Should Walmart buy Birchbox?
Birchbox, the monthly service that sends four or five samples of prestige and niche beauty and grooming brands to subscribers for $10 a month, has held talks with several retailers, including Walmart, about a potential sale, reports Recode.
The company, which was founded in 2010, has had discussions about a possible sale as it faces a debt payment next year. In 2016, Birchbox laid off workers as it sought to reach profitability after years of focusing on growth. According to Recode’s reporting, the company has been profitable excluding interest and taxes this year.
The report that Birchbox co-founder and CEO Katia Beauchamp has held talks wth Marc Lore, Walmart’s e-commerce chief in the U.S., is not surprising. The retailing giant has focused on making acquisitions that go beyond Walmart’s core customers since Mr. Lore came on board last August as part of the retailer’s $3.3 billion acquisition of Jet.com. Walmart’s acquisitions include Bonobos, ModCloth, Moosejaw and ShoeBuy.com. Walmart.com has also greatly expanded the number of third-party sellers on its marketplace as it seeks to narrow the online market share gap with Amazon.com
Neither Birchbox nor Walmart has commented on the Recode report.
Birchbox subscribers can buy full-size versions from the company after receiving their samples. Customers who purchase full sizes receive $1 back in loyalty points for every $10 they spend.
According to estimates, full-size product sales represent 30 percent of Birchbox’s revenues.
While founded as an e-tail entity, Birchbox currently operates two permanent physical locations. It opened its first store in Manhattan’s SoHo neighborhood in 2014 after finding success with pop-up locations in New York City and the Hamptons.
- Birchbox has held acquisition talks with several retailers, including Walmart – Recode
- Online subscription service gets physical – RetailWire
- Will the Bonobos acquisition give Walmart a fashion edge? – RetailWire
DISCUSSION QUESTIONS: Would a Walmart acquisition of Birchbox make sense for both companies? Are there other retailers that you think should have discussions with Birchbox?