birchbox the future business model of e-commerce
DESCRIPTION
Table of Contents Executive Summary ii Table of Figures ix Introduction 1 E-Commerce 3 -Current Statistics 3 -History of E-Commerce 7 -Mobile Commerce 13 -Tablets and Future of E-commerce 14 -Advantages &Disadvantages of E-Commerce 18 Subscription Business Model 20 -What is Subscription Business Model? 20 Birchbox: the Mother of all Boxes 24 -BirchBox Overview 24 -BirchBox Healthy growth 26 -BirchBox Business Model 27 -BirchBox Challenges 33 Other Good Box Examples 34 -Lacquerous 34 -Manpacks 35 -Nature Box 36 -Why some subscription boxes are successful? 39 Failed Boxes 42 -Ellie 42 -Dollar Shave Club 44 -Rocksbox 46 -Why Boxes Fail? 47 Current Waves that are driving the Market 48 1. Social Commerce 48 2. Private Sales 53 3. Mobile / Location 54 Future E-Commerce Trends 55 1. Data is the beating heart of e-commerce 55 2. Cutting Out the Middle Man 56 3. Always-on shopping experiences 56 4.Social Shopping: Video experience in E-commerce 57 Conclusion 60 Recommendations for BirchBox 62 Bibliography 63 Appendix 76 NOTE: Guys, due to the high demand and time that I spend on sending out this report as a favor, I am starting to charge a fee of $25 if you would like to have my thesis. No more favors! If interested, email me at [email protected]TRANSCRIPT
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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
~7mln./yr
190Global offices:NY, Paris, Barcelona,London
4
11.9400.000
monthly subscribers
mln.venture capital money
employees
revenue
AGENDA• E-commerce
• Subscription Business Model
• BirchBox
• Good & Bad
• Future Trends
• Conclusion
1E-Commerce
econintersect.com
B2C Ecommerce Sales Share,
by Region
2011-2016
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source: emarketer.com
Michael Aldrich Invents Online
Shopping1979
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E-Commerce BIG Influencers
AMAZON MOBILE TABLET
econintersect.com
• 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
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
3BirchBox
BIRCHBOX
SURPRISE in EVERY BOX
E-Commerce Business Model Cycle
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
ONE BIG POINT
HAYLEY BARNA+KATIA BEAUCHAMP
BIRCHBOX
CONTENT
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BOX CONTENT SHOP
1 2 3
360 Degrees of Discovery
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
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.
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
4Good vs. Bad
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NATUREBOX
MANPACKS
LACQUEROUS
MANPACKSTARGET
GIRLFRIENDS
TRENDY PRODUCTS
“SNOOZE” SHIPMENT
S
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
Why FAIL?Don’t solve real
problems
Add no value to the customer
5Future Trends
SOCIAL COMMERCE
PRIVATE SALES
MOBILE/LOCATION
1 2 3
Current Waves of Innovation
Data is the beating heart of E-commerce
Cutting Out the Middle Man
Always-on shopping experiences
Video experience in E-commerce
Future Trends
6Conclusion
• 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”
Do you want to read 76 pages Thesis as well as recommendations for
BIRCHBOX?
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