As a student at Harvard Business School, Katia Beauchamp developed a passion for shopping online. The fashionista couldn't resist chic finds like a Walter shift dress and Madewell skinny jeans on budding e-commerce curators Gilt and Shopbop. But the former commercial real estate agent, now 29, wasn't willing to buy new makeup that way. Why? When purchasing something that she applies to her skin and costs up to $1,000 an ounce, "I have to try it first," says Beauchamp.
So when it came time for the 2010 graduate to find a job, she teamed up with her best friend and business-school classmate Hayley Barna, 26, a former management consultant, to launch a company that allows e-shoppers to do just that. Beauchamp fired off e-mails to beauty-company CEOs asking for samples that shoppers could try at home before making a purchase online. By that spring, the pair had amassed more than 1,000 samples from a handful of brands, including Benefit, Kiehl's and Nars. It was enough to send out their first beauty boxes to 200 takers. The idea rapidly grew into Birchbox, a more than $12 million-a-year business that has over 100,000 paying customers in the U.S.--more than twice the number from six months ago.
The subscription-based business works like this: cosmetics companies supply Birchbox with free samples of their latest products, which are selected with input from Birchbox editors, who bundle them into batches of four or five and ship them to your doorstep for $10 a month. Birchbox also takes a cut when subscribers purchase full-size versions of the products on its website.
The idea is catching on elsewhere. Since Birchbox debuted, more than 20 other beauty-box sellers have launched in the U.S., including Beauty Army, TheLookBag and Sample Society. Dozens of similar start-ups have surfaced in other parts of the world, including the United Arab Emirates (GlamBox), Turkey (Vanilya Club), India (Ritzbox) and Hong Kong (Glamabox). Of course, the $380 billion beauty industry has long used free samples and pretty packaging to seduce shoppers. But with beauty boxes, customers pay for somebody else to sift through countless eye creams, lip balms and blushes. The boxes give cosmetics consumers the feeling of having a "friend who's just a little bit more in the know," says Mintel beauty analyst Vivienne Rudd.
Beyond appealing to cosmetics junkies, the boxes are a low-cost way for smaller brands to get consumers overwhelmed by choice to try their stuff. "These services are cherry-picking the best brands for you," says Rudd. "It takes the fear factor out of things." As the beauty business has grown in recent years--global beauty sales rose 7% in 2010, according to Euromonitor--thousands of niche brands have flooded the market, leaving consumers with more of the personalized boutique products they love but also more confusion. And as more people buy online instead of at department stores--Web sales of beauty products in the U.S. rose 25% from 2005 to 2010, according to Kline & Co.--beauty boxes, which rely on social media and online interactions to build awareness, are well poised to profit.