Is Walmart Looking to BirchBox for a Beauty Boost?

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Birchbox subscription box service
Photo credit: Birchbox

Jet.com, ModCloth, MooseJaw, Bonobos and now Birchbox?

Walmart has been beefing up its roster of digitally native businesses lately, and sources say Birchbox is on its radar.

According to Recode, Birchbox, which hasn’t officially put itself on the market, is juggling multiple suitors, including the world’s biggest retailer.

Though the unnamed sources say Birchbox and Walmart are in talks, no details were provided about how advanced these discussions might be. The two parties involved have been mum on the speculation.

Birchbox is thought to do $200 million in annual revenue. Though the subscription box service is carrying some debt, which is due in early 2018, the amount is not thought to be enough to push the company into a hasty deal.

[Learn more about the Birchbox philosophy: Don’t Discount the Value of Positive Consumer Experiences]

Beauty is a hot category now. Fung Global Retail & Tech estimates that beauty and personal care sales will hit $89 billion in 2017, up $3.9 billion from 2016. Of that, brick and mortar mass chains capture 12.9% of sales while online accounts for 8.5%.

Birchbox launched in 2010 as one of the first box businesses, offering consumers trial size makeup and skin care products for a monthly fee. While surprise and delight is part of the mix, the company says its longevity will come from the utility and relevance that make fans’ lives easier. The service also sells full-size products, which account for 35 percent of revenue, and operates a flagship location in New York’s SoHo district, which acts as a testing ground.

The company is coming off of a rocky year during which it underwent two rounds of layoffs and needed to raise a $15 million investment from its current investors.

Walmart’s recent acquisitions are seen as the retailer’s attempt to go head to head with Amazon. Though the e-commerce giant is strengthening its offerings in some of the same categories, it’s doing so through private-label brands.

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