Birchbox was ground zero for subscription boxes building a completely new distribution and sales channel for beauty brands. The visionary business has been struggling in recent years, fighting to maintain a leadership position in what has become a crowded market. The biggest competition has come from retail boxes like Sephora’s Play! subscription box.
While the startup generates $200 million in annual sales, like many e-commerce startups the focus was growth over profitability. Since 2010 Birchbox has raised more then $80 million and an undisclosed venture debt that was secured in 2015. Unable to raise additional funding last year, the brand received a $15 million lifeline from investors, and after two rounds of layoffs in 2016, Birchbox has been in a sprint to profitability. A source close to the brand claims the business has been profitable on an EBITDA basis in 2017.
While the business seems to have steadied itself, many feel an acquisition is in Birchbox’s future. Recode reported that several sources have said they’ve been discussing a potential sale with several retailers including Walmart.
Walmart has been on an acquisition tear of late, and Birchbox could fast-track the newly unveiled Sephorafication of their beauty department.
Read the full story in Recode.