BIRCHBOX INC. Rutherford Consulting University of Alberta · CUSTOMER PERSONA Introduction Analysis...
Transcript of BIRCHBOX INC. Rutherford Consulting University of Alberta · CUSTOMER PERSONA Introduction Analysis...
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BIRCHBOX INC. Rutherford Consulting
University of Alberta
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THE TEAM
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Mackenzie Nugent
Morgan Tien
Abby Verstraete
Nupur Thakor
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CHALLENGE
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
How can Birchbox achieve growth
in an increasingly competitive market?
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RECOMMENDATION
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
How can Birchbox achieve growth
in an increasingly competitive market?
Utilize a less tapped customer to grow resources (build capacity,
increase profits) so you can continue stay competitive
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ANALYSIS Rutherford Consulting
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REVENUE STREAMS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Subscription Re-OrdersPhysical stores
Revenue Streams $125 million
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SWOT
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Strengths
• First mover advantage
• Lean
• Innovative
• Research/customer insights
Weaknesses
• Full size products can be bought elsewhere
• Difficulty with shipping logistics
• Decreasing subscriptions
Opportunities
• Physical store
• Love of Color brand
• High margin men’s market
• Expand product offerings
Threats
• Competitive market
• Quickly changing market
• Unhappy customer reviews
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VRIO
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Current Position Future Position
Valuable
• Yes
Rare
• No – although men’s might be unique
Imitable
• Yes
Organization
• Lack capacity to meet large customer base
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VRIO
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Current Position
Valuable
• Yes
Rare
• No – although men’s might be unique
Imitable
• Yes
Organization
• Lack capacity to meet large customer base
Valuable
• Yes
Rare
• Yes
Imitable
• Yes
Organization
• Create proper capacity
Short Term Future Position
Ever changing market
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CUSTOMER PERSONA
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Laura31 years old
Professional - $80,000
Doesn’t have time to shop or learn about beauty products in stores
Wants quick convenient ways to get beauty products they really like
Issue with Laura:
• She is not going back to Birchbox to
make large purchases
• 1 time chance to win her
• Overwhelmed with options
• Subscription driven, less commitment
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CUSTOMER PERSONA
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Jonathon 32 years old
Professional - $80,000
Wants quick purchase and hold onto the product he likes
Advantages of Jonathon
• Spends more money – research
• More likely to buy full product
• Higher margins
• Lower churn rate
• Blue Ocean Market
• Less controlled by male bloggers
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ALTERNATIVES Rutherford Consulting
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ALTERNATIVES
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Focus on using data to grow internal product line – Love of Color
Sell data to bigger brands – revenue source
Sell your business
Focus on Men’s products
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INTERNAL PRODUCT LINE – LOVE OF COLOR
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Advantages Disadvantages
Maybe consider
in future?
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SELL DATA TO BIGGER BRANDS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Advantages Disadvantages
Maybe part of
an exit
strategy?
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SELL YOUR BUSINESS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Advantages Disadvantages
Does it feel
right?
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FOCUS ON MEN’S PRODUCTS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Advantages Disadvantages
Short term
success! To allow
for long term
growth
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ALTERNATIVE EVALUATION
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Cost Ease of
Implementation
Potential for
Growth
Customer retention
and upscaling
Differentiation
Internal
product line –
Love of Color
Sell data to
bigger brands
Sell your
business
Focus on Men’s
products
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RECOMMENDATION
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
• Priority that will help create sustainable growth to support future activity
• Less crowded market to capitalize on
• DO not pull way from women's
Focus efforts on men’s market
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IMPLEMENTATION Rutherford Consulting
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IMPLEMENTATION
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Promote the men’s subscription service
Sustain women’s subscription service for the time being
Streamline operations long term
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CURRENT PURCHASING TRENDS - MEN
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
- Tend to buy products in the most convenient
way from a knowledgeable person
- Buy larger quantities to reduce frequency of
purchases
- Tend to experiment less
- Want good value but less likely to price
compare on beauty items
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CURRENT PURCHASING TRENDS - MEN
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
- Tend to buy products in the most convenient
way from a knowledgeable person
- Buy larger quantities to reduce frequency of
purchases
- Tend to experiment less
- Want good value but less likely to price
compare on beauty items
How do we
capitalize on
these purchasing
trends in our
solution?
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WHAT ARE CONSUMERS LOOKING FOR?
01020304050607080
% of Customers that consider these elements to be “Very Important”
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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WHAT ARE CONSUMERS LOOKING FOR?
