One of the beauty news that I came across last week, is that a major beauty sampling box withdrew from the Taiwanese market. Back in Australia, the same happened about 5 months ago, and before that time, we saw many beauty sampling boxes that either never got launched, or also withdrew from the market within a short time after launch.
Whilst looking from the outside, a beauty sampling box seems like one of those great “why didn’t I think of that?” idea. But in reality, it’s a business model that, in a lot of countries, is destined for failure. Here’s why:
1. Profit is reliant on brands providing free products
The basic business model of beauty sampling boxes is that the brands provide the sample products completely free of charge. Beauty boxes then pay for all picking/packing, packaging, postage, advertising, not to mention all the warehousing and staffing costs for taking care of all these tasks.
Beauty boxes thus earn their profit from the difference that their subscribers pay per box and all the aforementioned expenses. Nothing wrong with that per se, but it means that they are first and foremost, completely reliant on a continual stream of brands that are willing and able to provide the products free of charge. Read on to see why it’s not an easy task.
2. Infeasible Quantities
To avoid subscriber dissatisfaction, it’s a good idea for beauty sampling boxes to keep all boxes identical. That in turns make the total quantities of samples required quite a large number. From my experience, it’s anywhere from 300 for a beauty box that’s just starting out, to 5,000+ for a more mature brand of beauty box – and that’s per month!
For markets with relatively small population ie. Australia and Taiwan, 5,000 units in a single beauty product is often a big chunk of, if not more than, the total quantity in stock. Not to mention the cost, as sample sizes can cost the same as full-size products to manufacture.
So if the quantity for one time participation is a lot to ask for, multiple participations would be infeasible, even for big brands. I believe this is the reason why a lot of beauty sampling boxes launch with good samples, then very quickly decline in quality and start to include sachets and even discontinued products in their boxes.
3. Marketing 101: Any promotion should generate customers for your own brand
Sampling counts as part of the overall marketing expenditure, so it needs to get return. Return in sales ultimately, but at least a return in number of people in database to begin with.
Beauty boxes do not share their database with the brands, they do not provide testimonial contents to the brands to be used on their own websites, and from what I’ve experienced, have not been able to provide the brands sales increase in the short or medium term.
So as a brand custodian, if I had such a large quantity of samples at my disposal (see point 2 why it’s not always available), I would choose to use it to drive traffic directly to my brand’s website/counter/social media platform, and not via a third party.
4. Beauty sampling boxes limit their own product appeal
Perhaps to make their commercial proposals seem more attractive, beauty sampling boxes offer category exclusive rights to brands. This means that in any single box – subscribers would only find 1 cosmetic item, 1 skin care item, 1 body item and so forth.
I have questioned a major beauty sampling box on this policy, as I, as a potential subscriber, would just LOVE to receive a box full of cosmetics, and think that it makes more sense for their long-term business model. As a product/brand manager, I also have no qualms of having my product being sampled with and compared against other like products.
But it is as it is, beauty sampling boxes continue to run their business models with the category-exclusive policy. However the result of it is evident – subscribers are dissatisfied with what they receive, and start cancelling their subscriptions (from what I observed on their Facebook pages).
5. Beauty sampling boxes have tiny advertising spends
In both Australia and Taiwan, I noticed that beauty sampling boxes don’t spend much at all on advertising. No TVC, no billboards, no sponsorship, not even print ads.
Beauty sampling boxes spend a little on PR and social media – including working with beauty bloggers in Oz (where much of the write-ups are not paid for). These are activities even the smallest beauty brands can do themselves, without going to a third party that also asks for a large amount of free products (point 2) with no guarantee on return (point 3).
In summary:
Beauty sampling box subscriptions are not cheap: for subscribers about AUD$20-$30/month and NT$300-$500, for brands 300-5,000 units of free products – each and every month.
For that money, both subscribers and brands want to see return for their buck.
As both a Brand Manager and a beauty enthusiast, I unfortunately have not found good enough reasons to invest in any beauty sampling box on an on-going basis from either sides. These, I believe, are ultimately why beauty sampling boxes are destined for failure in Taiwan and Australia (and probably other countries with similar population sizes).
What say you? Have you subscribed to any beauty sampling boxes? Or are you a brand that has provided products to beauty sampling boxes? What have your experiences been, and what are your thoughts on why they fail or succeed where you are?
