BIRCH

BOX
The Future Business Model of E-Commerce

Yelena Starikova EUROPEAN UNIVERSITY

September 2013 Business School
Undergraduate Thesis
400.000 monthly subscribers

11.9 mln.
venture
capital money

7mln./yr
~ revenue

190 employees

4 Global offices:
NY, Paris, Barcelona,
London
 AGENDA
• E-commerce
• Subscription Business Model
• BirchBox
• Good & Bad
• Future Trends
• Conclusion
 1
E-Commerce
econintersect.com
B2C Ecommerce
Sales Share,
by Region
2011-2016

source: emarketer.com
Michael Aldrich Invents
Online Shopping
1979
 E-Commerce
BIG Influencers

AMAZON MOBILE TABLET

econintersect.com
 ADVANTAGES DISADVANTAGES

• Overcome Geographical
• Ecommerce Lacks Personal
Limitations

• Lower Costs
& Touch
• Waiting time
• Enable Deals, Bargains, Coupons, • Security
and Group Buying

• Quick search of the product

• Provide Abundant Information

• Open all the Time

 Subscription
2
Business Model
 Frequent

Infrequent

Freemium
 Benefits of Subscription
E-Commerce

1 2 3
CURATION CONVENIENCE TRAIL/
SAMPLING
 3
BirchBox
 BIRCHBOX
SURPRISE in EVERY BOX
 E-Commerce
Business Model Cycle
 E-Commerce Business Model Cycle
Description Subscription
Companies originates BM
New Business originated from offline BirchBox
Model analog.

Other companies clone

BeautyBox.
Copycats good BM with different
GlossyBox
branding, geography.
Several companies begin
Apply to Different replicating the BM in NaturBox,
Categories different product ManPacks
categories.
Companies will innovate
Apply Innovative with pricing, content,
Not another Bill
marketing Strategy marketing, etc..

Website that aggregates N/A

Aggregator specific type of info from
multiple sources.

Source: E-Commerce landscape 2012. by Josh Yang

 HAYLEY BARNA+
KATIA BEAUCHAMP

ONE BIG POINT

 BIRCHBOX
CONTENT
 360 Degrees of Discovery

1 2 3
BOX CONTENT SHOP
 BIRCHBOX BUSINESS MODEL
Problem • There is no easy way to acquire beauty samples.
• Consumers need some extra help in picking up a
new beauty product.
• Young woman between 25 to 39 with an
Ideal Target annual income of $35.000-$55.000
• Female who loves beauty and takes care of
looks.

Unique Value • Beauty products every month at clients

convenience.
Proposition • Flat predictable monthly fee.

1.Subscription service
Solution 2. Original content
3. Online shop

Channels Monthly roster of articles and videos, daily blog

posts, Facebook, Twitter, Foursquare, Pinterest,
and Youtube
 BIRCHBOX BUSINESS MODEL
Revenue • Subscription revenue
Stream • "Affiliate" fee.

• Cost to acquire the samples, marketing,

Cost Structure shipping cost, employees salary, warehouse
cost, technology infrastructure cost.

• Number of new subscribers

Key Metrics • Number of cancellations per month
• Number of people buying products

Birchbox has captured the novelty effect which

Early Adopter gave a lot of publicity in media coverage.

Unfair 1. Unique and original business concept

2. Lead in “beauty product sample” market
Advantage 3. BirchBox collects feedback from customers
and provides results to suppliers.
Value to the customer Value to the brand
• Discovery & • Ability to collect feedback

• „Surprise effect” • Additional distribution channel

• Personal curation
CHALLENGE #1
Limited Sample
Amount

BIRCHBOX CHALLENGES
CHALLENGE #2
BirchBox requires
special size
samples
 4
Good vs. Bad
NATUREBOX

MANPACKS

LACQUEROUS
MANPACKS
TARGET
GIRLFRIENDS

TRENDY
PRODUCTS

“SNOOZE”
SHIPMENTS
 WHY
SUCCESS?

1 2 3
LEAN GOOD GOOD
OPERATIONS PRODUCT MARKETING
STRATEGY
 ELLIE

ROCKSBOX

DOLLAR SHAVE
CLUB
ELLIE
DIDN’T SOLVE
MAJOR
PROBLEM

POOR
SERVICE

QUESTINABLE
MARKETING
STRATEGY
 Don’t solve real problems

Why FAIL?
Add no value to the customer
 5
Future Trends
 Current Waves of Innovation

1 2 3
SOCIAL PRIVATE MOBILE/
COMMERCE SALES LOCATION
 Future Trends
Data is the beating heart of
E-commerce

Cutting Out the Middle Man

Always-on shopping experiences

Video experience in
E-commerce
 6
Conclusion
• customers are
willing to spend over BIRCHBOX is the
$45 monthly on FUTURE?
subscriptions*

• interest in curated
shopping services

• personalized and
meaningful
relationship with the
brand
“NETFLIX of BEAUTY”
 Do you want to read 76 pages Thesis as
well as recommendations for BIRCHBOX?

Contact me: starikovayelena@gmail.com