Daily Dose of iQ: Online Cosmetics Retailer Birchbox Opening 2 New Locations in 2016

Jul 15, 2015 — Allan Pulga
Birchbox_salon_in_New_York_City_-_Source_-_Digiday.jpg

Last month, we blogged about Birchbox's pop-up stores at select Gap locations. On Monday (July 13), Birchbox announced it is expanding its brick-and-mortar business with two new stores (one Birchbox and one Birchbox Man) in 2016.

The online cosmetics retailer opened its first physical store last year (pictured above) in New York's SoHo district.

The company is inviting customers to vote online to determine three cities for pop-up stores. Those stores' performance will determine where the two new 2016 stores will be built.

Internet Retailer reported (July 13) that Birchbox is inviting customers to vote online to determine three cities where the company will open pop-up stores. The location of the two new 2016 stores will be determined by the pop-up stores that perform best. Voting is open until Friday, with the locations of the pop-up stores being announced in early August.

“Our offline customers have a higher lifetime value with us online, so for us, this isn’t just another cute pop-up,” Birchbox CEO Katia Beauchamp told Internet Retailer. “It’s a serious step toward further retail expansion and a way for us to test the waters in new markets.”

The move from online to offline is something Warby Parker has done and other companies -- such as Fabletics, BaubleBar, and Blue Nile, according to Internet Retailer -- have done in recent weeks as well.

Bloomberg reports that Birchbox subscribers have bumped Sephora's sales 5% and Ulta's sales 6%.

Digiday identified (July 14) an interesting motivator behind Birchbox's offline ambitions. Birchbox's business model is based on subscriptions: It sends sample-sized beauty products to its 1 million monthly subscribers, and sells full-sized versions of its entire product lineup in its online store.

"Of those subscribers, about half regularly make purchases on birchbox.com; about 35% of Birchbox’s revenue is earned from e-commerce," wrote Digiday's Hilary Milnes. "The company wants to see those numbers grow, so it is investing in a physical retail presence.

"Birchbox’s problem, however, is that subscribers are buying the products they first tried in their boxes from the brand’s competitors. A June Bloomberg study found that Sephora’s sales were bumped 5% by Birchbox subscribers; Ulta saw a 6% bump."

Birchbox is hoping combat that trend with physical stores of its own.

Topics: Wireless Trends, Customer Experience, e-Commerce

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