Birchbox Cuts 25% of Workforce to Reduce Costs
Beauty products subscription service Birchbox plans to lay off 25 percent of its workforce to reduce costs. At least 44 employees will be affected in New York, out of a total workforce of 94, according to a notice filed with the state labor department. As part of the costs reduction plan, Birchbox also plans to move some operations from the U.K. to Spain. The news was first reported by Bloomberg, and comes shortly after Birchbox sold its French business to its its co-founders, Quentin Reygrobellet and Martin Balas, and a private equity firm. Birchbox France was established a year after the U.S. business in 2011, when the company acquired Paris-based subscription service JolieBox. That business is now operating as a separate entity from the rest of the company.
Chief Executive Katia Beauchamp told Bloomberg that Birchbox improved its margins and reduced customer turnover, a key concern for subscription services. Beauchamp said the business has seen a fourfold increase in customers signing up for annual subscriptions, which cost less, rather than shorter-term options. “Building on that progress, we believe creating more savings through these operating efficiencies is the best path forward for the company,” Beauchamp said in a statement.
Still, that customer base has shrunk after the company increased its price from $10 almost a year ago to a range based on the subscription period, though the value of each shopper rose for the company. As of last year, Birchbox had more than 1 million subscribers who receive the monthly boxes.
Total Retail's Take: Heralded as one of the pioneers of the subscription box craze, Birchbox charged onto the scene in 2010, led by Harvard graduates Beauchamp and Hayley Barna. Since then, however, Birchbox, much like the subscription box services that have followed, has seen its share of ups and downs. Some highlights: In July 2014, Birchbox opened its first brick-and-mortar store in New York's SoHo neighborhood, with hopes to expand the business. In January 2016, the company cut 15 percent of its staff. In May 2018, hedge fund Viking Global Investors acquired a majority stake in Birchbox after agreeing to invest about $15 million to buy out other venture capital investors. And then, in October 2018, a minority stake in Birchbox was purchased by Walgreens, in order to establish a presence in 11 stores in major cities across the U.S. Finally, last November, Birchbox announced plans to expand its partnership with Walgreens for the holiday season by displaying fixtures inside 500 of the drugstore's locations in 44 states.
