Birchbox is a site that sells high-end makeup, and $10 sample box subscriptions that entice customers to try new types of high-end makeup. Walmart is a discount mega-retailer that sells lots of makeup, but hardly any of it is high end. Yet Birchbox could join the Walmart family if a rumored deal goes through.
Birchbox CEO Katia Beauchamp has reportedly been in talks with a few potential buyers, including Marc Lore, one of the founders of Jet.com and now the head of e-commerce at Walmart.
Why sell?
Insiders told Recode that the company is on its way to profitability. While the company has a lot of debt, some of which comes due in 2018, its lenders are willing to refinance, since the company’s future is promising.
2016 was a rough year for the company, though. There’s been an explosion in the subscription box market since Birchbox launched seven years ago, and its $10/month competitor, Ipsy, has actually overtaken Birchbox, with 68% of the market. The company had two rounds of layoffs and angered some customers by drastically changing its system of rewarding customers for reviews.
Maybe a deep-pocketed parent that could encourage Jet customers to try Birchbox subscriptions and buy full-size products would set it apart. Or would that just turn Birchbox into a version of Target’s own subscription beauty box?
Walmart’s Family of Fancy Brands
Walmart’s Jet.com has been acquiring retailers including sporting goods retailer Moosejaw, women’s clothing site Modcloth, and men’s clothing site Bonobos, all of which sell higher-end merchandise than Walmart.
Fashion and beauty products are two categories that Amazon hasn’t yet taken over, though Amazon is making a big fashion push, even marketing a special version of the Echo smart speaker that doubles as an outfit camera that judges what you’re wearing.
by Laura Northrup via Consumerist
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