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Great writeup, Tina! I remembered when so many beauty boxes started launching in Australia. All of them started off so well, with great luxury-brand samples and full-sized products to tickle our fancy. Heck, I even subscribed to 3 of them to try out. It wasn’t long before the subsequent boxes started to disappoint. When I started receiving paltry tubes of body shimmer and minuscule 1ml vials of perfumes, it was time to unsubscribe.
I still followed the beauty boxes on social media just to see how they were doing. One by one, they started dropping like flies. First beauty boxes had to combine forces. Even then, the company closed down. Then another closed down. It’s just not a sustainable business model.
Having said that, I think food boxes would work. There’s a bigger market for it methinks. We’ve all gotta eat
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Tine: Yeah I remember when beauty boxes started to get launched in Oz, and I was mildly excited by their prospect. Same in Taiwan when I was going to jump on the bandwagon as soon as I got here, but decided to observe what they have to offer before taking the plunge.
Sure enough in both countries the quality got worse and worse, people started to unsubscribe, and beauty boxes start closing down.
Ultimately the market is just not big enough for beauty products in Oz, and not even in Taiwan.
I agree food (and perhaps other household items) may be more viable – the market is bigger and people are not so brand focused when it comes to them.
Good to hear your perspective on this – so far, there’s only one beauty box in Singapore that has managed to survive, but that’s also because they operate on a different model than other beauty boxes.
Besides the beauty box subscription, they also maintain a blog (and attend events), double up as an online shop (so you can buy the full size of the sample item in your box if you like it) and collect feedback from the subscribers for the brands they work with (you get points for your feedback on the products in your box, which can be converted into store credit). Not a bad model, and definitely a more sustainable one than the rest of the boxes I’ve come across so far. It’s been over a year, and it’s still the only one I willingly subscribe to.
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Beetrice: I would be interested to know how they go! It’s great to hear that not only are they still in operation,but you’re also happy to stay subscribed to them.
I think the only way for a beauty sampling box to stay afloat for a long time, they’d still need to be able to offer brands exposure that they can’t get themselves ie. above the line marketing spend; or even better, share a portion of the cost of goods with the brand.
I tend to agree with a lot of what you’ve said above Tine, the idea is a wonderful one but when you think about the fact that brands have to shell out major samples in high quantities, it becomes clear why beauty boxes struggle to fill their boxes with high quality products. The fact that you can obtain free samples from many counters and that (in my opinion) people are more likely to buy full sizes after this type of sample, the beauty box just isn’t worth the money. If I am out shopping and am given a sample, I am happy and quite often buy the full size. If I am paying for the sample, my expectations are much, much higher, and therefore even decent samples can seem lackluster.
Great post x
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Emmabovary: Exactly right and that’s what a brand thinks of it too, especially one that has many distribution points. Why give it to someone else’s business, when giving it out or using it as gift-with-purchase will get a much quicker return?
Unless beauty boxes can offer brands very good reasons to part with good samples, brands would much rather prefer to keep them for themselves.
Great post Tina! Do you think economies of scale also plays a part too?
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Yishan: I’m not sure so that’s why I can’t comment for other countries. However, even with big quantities, I can’t imagine a decent sample size product (ie. not sachets) to cost less than AUD$1.
So $1 x 5,000 samples – that’s still $5000 of marketing funds that can buy a decent amount of advertising (especially nowadays when magazines don’t sell as much as they used to).
I loved reading this. I have certainly jumped on the beauty box bandwagon but was sorely disappointed by subsequent boxes and have unsubscribed. From observing the beauty box market, Birchbox, the original (not sure but I think it is) creators of this concept are still going strong but I think that’s because their marketing is very aggressive and they put out collaborations with TV shows e.g. Gossip Girl and for some reason YouTubers consistently put out videos unboxing Birchboxes so they must pay them to do so. So I have a feeling that they try very hard to maintain a wide reach hence they are able to scale their business.
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Beauty Box: Now that would be a box that as a Brand Manager, I would be willing to part samples for. A beauty box needs to provide return that is larger than the cost of the quantity of sample products!
