BirchBox raises $1.4M for cosmetic site

Katie Gatto · October 27, 2010 · Short URL:

BirchBox offers mailed beauty samples, advice and discounts to users, for $10 a month

Buying new makeup online can be a risky venture. You can't see what you are getting, or test it out. The sheer volume alone is enough to make the idea intimidating. If you put in the word makeup on the Macy's site, 2496 results pop up. The same search in Amazon yields a mind-boggling 52,628 results. Even at a drug store, such as CVS, the number of choices is 3117. A poor choice can also be costly. Trying out a tube of Viva Glam GaGa, only to find out you hate it, is $14.95 down the drain. At Sephora the same mistake can set you back $30.

With buyer caution and some serious competition, how can emerging brands reach out to consumers without getting lost in the fray? The solution is simple: samples. It is a time-tested notion: giving your customer a chance to try before they buy. If you have ever test driven a car, or downloaded a trial version of software, then you have been marketed to, with a sample.

A new player is aiming to help new high-end cosmetics bring the sample model home. New York City based, BirchBox raised $1.4 million in a seed round of funding, after launching in September of this year. The round was led by First Round Capital and Accel Partners. Other investors in the round included: Sam Lessin, Dave Morin, Michael Dearing, Kirsten Green, and Gary Vaynerchuk.

The company charges a $10 monthly fee to users, who also have the option of paying $110 for the year. Right now, the site has roughly 2,000 subscribers.  In exchange for their money, they get a box of premium-sized samples. A premium-sized sample, is usually bigger then a one-use standard sample, but not as large as a full sized item. If users like a sample, they can buy the real thing through BirchBox's website, and collect points. Those points can then be used for discounts on future purchases. The site also offers articles and how-to content, related to the products that they sample and sell.

Competition includes sample subscription services like Yellow Box Beauty or TestTube. Though, for now, it is coming in at a lower price point, then its competitors. Yellow Box Beauty costs users $34.95 a month, and Test Tube comes in at $29.95, shipping products every three months. One could also argue that the site is in competition with every makeup counter in the country, which give out samples to customers as part of their marketing.

The only question left is can the sample model really be effective? Research says it can. According to a 2004 study, entitled, The Effects of Free Sample Promotions on Incremental Brand Sales,  showed that the use of free samples can produce measurable effects on sales. Those effects can last as long as one year after the sample was received. So, this model has a lot of potential. 

BirchBox did not respond immediately to request for comment.

(Image courtesy of BirchBox)

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