The rise and fall of Birchbox, the once-buzzy startup that was sold off twice in 2 years and has recently resumed shipping boxes

• Birchbox pioneered the monthly beauty subscription box and was once valued at nearly $500 million.
• But after some financial setbacks, Birchbox was acquired 10 years after launch for just $45 million.

Birchbox is back.

The company that pioneered the subscription beauty-box segment in 2011 has resumed shipping products to customers after a tumultuous few years that saw significant fulfillment interruptions as the brand was sold off twice.

It's the latest development following a yearslong decline for Birchbox, the once-hot startup that in 2014 boasted hundreds of thousands of subscribers and a $485 million valuation.

Just seven years later, in late 2021, startup FemTec Health acquired the brand for $45 million, a fraction of its former valuation, following layoffs and a dwindling customer base.

Last year, Birchbox seemed to have all but disappeared, leaving frustrated vendors and customers in its wake who said the company owed them money.

Then, in May, FemTec sold off Birchbox's assets to Retention Brands to satisfy creditors, the companies said.

Here's how a once-hot startup got its start, defined a category, then seemingly vanished, and is now seeking to stage a comeback.

Birchbox was founded by two Harvard Business School grads

Katia Beauchamp and Hayley Barna came up with the idea for Birchbox back in 2009 while they were students at Harvard Business School.

The company was modeled off of what Netflix was doing at the time for movies: sending customers DVDs in the mail for a flat monthly fee.

Instead of movies, Birchbox customers would receive designer beauty products, many of them in miniature size, from the likes of Nars and Kiehl's for $10 per month.

"We were inspired by other companies doing similar things — Netflix and Zappos," Beauchamp told Insider in 2011. "Our goal was to change the way that consumers shop online."

Beauchamp and Barna secured $1.4 million in seed funding prior to launch, and by 2011, had raised another $10.5 million in Series A funding from the likes of Accel Partners and First Round Capital.

By then, 45,000 customers had signed on for monthly beauty boxes and the company had begun expanding to other categories, like men's grooming.

Birchbox opened its first retail store in 2014 in New York's SoHo neighborhood, where shoppers could test out products and build their own Birchbox.

The company also raised another round of funding, this time $60 million, which pushed the startup's valuation to $485 million.

By the time it raised its Series B, Birchbox counted 800,000 subscribers and had acquired a French competitor.

The subscription box market quickly became crowded

While Birchbox was an innovator in the world of monthly subscription boxes, by the mid-2010s you could subscribe to regular deliveries of anything from razors to lingerie to dog food.

But the startup had also spawned imitators in the beauty industry, which meant that Birchbox was losing market share.

In 2016, The Wall Street Journal counted at least 300 subscription beauty services and noted that rival service Ipsy was beating Birchbox in terms of subscribers: Ipsy had over 1.5 million, while Birchbox had just over 1 million.

And while Birchbox offered customers the option to buy full-size products after they'd tried the mini version, it didn't result just in more sales for Birchbox — the company was bolstering sales at traditional retailers too.

Bloomberg reported Sephora and Ulta were getting a 5% and 6% sales boost, respectively, from Birchbox subscribers. Meanwhile, Sephora had launched a monthly beauty box of its own.

Barna, the cofounder and co-CEO, announced in 2016 she was leaving the company to join venture capital firm and Birchbox investor First Round Capital.

That same year, Birchbox started scaling back its growth plans, pausing on new physical store openings, suspending plans to expand in China, shrinking its New York City headquarters space, and cutting about 50 of its 300 employees, The Journal reported at the time.

After funding struggles and layoffs, Birchbox was acquired

By 2018, Birchbox was struggling to secure more funding or find a buyer.

The company ultimately raised debt financing following a $15 million buyout and later struck a deal with Walgreens to install Birchbox shops within select stores. Walgreens also took a minority stake in the company.

Meanwhile, Birchbox's subscriber count was dropping, and the company raised its monthly subscription price for the first time in its history.

Birchbox conducted another round of layoffs in early 2020, downsizing its global team by roughly 25%.

In October 2021, Birchbox was acquired by FemTec Health, a startup focused on using technology to "transform the total healthcare experience for women."

FemTec Health paid $45 million for Birchbox and the deal resulted in Beauchamp, the remaining cofounder and CEO, leaving and selling her stake in the business. Beauchamp has since become CEO of Victoria Beckham Beauty.

Customers accused Birchbox of having 'vanished'

A year later, red flags had started to appear. An Axios investigation found that FemTec Health hadn't paid some of its vendors and a content creator.

Some of those bills still hadn't been paid as of January 2023, and one vendor took the company to court over the missed payments, Retail Dive reported.

Months earlier, in November 2022, Birchbox was said to be considering filing for bankruptcy, WWD reported. Around the same time the brand posted a statement on Instagram acknowledging its struggles.

"Birchbox is facing a host of unprecedented setbacks that are affecting all of you, our cherished members," the post read. "Within the next couple of weeks, we will be able to share details about the future and what you can expect."

Social media comments flooded in from users who said they were frustrated longtime customers, with many saying they hadn't received a box since October.

"What a joke," one Instagram user wrote at the time. "I paid for a year subscription and only got 3 months worth before the company just vanished. And I've been a customer for YEARS."

Birchbox's website also appeared to be disabled for several weeks.

On May 12, FemTec announced Birchbox's assets had been sold the month before to Retention Brands, an investor in e-commerce and subscription businesses. Retention Brands "is poised to deliver excellent customer service and a delightful customer experience," FemTec said in a statement.

A month later, Birchbox announced that fulfillment had restarted, with unfilled orders from September and October shipping on June 14. The company said technical limitations prevented customization of June boxes and the feature would return in July, with new member signups resuming at that time as well.

In August, the company raised the monthly price for its existing Ace members from $10 to $15, while new memberships cost $20 when billed monthly.

Various product sizes also now have assigned point values, ranging from one point for samples, two points for travel size, and four points for full size. Members can select six points' worth of products per monthly box.

Facebook users reacted negatively to the changes, with several expressing disappointment at the selection, quality, and presentation of the boxes they received.

"So to recap, boxes cost more and they contain less," one commenter said. "Great. I'm giving this one more month."

The company said it hopes to return to a "standard shipping cadence" for September.

Avery Hartmans contributed the original version of this article.