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  • 12.13.16

The secret to a successful subscription model appears to be brand incubation

It’s a tale of two subscription boxes. In 2010, Birchbox launched with a bang, spurring other entrepreneurs to sell everything from underwear to soap to sex toys through subscriptions. But these days, Birchbox is suffering financially, cutting 15% of staff, and is not profitable. Many other subscription companies have already folded. 

But bucking that trend is FabFitFun, a quarterly subscription box founded the same year as Birchbox. This year, the cash-flow positive company generated $40 million in revenue, three times its revenue for 2015. Unlike Birchbox, which offers product samples, FabFitFun incubates brands then partners with them to offer full-size products in the boxes. While Birchbox is counting on customers to end up buying products at its stores, FabFitFun makes money on the box itself, which costs $49.99 a quarter. 

ES