to at minimum cover the marginal cost of shipping each box (the shipping cost), and also help to cover some of the other major expenses (marketing, overhead, etc. ) “Affiliate” fee, When a customer purchases a sample at dull price trot one to Birch’s suppliers, Birch shares revenue on the total amount of product purchased. Over time, think this will become a more and more important source of revenue for Birch as they understand their users’ tastes better and increase the available supply of reduce samples that they can provide to users.
Birch was making a bet that some percentage of the company’s customers would leap to pay for full-size products after trying out the samples. There are also full- size e-commerce orders that come from non-subscribers. About 15 percent Of the company’s orders come from customers who don’t get the monthly box of sample products now. Suppliers have been providing samples to Birch as a way to reach potential, long-term customers. Suppliers offer the samples as a marketing expense. Birch is 13th a marketing partner and a retail partner”. Engagement:
When you are ready for more of the products you sampled, you can purchase full-size versions directly from the Birch Shop. The shop has a generous loyalty program that rewards you every time you shop, refer friends, and give feedback on your monthly samples. You can redeem Birch Points and save on any full-size or gift purchase. 4. The win-win-win situation is: – customers get to test premium products vivid reduced prices – companies make efficient promotional campaigns with a good target audience that will multiply the strength by recommending it to friends (word of mouth) and becoming customers When they are satisfied With the samples. Birch earns revenues: from customers through the monthly fee, from the companies to promote their products and through lots Of Other ways by also creating on the website a store section and a beauty section with tips, editorials and articles talking about the products. Beauty brands needs Non-directed sampling can be ineffective since the samples don’t reach the right people. (i. E. You walked into a department store and received a sample that was the wrong for your skin type. ) Brands cannot track whether a person went home ND tried it, or whether they bought the full-size product after trying the sample.
Birch shovel: They only send samples to subscribers with the correct profile (e. G. If you have straight hair, you won’t receive a curly hair mousse, and if you are a teenager, you won’t receive an anti-wrinkle cream). As an online service with their own shop, they have the ability to track metrics about whether customers tried the product, how they felt about it (ratings) and whether they converted to full s. Zee, _S_ Organization: Birch actually buys inventory wholesale and operates its own shipping apartment.
The company started out working eight To date, it has brought more than 800 beauty brands – including Elizabeth Arden, Inc. (ARDEN), Esteem Lauder Companies Inc (EL), Smashups and Milliner pleas (JILL) Tony & Guy- on board, and is selling over 6,500 products through its online stores. Investors: Cell Partners, Harrison Metal Capital, Consigliore Brand Capital, First Round Capital, Forerunner Ventures, Leer Ventures (a Opinionated investor), Sam Lessen, Dave Moron and Gary Evanescence plunked $11 million into the company. And now Birch’s total funding is 571. M Marketing Strategy: had no marketing,” says Katie Béchamel, a co-founder. Once people received the boxes, they were making videos and blobs,” spreading Birch virally. The 50-person company is expanding and has been testing an offering for men. 6. Barriers to growth: Fifth company continues to scale up its subscriber numbers within beauty, there’s a point when brands don’t want to produce any more samples, because the trade-off isn’t worth the money, If Birch instead focuses on expanding into new categories such as men and home, as it has started to, its dealing with disgorges where the sample model isn’t as popular or doesn’t exist at all.
Limited market. Birch is still focused on one segment of the market: first-time purchases, But the market will saturate eventually. Birch could, of course, expand to new markets -? it’s already available in the ELK, Spain and Prance, and copycats have cropped all over the rest of the world -? or into new verticals, though opportunities there are limited to categories that already have strong sampling programs, like food. 7. Competition: I. Copycats that copy the business model. 2. Company in other business area targeting the same group of customers.
Some competitors info: Beauty Army Ships To: USA only Ships From: unknown Cost: SSL 2/month Samples: Choose 6 product samples from a selection of 9 Additional Details: Beauty Army is quoted as being for the “beauty obsessed” and curates by some of the industry’s experts. The neat thing about this company is you can choose your samples and the cost is still low. Beautified Ships To: USA Ships Prom: California Cost: $49. 99/quarter (every 3 months) Samples: 8 full sized products in each box Additional Details: Beautified has a neat twist to their boxes.
You have the choice of 8 products from a long list which you can include in your box. This way you’ll always get what you want and only for $49. 99. The downside is that you have to wait 3 months in between your boxes, but it might just be worth the wait. Julep Ships From: Washington State Cost: $19. 99/month Samples: $40 worth Of nail polish and mania/peed products Additional Details: If you have a nail polish fetish and want the latest colors and products, Julep is a great company for you. You’ll receive their latest nail products straight to your door to try for half the price.
Belabor Ships To: Australia and Singapore Ships From: Victoria, Australia Cost: $15 ADD/month Samples: 5 Products Additional Details: Sampled to both Australia and Singapore, the company send a great selection of samples and full sized products to subscribers, There’s even a Belabor for men, distributed for $30 per quarter. Funding: How to react: The company acquired Joliet, a similar business based in Paris, in August. Birch had considered expanding internationally on its own, but met the Joliet team and decided it would be faster and more efficient to do so by acquisition.