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).
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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