Subscription service Birchbox turned eight in 2018, and the sample sizes of premium beauty products it peddles are becoming available in what might seem an unlikely place: Walgreens. Six such kiosks opened at Walgreens and Duane Reade locations in New York, Los Angeles, Bloomington, Minnesota, and Chicago in December, with more to come in 2019. Marketplace host Adriene Hill talked with Birchbox's CEO and co-founder Katia Beauchamp about what's behind this move and how it fits into the brand's strategy. The following is an edited transcript of their conversation.
Adriene Hill: I want to start with a question about the business model of beauty subscription boxes ... something I've wondered for a long time, which is: are you in the business of selling full sized products or are you in the business of selling boxes of samples?
Katia Beauchamp: That's a great question. I think it really actually differs by company. At Birchbox, we really think about changing the path to purchase, changing the potential customer for beauty. And that comes in the format of starting with a subscription. But that is what we call the appetizer to the entree of changing what you're buying in full size. So for us we think of it as, how do we get you from basically less consumption of things that are not exciting for you or just kind of become rote or routine to increasing consumption but having real delight and joy and utility from the products you're buying?
Hill: Birchbox recently announced a partnership with Walgreen's and I wonder how that fits into the model and the vision that you've laid out.
Beauchamp: Yes, it fits in very nicely. I mean, obviously, the Walgreens company as a whole is massive and serving every consumer in America. But when we looked closely at who is currently consuming beauty there and who they think there is an opportunity to consume beauty there, there was a clear overlap with the psychographic that we call the "casual beauty consumer." Not a consumer, again, who is so passionate that they're prioritizing but where it's a little bit more about convenience. But a lot of times the casual beauty consumer is consuming at drugstores and at grocery because there is a perception that, you know, that's lower price. And that's true, you know to an extent, but the lines are definitely blurring between mass beauty pricing and what's called prestige beauty pricing. So we love the idea that we can have the potential of being in front of, you know, the 70 percent population which is really massive.
Hill: Can you move, though, the traditional sort of $7 Covergirl mascara shopper to a $25 more prestige brand mascara? Or is that not what you're going for here?
Beauchamp: It's some of what we're going for, but not through what I call a traditional lens of, like, pressure selling. It's ... you can sample all of these products for $10 a month and choose for yourself. So we've been pretty profoundly impressed that, you know, none of us, for example, when we started the company, would have ever said we'd buy a $30 shampoo, and then you find like all of our customers, when they sample it, you know, a really large proportion of them, decide to buy a $30 shampoo. And we've just really found, yeah, you can absolutely move the needle, like I said, doubling the spend of the average customer that starts at Birchbox within a year is the trend we've seen.
Hill: Where do you fall in the beauty spectrum? Are you a passionate consumer or more casual?
Beauchamp: Very much cas[ual], but very informed now. So it's a little bit skewed. I'd say the whole reason we started Birchbox was because, you know, my co-founder and I were in business school ... we thought we were pretty smart and we were like, this is so confusing ... and I don't care enough to —
Hill: Figure it out?
Beauchamp: Right. But like, I do want to have nice skin in my whole life and not have to do, you know, I want to know how to do these things, but I certainly just do not want to put in the time because it's not that important to me. And so we started realizing, you know what? Everybody else is competing for the same customer. This, like, passionate consumer, the one that you see on Instagram and on YouTube. There's a huge opportunity and we're naturally attracting a different audience that sees this intersection of delight and efficacy as a better way to consume. You know, that still says like, you know, we put a box of adorable samples in front of you — there's a delight component for sure. But, you know, the purpose is that you find things you love, you're throwing things away, you're an empowered and informed consumer and when you do buy something that's expensive — more expensive than, you know, a mass product — you use it all up because you really liked it.
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