Birchbox’s Investors Are Giving it a $15M Lifeline
Birchbox has been thrown a lifeline. Re/code reports the beauty startup has raised a new $15 million round of financing from its current investors to help keep it afloat amid a major cash crunch. Luckily, Birchbox's investors — such as First Round Capital and Accel Partners — are continuing to back the company, while the brand has trouble persuading other parties to invest. The new funds follow drastic layoffs from the company earlier this year. Until the most recent layoffs, Birchbox was widely considered the bell-of-the-ball of startups. However, with troubles internally and PR externally, the company recognizes it has some work to do before the very busy holiday season that's fast approaching
Total Retail's Take: I'm still a fan of Birchbox, but anyone from the outside looking in can tell there's trouble. At the moment, the cost-cutting, layoffs and rush to reach profitability could be viewed as a strategy to position the brand to be sold. Birchbox's original strategy of subscription commerce for trial-size beauty products was so successful, big-box retailers such as Sephora followed suit with their own programs. Now, with competition from big-box beauty retailers, Birchbox's struggle has been to transition from just subscription commerce to a full fledged e-commerce beauty site. I believe if Birchbox can't raise its e-commerce sales of full-size products by 10 percent by the end of the year, the company will put the for sale sign up. Here's hoping holiday 2016 is the season of Birchbox.