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Beauty Subscription Service Birchbox Earns $125 Million In Sales!

Posted by: on Jun 5, 2015 | No Comments

Birchbox, a New York City-based startup that was set up by graduates of Harvard Business School in September 2010. The founders, namely Katia Beauchamp and Hayley Barna, had an idea of increasing the demand of beauty products in women by giving them an idea of what products they may buy and what will suit them. For this purpose, Birchbox started a monthly online subscription program; the subscribers then get a box consisting of 4 to 5 beauty-related products, per month. The products go through careful selection and include makeup items, perfumes, skincare products, organic based products and many others. The box sent to customers is actually a sample that has a cost of just $10 each. Birchbox then offers the full the box with more products on its website.

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Raising Funds
Since the time Birchbox was formed, it has successfully gained 800,000 subscribers. The payments from these subscribers make up to around $96 million annually for Birchbox. Making total annual revenue of more than $125 million, the more interesting part about Birchbox’s earnings is that 30% of this amount is earned by selling full-sized products or boxes. As the customers are usually satisfied, or rather attracted to the products they get as samples, around 10% of the subscribers buy the full products later. Statistics from last year that is, 2014, show that half of the subscribers of Birchbox at birchbox.com ended up buying the full-sized boxes. This fact is also what makes Birchbox different from other organizations or companies who attempted to start off the same business.  Following the increased demand of beauty products, Birchbox started another section of the company, selling products for men. This increased the number of subscribers even more. The Birchbox is an established company with almost 250 employees. The growth of Birchbox does not seem to take a stop since it was created; the company has managed to work with more than 800 brands with an investment of only $12 million. Birchbox reached this status with their series of funding.

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Series A
In Series A funding, Birchbox received investments from First Round and Accel Partners and few others. The initial funding began in October 2010 with a seed funding of $1.4 million from these investors. Then in August 2011, Birchbox got a funding of $10.5 million. The company had grown so rapidly that by June 2011, it was working with 25 employees and was subscribed by 45,000 customers.

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Series B
In April 2014, Birchbox launched the Series B funding. Viking Global Investors led this funding and First Round Capital, Accel Partners, Aspect Partners and Consigliere Brand Capital were some of the other investors. Birchbox was able to raise $60 million in this funding and was valued at $485 million.
Due to their success since the time Birchbox was founded, the founders decided to open up their own retail store and also to increase expenditures in advertising and marketing. Birchbox is definitely  did what it took to be number one in the beauty demo supply space. I see nothing but success for this company as the business scales into retail.

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