Birchbox, which fast became the darling of subscription-based businesses, with its personalized beauty product sampling, is set to reduce its staff by 15% and suspend operations in Canada. From its launch in 2010, it has grown from a subscription-based service, evolved into a full-fledged beauty ecommerce site, opened brick-and-mortar locations, and launched their own beauty line.
The question that comes to mind is did they try to do too much too quickly? As venture funding is cooling, the pressure is on to go from startup to sustainable business, which will be no easy task for Birchbox as they face competition from big-box retailers like Amazon. Birchbox advised the cuts will allow them to reinvest in what they consider key opportunities and accelerate growth.
Birchbox’s goal is profitability in 2016, with expectations for growth in their subscription service and higher store sales. The good news for Birchbox is they believe they don’t need additional funding to accomplish their 2016 goals. What is evident is that the pressure for profitability is on; we will see as the year goes on which startups will thrive under this pressure, and which ones will falter.
Read more on Birchbox and the changing market.