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B I R C H B O X
The Future Business Model of E-Commerce
Yelena StarikovaSeptember 2013
EUROPEAN UNIVERSITYBusiness SchoolUndergraduate Thesis
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~7mln./yr
190Global offices:NY, Paris, Barcelona,London
4
11.9400.000
monthly subscribers
mln.venture capital money
employees
revenue
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AGENDA• E-commerce
• Subscription Business Model
• BirchBox
• Good & Bad
• Future Trends
• Conclusion
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1E-Commerce
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econintersect.com
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B2C Ecommerce Sales Share,
by Region
2011-2016
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source: emarketer.com
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Michael Aldrich Invents Online
Shopping1979
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E-Commerce BIG Influencers
AMAZON MOBILE TABLET
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econintersect.com
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• Overcome Geographical
Limitations
• Lower Costs
• Enable Deals, Bargains, Coupons,
and Group Buying
• Quick search of the product
• Provide Abundant Information
• Open all the Time
• Ecommerce Lacks Personal Touch
• Waiting time
• Security
&
ADVANTAGES DISADVANTAGES
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2Subscription
Business Model
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Frequent
Infrequent
Freemium
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CURATION CONVENIENCE TRAIL/SAMPLING
1 2 3
Benefits of Subscription E-Commerce
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3BirchBox
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BIRCHBOX
SURPRISE in EVERY BOX
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E-Commerce Business Model Cycle
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New Business Model
Copycats
Apply to Different Categories
Apply Innovative marketing Strategy
Aggregator
Description SubscriptionCompanies originates BM originated from offline analog.
BirchBox
Other companies clone good BM with different branding, geography.
BeautyBox.GlossyBox
Several companies begin replicating the BM in different product categories.
NaturBox,ManPacks
Companies will innovate with pricing, content, marketing, etc..
Not another Bill
Website that aggregates specific type of info from multiple sources.
N/A
Source: E-Commerce landscape 2012. by Josh Yang
E-Commerce Business Model Cycle
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ONE BIG POINT
HAYLEY BARNA+KATIA BEAUCHAMP
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BIRCHBOX
CONTENT
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BOX CONTENT SHOP
1 2 3
360 Degrees of Discovery
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Problem
Ideal Target
Unique Value Proposition
Solution
Channels
BIRCHBOX BUSINESS MODEL
• 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
annual income of $35.000-$55.000• Female who loves beauty and takes care of
looks.
• Beauty products every month at clients convenience.
• Flat predictable monthly fee.
1.Subscription service2. Original content3. Online shop
Monthly roster of articles and videos, daily blog posts, Facebook, Twitter, Foursquare, Pinterest, and Youtube
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RevenueStream
Cost Structure
Key Metrics
Early Adopter
Unfair Advantage
BIRCHBOX BUSINESS MODEL
• Subscription revenue• "Affiliate" fee.
• Cost to acquire the samples, marketing, shipping cost, employees salary, warehouse cost, technology infrastructure cost.
• Number of new subscribers• Number of cancellations per month• Number of people buying products
Birchbox has captured the novelty effect which gave a lot of publicity in media coverage.
1. Unique and original business concept2. Lead in “beauty product sample” market3. BirchBox collects feedback from customers
and provides results to suppliers.
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Value to the customer Value to the brand
• Discovery
• „Surprise effect”
• Personal curation
• Ability to collect feedback
• Additional distribution channel
&
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CHALLENGE #1Limited Sample
Amount
CHALLENGE #2BirchBox
requires special size samples
BIRCHBOX CHALLENGES
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4Good vs. Bad
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NATUREBOX
MANPACKS
LACQUEROUS
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MANPACKSTARGET
GIRLFRIENDS
TRENDY PRODUCTS
“SNOOZE” SHIPMENT
S
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WHY SUCCESS?
LEAN OPERATIONS
GOOD PRODUCT
GOOD MARKETING STRATEGY
1 2 3
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ELLIE
ROCKSBOX
DOLLAR SHAVE CLUB
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ELLIEDIDN’T SOLVE MAJOR
PROBLEM
POOR SERVICE
QUESTINABLE MARKETING
STRATEGY
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Why FAIL?Don’t solve real
problems
Add no value to the customer
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5Future Trends
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SOCIAL COMMERCE
PRIVATE SALES
MOBILE/LOCATION
1 2 3
Current Waves of Innovation
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Data is the beating heart of E-commerce
Cutting Out the Middle Man
Always-on shopping experiences
Video experience in E-commerce
Future Trends
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6Conclusion
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• customers are willing to spend over $45 monthly on subscriptions*
• interest in curated shopping services
• personalized and meaningful relationship with the brand
BIRCHBOX is the FUTURE?
“NETFLIX of BEAUTY”
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