01020304050607080
% of Customers that consider these elements to be “Very Important”
These
considerations
need to be
included in
recommendation
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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TEND TO BUY PRODUCTS IN MOST CONVENIENT WAY FROM A KNOWLEDGEABLE PERSON
Eliminate need to initially complete a profile
Provide three expertly curated boxes each month for men to select
One tap full size ordering from mobile interface
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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BUY LARGER QUANTITIES TO REDUCE FREQUENCY OF PURCHASESTEND TO EXPERIMENT LESS
After selecting items to order full size, option to increase volume
Options for 1 month, 3 month, full-year supply
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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THE BEST PRICESFREE SHIPPING
Must offer free shipping on full size items
Discounted product prices on higher volume orders – 3 month and 1 year supply
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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CUSTOMER ORDERING EXPERIENCE
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Customer wishes to purchase a box
Open Birchbox mobile
3 promoted boxes available this month: eg. “The Tom Brady”, “The George Clooney”, “The Barack Obama”
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CUSTOMER ORDERING EXPERIENCE
Box is selected and sent to customer
In one week notification sent asking the customer thumbs up or thumbs down?
Customer is prompted to order full size of ‘thumbs up’ items in 1-month, 3-month, full year supply
Customer is asked if they wish to try another box the following month
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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REFERRALS
Customer referrals
• Men can gain Birchbox credit with customer referral
• Men are more willing to learn through word of mouth than a blogger
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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TIMELINE
Utilize current data to select high selling products
Adapt mobile interface for
male customers
Identify cash flow stream to support
free shipping initiative
By May 2017 By June 2017
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
By end of 2017
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FINANCIALS Rutherford Consulting
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ESTIMATED MARKET SIZE AND GROWTH RATE
Estimated Total Market for Men’s Grooming
• $8.5 billion
• Doesn’t include things like deodorant, hair care
Current revenue from Male Customers
• $43.75 million, 15x growth 2017, anticipated sales will increase rapidly but growth will slow
Men spend 10% more than women and box price is $20 compared to $10
• Estimated that of men that subscribe to box, 20% will buy a full size product once per year
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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STREAMLINING OPERATIONS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Reduce cash tied up in brick-and-mortar location
• Estimated that this can free up $810,000 in annual cost
• $45/sq ft. estimated retail space
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COST ASSUMPTIONS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Cost Amount Cost incurred
Mobile interface adaption $20,000 USD May 2017
Consolidation of collected data
and selection of products
$60,000 USD May-June 2017
Free shipping costs $5/full size product order Duration of plan
Continued data collection on
men’s products
$12,000 USD/month Duration of plan
Customer referral discounts 10% discount, 10% of men take
advantage
Duration of plan
Other cost considerations:
- Potential for increased inventory costs to ensure reliability of supply of popular products
- Potential for cost savings as shipping volumes increase
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MEN’S SALES PROJECTIONS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
0
50
100
150
200
250
300
350
2018 2019 2020 2021 2022
Sale
s in
USD
mill
ions
Growth in Men's Sales
Growth in mens sales - best case Growth in mens sales - average
Growth in mens sales - worst case
Year over year growth in
best case scenario: 15x with
growth slowing over time
Average year over year
growth: 7x year over year
Worst case: Men’s sales grow
at market rate 4.5%
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KEY PERFORMANCE INDICATORS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Best case: hit total sales growth of 330 million by
Year 2020
Average: hit total sales of 207 million by Year
2020
Worst Case: Men’s sales add 5 additional million
by year 2020
Increase Men’s subscriptions to 1 million by 2020
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2020 FUTURE PLANS – LONG TERM CONSIDERATIONS
Similar to Glossier utilizing consumer research to create products
-You can produce/expand your beauty line!
Creating a private label (using research)
Expand Love of Color
Create a men’s private label
= create a more sustainable competitive advantage (less imitable)
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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VRIO
Current Position
Valuable
• Yes
Rare
• No – although men’s might be unique
Imitable
• Yes
Organization
• Lack capacity to meet large customer base
Valuable
• Yes
Rare
• Yes
Imitable
• Yes
Organization
• Create proper capacity
Short Term Future Position
Valuable
• Yes
Rare
• Yes
Imitable
• No
Organization
• Will have Increased capacity
Long Term Future Position
Ever changing marketPrivate Label
-love of color
-men’s line
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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RISKS AND MITIGATION Rutherford Consulting
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RISKS AND MITIGATIONS
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
May loose out on the women’s market
• Not ignoring the women’s side
• Using this approach to fuel overall growth and better customization
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RISKS AND MITIGATIONS
New Entrant in Men’s Market
• Creating brand loyalty
• Gain first mover’s advantage
• Move into Private label eventually
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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RISKS AND MITIGATIONS
Might be additional stress on logistics
• Less variety of samples for men
• Easier to sort and assemble than before
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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CONCLUSION Rutherford Consulting
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CONCLUSION
Competitive advantage
Better revenue streaming
More structured logistics
Set for future growth with private labels
Focus on men’s market
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
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APPENDIX Rutherford Consulting
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OVERALL REVENUE
Introduction Analysis Alternatives Implementation Financials Risks Conclusion
Overall Revenue
projections - best case
Growth in
Revenue
Average
Over all
revenue -
worst case
2018 160 140.3125 121.8063
2019 219.0625 166.8906 123.0229
2020 287.96875 201.1469 124.2761
2021 339.6484375 237.1159 125.5669
2022 378.4082031 268.2891 126.8964