The company behind subscription boxes wants to gather more information to deliver personalized skincare, supplements, and other items.
A new health-related startup is purchasing Birchbox at a price of more than $45m and plans to rejuvenate the company’s subscription model by introducing individualized health and wellness items.
The company will begin asking its 300,000-plus subscribers to share personal health information–collecting data through skin tests, for instance–and using it to zero in on relevant skincare, supplements, and other products, like birth control or pregnancy tests.
“We will have gathered information, so you don’t have to see thousands of products,” says Kimon Angelides, who holds earned a Ph.D. in bioorganic chemical engineering and is the executive chairman of FemTec Health. This newly founded company. This newly established company purchased Birchbox. “We’ll make suggestions on the things that match your biology and match your life stage.”
The company is introducing a new model to Birchbox, resulting in the departure of co-founder Katia Beauchamp as the chief executive. She’ll sell her remaining stake in the company and will become a strategic advisor.
While Birchbox was the first to pioneer the trend of subscription boxes when it introduced its beauty service in the year 2010 and triggered a flood of similar services covering everything from toys, snack items to novels, the company struggled to grow profitably. In 2018, the company sold its majority stake to Viking, an investor already with a $15 million investment. It was a slender sum for a business that had received around $90 million in funding from Accel, First Round Capital, and Walgreens and was once valued at more than half-billion dollars. In the past, the company had contacted all of the major retailers, starting from QVC to Walmart, in search of an investor.
“I think the issue in the industry was in the way of I’ve witnessed it from all other companies too . . . The reason is that they were unable to establish that type of connection or engagement. It became more of a purchase,” Angelides says. Angelides.
To build more of a relationship with the customers they serve, Birchbox and others are placing their bets on personalization. Stitch Fix, the most popular subscription service with 4.1 million active users and recently opened its shopping platform to customers who are not subscribers, boasts a personalization engine that helps quickly find styles that customers will appreciate. Another company, The Yes, started by former Stitch Fix chief operating officer Julie Bornstein, also offers personalized recommendations on clothing for brands such as Madewell, Alo Yoga, and Valentino.
To support its recommendations, FemTec has invested $28 million in acquiring technology startup Mira AI, which uses artificial intelligence and data to connect a person’s characteristics with the products they use and any information they may find helpful. Birchbox, for instance, can use the results from a hydration test and suggest a face lotion suitable for oily or greasy skin.
“It’s fascinating to get our hands on the types of information that will help us do our jobs better,” says Jay Hack, co-founder of Mira, which previously received funds via Unilever Ventures and Canaan. “It suddenly means you’re able to reach into that person’s life and have a much more intimate relationship with them.”
The company claims to adhere to HIPAA and other regulations and rules that regulate the privacy of someone’s medical information and will not offer customer information to third parties.
FemTec is planning to expand beyond Birchbox as well. In the up-coming year, it will launch a concierge-style health telehealth service known as Awesome Woman. It will help women with menopausal issues, pregnancy, and all. Customers will have access remotely to their doctors, who will utilize data and technology for recommending various tests at home and prescribing medication or providing product recommendations based on the outcomes.
If, for instance, someone is suffering from recurring problems with her urinary tract, the treatment will not just help her to confirm the diagnosis using an at-home test and then take care of it with an antibiotic but will also give her a better understanding of the reason for the issue and may suggest a couple of supplements that can help prevent the problem from occurring for the longer term.
FemTec has received funding of $38 million at a price that is $380m, has created its brand of nutritional supplements and probiotics that it will sell to consumers, and plans to develop products for personal care. It may eventually offer these products in shops like Walgreens. It will also advertise its products to employers as a perk it can provide to their employees, like a discount exercise membership and access to mental wellness clinic.
“Women don’t know what to use, when, and how,” says Kim Capone, chief science officer. She previously worked for Johnson & Johnson, where her research led to the inclusion of prebiotic oatmeal used in Aveeno and Johnson’s Baby to keep moisture in the skin. “What we’re doing is bringing all this together.”