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Birchbox CEO Katia Beauchamp: We Can Provide A Better Experience By Adding Physical Stores

The online beauty giant recently opened its first store in New York. At Retail Week, CEO and co-founder Katia Beauchamp explained why.

Beauty product subscription pioneer Birchbox started in 2010 with the mission of delivering customized product samples and recommendations to makeup enthusiasts. Today, the company is a subscription service serving over four million consumers and an online shopping destination for beauty products  — as well as the latest major e-tailer to make the leap from “clicks to bricks” with the opening of its first New York City store.

“We realized we could provide a better experience if were were omnichannel,” said Katia Beauchamp, CEO and co-founder at Birchbox. But Beauchamp explained in a keynote at Retail Week that this meant delivering not just popular beauty products, but creating an offline experience that went beyond simple commerce. “We merchandise everything by [beauty] concern rather than by brand, because we really believe that’s how our customer is looking to shop — for frizzy hair, looking for dry skin products, looking for lipstick. And in our store, you can also build your own Birch Box. You can subscribe. We have lessons, classes. That’s what we’re doing, and it’s been a huge success, profitable, increasing the lifetime value of our customers, and influencing market awareness.”

GeoMarketing: What influenced your decision to open a physical physical Birchbox store? And why do you think it has been successful?

I think it comes down to a few things. One was the opportunity that we saw with an underserved customer — the “beauty majority” consisting of women who aren’t [necessarily passionate] about beauty products. They aren’t the beauty editors of the world, but they still want to look and feel their best. And we realized that if [this consumer] was underserved in general, she wasn’t just underserved on a single channel. We realized we could [potentially] provide a better experience if we were omnichannel.

Then, for us, it was really important that if we did this — and it was profitable — that it was truly increasing the value for our customers. [We found] that it was; people responded to the [advantages] of having a physical store, [which include] the lessons, classes, and more.

And, on our side, we know that at a certain scale, [having a physical presence] will impact market awareness at Birchbox.

Is the store concept something that you will continue to scale, then?

Yes, definitely. Not to the level of what retailers of past did, of course; we know that we will continue to be digital majority revenue. But the change in digital platforms and where people transact, that’s a focus for us. We definitely see physical retail as a right way to augment, but the total number of stores? We will have to learn and see. We’re going to definitely be more on the small side than on every corner.

You mentioned the change in how people find products, and in how they transact once they’ve found them. Yesterday’s opening keynote focused on how intelligent search has impacted discovery. Do you think about how to capture the attention of consumers who may have made a voice search for “mascara” rather than for Birchbox? How are you helping people find Birchbox in an age where search is evolving so quickly?

That’s such a great way of framing the question. It’s interesting because who we go after; because we’re going after this non-obsessed beauty customer, it’s actually a pretty hard customer to acquire from a traditional sense of “she must be [Google searching] new beauty products.” She’s not.

That is both an interesting both opportunity and a hard aspect of what we do. I think what’s interesting about it is that it puts a lot of discipline into the business; the product has to sell itself.

I know that sounds trite, but when we look at our marketing budget, we don’t look at it the way a traditional company does. We take what percentage of revenue should be for marketing and we allocate it back into the product — as well as to traditional channels like PR, social, and then, of course, unpaid media. Our belief is that the product itself has to be so good that a customer who was skeptical of it is willing to talk about it, in person [and] online. Everything is, “does my friend recommend this? Is this good quality?”

So you’re looking to build that element of social sharing, as well as simply having consumers identify with the brand and what it stands for. 

Exactly. In basically every category, [consumers] don’t only say, “I like it. It’s the right price,” but they can now say, “The values of the company match mine.” More than ever, having substance and depth is an important criteria. We’re lucky because that’s how we started. I think that’s just gone a long way in helping us build a brand, get through times that are hard, and have customers that are advocating for us and want us to win.

Having that relationship means that they are also more tolerant of us learning things, and experimenting, and making changes. We invest in the people and in our products. We also invest in a traditional marketing funnel, but it’s really designed so that it echoes what the customers are saying. The goal is all about reinforcing those messages.