Founded five years ago this month by Katia Beauchamp, a Harvard Business School graduate, the startup asks its one million-plus subscribers to pay $10 a month for a box of product samples. For its men's line, Birchbox charges $20 a month.
Industry giants are taking notice. Sephora just announced plans to launch a similar subscription service, recognizing the growing popularity of "try before you buy."
"I think it's really validating" to have Sephoraenter the space, Beauchamp said in an interview. "It's a testament to the fact that the whole commerce landscape is changing, e-commerce is changing and it's very clear that there are going to be evolutions in how consumers want to shop."
Birchbox was one of the first e-commerce subscription companies. Other notable ones include BarkBox, a service that provides dog treats each month for $19 to $29, and Julep, which offers nail polishes for $19.99 a month. ArtSnacks boasts full sized arts and crafts supplies for a monthly rate of $20.
But Birchbox doesn't just want to be known for product samples. It wants to upsell consumers, hoping they'll purchase the full-sized item from Birchbox instead of other beauty stores like Sephora and even Amazon (AMZN) - Get Report. "Our whole purpose is to get you to find the things you love -- and buy them from us," she added.
That seems to be happening. After subscribing to Birchbox's sample service, consumers spent 38% more on the Birchbox Web site, according to data from research firm Slice Intelligence. Birchbox even boosted sales at Sephora and Ulta Salon Cosmetics & Fragrance (ULTA) - Get Report. "Even with retailers, they don't see us as a threat, they know we're doing something for everybody," Beauchamp said.
But the e-commerce giant isn't taking its success online for granted and is moving deeper into the retail business. It opened up its first brick-and-mortar location in New York City last year, with more on the way.
"Hundreds of thousands of products come to market every single year, which is a daunting paradigm. On top of that, it's really hard to discover beauty if you can't touch, try and feel it," she said. "So we realized the Internet wasn't going to be the place to discover beauty by itself. We started with a subscription, plus content, plus ecommerce and what we realized is that our consumer is responding so well to Birchbox as a way to discover, that we can't just be in one channel."
Though the company still has a long way to go on the retail side. Sephora boasts some 2,000 locations worldwide. Birchbox is also sitting on a treasure trove of data about what products consumers like and which ones they don't like. Upon subscribing to Birchbox, users reveal everything from their hair color to skin type.
"Data is at the core of the consumer experience," Beauchamp said. "You tell us a little bit about yourself and that's going to impact the samples that you get. Then as you shop with Birchbox, you rate products, it continues to augment your experience.:
Beauchamp said the company has no plans to go public, at least not right now. Though Fortune reported that the company was worth some $500 million last year. "I think it's misguided to think that going public is the goal post," she added. "From my perspective, there's huge responsibility to being a public company. It isn't just the activity of the IPO, it's actually running the public company day-to-day in a way that the market really understands and can appreciate."