With new funding, Birchbox could turn a profit next year

By Deanna Utroske contact

- Last updated on GMT

the March 2016 Birchbox (image courtesy of the company)
the March 2016 Birchbox (image courtesy of the company)

Related tags: Marketing, Finance, Birchbox

The iconic beauty subscription box company recently raised significant new financing and is looking to turn its cosmetics and personal care business around in the near future.

The additional $15m of funding came from the company’s current roster of investors. “The money,” ​according to Emma Hinchliffe of Mashable, “is needed to shore up the company after two rounds of layoffs this year and a $60 million investment in 2014 that pressured the startup to operate at a higher level than it was quite prepared for.”

The company itself, through a spokeswoman, has told the press that this round of funding came about because “Birchbox’s investors are very supportive of its ambitious long-term vision, and continue showing their confidence in the business through this round of financing.” ​She went on to say that the $15m will be used “to bridge the company to profitability.”

And internetretailer.com reports that “a source close to the situation says the e-retailer is likely to turn a profit by the start of 2017.”

Places and faces

The company launched its subscription service in Canada in late 2014​. At the time, Birchbox was already an international player, with operations in the US, the UK, Spain, France, and Belgium.

“The success of Birchbox in Europe has allowed the company to look at expansion into new countries, connecting brands with new consumers and driving demand of products by consumers who’ve not previously had the opportunity to experience them,”​ explained the company at that time.

In January of this year, however, Birchbox suspended its Canadian business. It was also in January that the company reduced its staff by 50 people or 15%. In June, further cuts were made and 30 more people were let go.

“The cuts [back in January] were not deep enough to get us where we need to go in the time frame we want.I wish I had been less conservative," ​Katia Beauchamp, co-founder and CEO of Birchbox, has told the press.

Growing while slowing

While on one hand Birchbox is streamlining and regrouping, on the other hand the beauty company is growing.

As the year got underway, Birchbox debuted its own active beauty brand, Arrow. And that athleisure-inspired product portfolio is still growing with a mascara and skin tint coming soon. “The goal with ARROW is to provide subtle color and practical skincare and body products that make women feel fresh and confident wherever their busy days take them,”​ Beauchamp said in a press release.

Birchbox has also added to its executive leadership team this year, bringing in Terre Layton as global vice president of product management and user experience and Fran Gaitanaros as vice president of creative for the company.

And just a few months back, Birchbox took its marketing strategy in a new direction. “This campaign is significant for us in that it’s the first time we’re featuring real customers, the first time we shot a major brand initiative in a square format specifically for social media and mobile consumption and the first time we have unique storylines that build through each marketing touchpoint,” ​Amanda Tolleson, interim chief marketing officer at Birchbox, tells the press.

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