Hayley Barna, 27, and Katia Beauchamp, 28, are getting stronger. "Every 10 new customers, one push-up," Barna says. Those push-up relays in the duo's fuchsia-strewn New York office may soon be daunting: Birchbox, their subscription-based e-commerce company, has grown to 5,000 members in four months, and roughly 50 people join each day.
For a $10 monthly subscription, Birchbox sends consumers a box of deluxe-size samples from brands such as Benefit, Kiehl's, and Marc Jacobs. Samples — whether given away in department stores or mailed with magazine subscriptions — have long been a staple in the beauty business, mostly because women like to test products before purchase. That sample-before-sale mentality is the reason 90% of women shop for new cosmetics in-store rather than online. But beauty companies haven't yet figured out how to effectively target beauty junkies or track which freebies translate into sales. "You can sample yourself out of business really quickly," says Vicky Tsai, founder of skin-care line Tatcha, one of Birchbox's 20-plus partners. "We give away samples, but we know it's a lot of wasted money," agrees Louis Desazars, CEO of Nars Cosmetics. "Birchbox customers are more engaged with the samples they get."
Birchbox members are encouraged to fill out surveys about each product, and that feedback is sent back to the beauty brands. Roughly 10% of members opt to participate, earning points they can then swap for full-size beauty products through Birchbox's online store.
Barna and Beauchamp, who began brainstorming the new model while at Harvard Business School, didn't want to stop at surveys, though. They tailor samples to women's coloring and makeup routines, but they also nudge members to experiment with new looks and techniques with online tutorials, videos, and interviews with beauty pros. "The model works because the selection is pre-edited for you," says Karen Grant, vice president of beauty at research firm NPD Group.
Beauchamp hopes the combination of customized samples and rich online content will create a virtuous cycle: Consumers fill out more surveys, brands get better feedback, consumers get better products. "We want it to be about discovery," she says. Member Jessica Jacobs, 23, agrees that the model works: "They send products I wouldn't necessarily spend money on, but once I get them, I realize I really like them."
A version of this article appeared in the February 2011 issue of Fast Company magazine.