On June 28, Birchbox Inc. co-founder Katia Beauchamp announced a 12 percent reduction in their staff. Birchbox’s cuts are a continuation of the cuts that led 50 positions to end earlier in 2016. “The [earlier] cuts were not deep enough to get us where we need to go in the time frame we want,” Beauchamp tells Bloomberg.
Birchbox is an online makeup retail company founded by Haley Barna and Beauchamp in 2010 with the hopes of changing the way consumers approached the cosmetics industry. Subscribers receive a box of beauty samples each month with the hopes these samples would drive people to in turn purchase the full-size products.
The model was ingenious…until everyone decided to jump on board and play copycat. Now, you can find a subscription box for almost anything, such as the snack-serving box Graze. On top of competing with the other boxes delivered on people’s doorsteps, Birchbox has to stand out against retailers like Ipsy, Walmart, and Sephora, just to name a few. With a lack of new outside funds from venture capitalists and an increasingly shrinking staff, profitability has become Birchbox’s top priority.
“[Birchbox’s] Expectations have been set too high,” Sucharita Mulpuru, an analyst at Forrester Research tells Bloomberg. “We’ve seen this story before.” Mulpuru is acknowledging the gilded ideals of a groundbreaking e-commerce program, thinking that they can enter the market and stay there.
Birchbox is right in that e-commerce something investors look upon with favorable eyes; Bloomberg reports that venture capitalists have invested over 1.6 billion dollars into e-commerce for the past five years. But while there is value in creating a digital business model, Birchbox failed to recognize the need to evolve and create a business that could not be imitated or replaced.
Are staff cuts the answer? Will Beauchamp’s conservation efforts create the profit they need to survive? Only time will tell, but Beauchamp’s track record of ingenuity make her difficult to count out.