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4 Things You can Learn From E-commerce Startup Birchbox

Birchbox, which we covered extensively back in April, is one of the hottest e-commerce startups right now, valued at close to $485 million after picking up an extra $60 million in funding. Birchbox helps you discover the latest in beauty products through monthly deliveries of samples straight to your door. They have more than 800,000 paying subscribers and its time to learn a few of their tricks and apply them to our e-commerce businesses.

Birchbox is An Innovative Startup

Making Things Personal

E-commerce stores today have a catalog of products and then simply let customers find things that make sense for them but Birchbox shows that personalizing the experience for customers can be quite lucrative. Personalization is of course hard to do on a large scale but it can be quite worth it.

Retailers like Amazon offer suggestions to things you may like based on your purchase history and other factors. You could create questionnaires that determine certain factors about you customers and then try to offer suggestions that could make sense for them. It could be as simple as a landing page that could offer guidance for new customers as they first visit your site or perhaps through a newsletter where customers are filtered into specific lists.

The point is to try and make things as personal as possible for each of your customers. Greet them by their names if you have them instead of just a generic welcoming. Customers like to feel like you chose something just for them and they are willing to pay a premium for that.

Recurring Subscriptions are A Great Business Model

Subscriptions Are A Great Business Model

Birchbox makes their money by offering monthly or annual subscriptions to their customers. This quite different from most e-commerce stores where you are selling products one at a time. Subscriptions are great for businesses though because they offer recurring, predictable revenue which is great for your cashflow.

Subscriptions are commonly seen in sites like Netflix where you are paying to access streaming movies but its interesting to see it being applied to models like e-commerce. Let’s pretend that a typical customer currently spends an average of $100 with you. You then introduce a monthly subscription of $20 and customers end up staying with you for six months. You are now making $120 per customers instead of $100. Pretty simple math right?

Well its more complex than that. Offering a monthly subscription in an e-commerce model means you have to offer something of value every month. Birchbox sends you samples of new beauty products every month which means you are always getting access to the latest industry products. Perhaps you could offer new merchandise as part of the subscription or perhaps you can also offer samples of your product assuming you are selling things like beauty items.

You could also offer other items besides your existing merchandise like educational materials such as videos and ebooks. The whole point is to get customers to commit to paying a set fee every month instead of hoping they complete more purchases in the future.

Birchbox Personalizes the Experience for Their Customers

Birchbox Makes Personalizes the Experience for Their Customers

Content Marketing Is Powerful

Creating useful content such as blogs and ebooks isn’t a new concept but Birchbox has shown that its even more powerful for e-commerce stores. Birchbox goes even one step further and show their customers how to use their products, why they are great and any other possible information they might need. This kind of detailed help creates trust in Birchbox and their recommendations ensuring their customers feel comfortable buying from them.

Your blog should be an amazing source of industry knowledge and you should strive to create every type of content such as photos, text and videos. All of these content can be a great way for your customers to get to know your products and your company. Most e-commerce stores simply have a couple of photos showing their products form different angles but every product has a history and story to tell. Tell that story through your website and connect with your customers on a deeper level.

Help Your Customers Discover New Things

The big idea behind Birchbox is that they help consumers discover new products through their monthly sample box. These consumers probably wouldn’t have bought certain products if they hadn’t tried them first through Birchbox. You can think about your products in the same way. How can you help potential consumers discover new things that they might like?

While you may not be able to offer samples, perhaps you can offer other things like rich media content such as videos and images. You could also offer one-on-one recommendations to try specific products that could complement something they bought in the past. The discovery of new products is key to driving repeat sales and creating loyal customers.

Birchbox will continue to shake up the beauty industry but their retail discovery model will soon be seen in more e-commerce stores around the world. What else could retailers learn from Birchbox? Let me know in the comments.

Ruben Ugarte is a Web Analytics Consultant who has helped companies of all sizes grow through the use of analytics. If you have any questions around how you can use analytics or even how to use tools like Mixpanel or Segment, get in touch with him!

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