What a great post. As someone who has a bit of experience of working with a few beauty boxes, I have to say that I’ve had boxes asking for more than 5000 free samples. Even if each sample only worth $1, that is at least $5000 for a one time marketing event. But chances are the return is much lower than that. On the other hand, spend a few hundreds bucks worth of products and work with bloggers, you may get a same if not better result.
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Angela: Yes it’s the maths that just don’t work out for suppliers, and if no suppliers want to take part, then the Beauty Boxes have no way of continuing.
Talk about population sizes. If Australia and Taiwan are not big enough, then what’s Singapore?
It’s more of a mindset to the beauty box idea than population size.
First off, the idea started in the US where people are more accepting and adventurous at trying out new ideas and things. The fact that it started there, already shows this. No one else thought of this, certainly, not any Asian country.
Culture and society have effect on the acceptance and success of new ideas, new business and things. Willingness to experiment, take risk, gamble, just purely for fun etc…
In the case of Taiwan, the people there are not rich. Things are cheap and people are not into upmarket ideas. It’s amazing how beauty boxes can even think of setting up shop there. It would be surprising if the business doesn’t fail.
More significantly, Asian cultures and other countries that didn’t come up with the beauty box idea, are based on a “practical” mentality. Beauty boxes don’t make sense. Even if anyone in these countries by chance considered the idea, they would not think it would fly and therefore not start it.
Why would people pay for something that they don’t know what’s inside? Logically, the idea wouldn’t work.
Even stocked with big name brands and given generous samples, people still complain it’s not their type, not their color, not this, not that. Not even considering the “low” price that they paid for their boxes.
However, people who enjoy getting beauty boxes say it’s the surprise element more than the items they get that keeps them subscribing. Some would say it’s addictive to see what’s going to be in the next box and the next, and not wanting to miss out.
Therefore, it’s a mindset issue.
The problem with beauty boxes is lack of personalized customization, not population size.
Another problem, is “cheapness”. Even at slightly above US$10, US women still say it’s expensive (which is strange). It seems that the problem of “cheapness” women is a problem even in the US, not just in Singapore. They have no idea of what is reasonable price and expect things to be free and customized.
Customization is possible, but at a price. And a higher price cannot be set because of these “cheap” women. And even at a low price, these women complain. So it’s tough being a beauty box.
Beautyboxy: Thank you for your detailed response, I can’t comment for Singapore as I have no experience as a consumer or supplier. Same with US and other countries – I don’t know how they make it work.
Perhaps it is the mindset that makes a difference. In Australia women are not so beauty focused, in Taiwan where women are, the beauty market is so fierce that free sample products are available everywhere: on counters upon request and even on a magazine that cost NT$200.
However the question still remain is: even if beauty boxes are well accepted, as a brand marketer, I would still choose to keep these free samples to drive traffic directly to my store/counter/website/facebook, rather than giving them away to a 3rd party.
I’m a BIG fan of your Beauty Insider posts! Can’t wait for more~
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By the way, I nominated you for the Beautiful Blogger Award
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This is a really interesting post and discussion, Tina!
I have to say that I have never subscribed to one of these beauty boxes and the reason was and still is that I like to select things myself rather than get a lucky dip of items! I can be fussy and when I read reviews on the various Aussie boxes I often think to myself “hmm I couldn’t/wouldn’t use half of that!” (due to skin type, style preferences, hair type etc etc etc).
Thanks to blogs and sites like Beauty Heaven I can learn about all kinds of products which introduces me to new things and costs me nothing!
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Sarah: If beauty products contain good products, I wouldn’t mind giving them a go even if the products are outside of my usual repertoire. Unfortunately since such large amount of samples are hard to come by, beauty boxes often contain unwanted products which are of no interest to me.
The Internet is definitely a great tool for “trialling” products – but I don’t know about costing nothing… bloggers are the worst enablers!
Great post!!! Glossybox pulled out of HK after launching for two months or so. Another beautybox pulled out of the market (Myluxbox), and then only left with Glamabox at the moment.
I think the quality of the beauty boxes still remain a big issue, as you pointed out, the subscription fee is not cheap, and I’d prefer spending those bucks on something I actually like instead of things I may or may not like!
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Jenni: And nowadays, especially in Asia, sample sizes can so easily be obtained from cosmetic counters – that reduces the attractiveness of beauty boxes too.