Subscription Services Just Got Bigger Than You Ever Thought They Would; Birchbox Raises $60M

Birchbox.jpg

The beauty e-commerce site and subscription service is now valued at $485 million.

By Betsy Mikel (Editor, Women 2.0)

Of the roughly gazillion online subscriptions services out there, Birchbox has emerged as one of the few that could not only stay afloat, but also expand successfully — and shake up the beauty industry with huge revenues. And now, they’re raking in the investment capital with a $60 million round of Series B funding, bringing the company’s valuation up to $485 million.

For the past 4 years, Birchbox has been making money off of the beauty samples cosmetic counters give away for free. For $10 a pop, subscribers sign up to receive a monthly box of the samples that are tailored to their personal interests. If they like a particular cosmetic, fragrance or hair product in one of their boxes, subscribers can order the full-sized product from the Birchbox site. With 800,000 subscribers, plus 30% of their revenue coming from full-sized products ordered off Birchbox.com, the company is bringing in $125 million per year. Add to that last month’s news that they’re preparing to open a brick and mortar location in New York.

Which begs the question: Does Birchbox really need any more money?

According to Fortune, Birchbox has big plans for the $60 million, which include:

  • Ramping up marketing, with potential TV and magazine ads

  • Expanding to Canada and other countries like France, Spain and the UK

  • Developing its own products

  • Continuing to expand into retail

Birchbox "started as an idea that some people considered to be a small idea, but not necessarily a core part of the industry,” Katia Beauchamp, co-CEO and co-founder of Birchbox told Fortune. “We're growing the market, and we realize we have a big idea.”

Birchbox isn’t the only cosmetics subscription service out there. Other companies are catching on and are edging into the market, which may explain why Birchbox is looking to expand both its customer base and the products it can offer them. For example Glossybox, the European competitor to Birchbox, raised $72 million in 2012.

Photo via Angie Six / flickr.

What do you hope to see next from Birchbox?

 


About the author: Betsy Mikel is the managing editor of Women 2.0 and runs the content consultancy Aveck. She has a degree in journalism from the University of Missouri and a lifelong obsession with French language and culture. When she's not biking all over every city she visits to find its best taqueria, you can find Betsy on Twitter at @betsym.