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Birchbox on Flipping the 80/20 Business Paradigm

March 23, 2017
March 23, 2017
Birchbox

Birchbox's CEO and co-founder, Katia Beauchamp, shared their counterintuitive business strategy during the Millennial 20/20 conference in New York. Most businesses focus on the top 20% of their clients who typically account for 80% of revenue. The Birchbox business strategy is to focus on increasing the purchasing of the "passive" beauty consumer rather than competing for the "passionate" beauty junkies.

Beauchamp told Forbes, "A Birchbox shopper, whose average age is 31 with a household income of about $80,000, is not looking for those transformative [beauty] moments. They’re looking for quick shopping trips, and to get out of the house in 40 minutes. It’s precisely this 'passive' versus 'passionate' shopper that accounts for 80% of beauty sales, generates the lion’s share of Birchbox’s revenues and will drive growth as it tiptoes into brick-and-mortar stores."

While I'm all for turning accepted business practices on their head, and while I find this to be a conceptually interesting strategy, there are inherent issues. First, while wooing the consumer that is not looking for you is an opportunity, it's also like trying to find a needle in a haystack. Second, passive consumers in a category are usually driven by ease and value rather than loyalty to a retailer.

Birchbox birthed the subscription box phenomenon and has been struggling with turning it into a profitable business model. I'm pulling for them to figure it out.

Read the full article on Forbes.

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