Retail

FabFitFun Thinks Outside The (Subscription) Box

Subscription box

Lifestyle brand FabFitFun has taken something of a circuitous route toward building its retail business. In fact, in its early days nine years ago, it wasn’t a retail operation at all — it was a newsletter. That newsletter eventually grew into a blog and online magazine, and six years into the journey diversified in a wholly new direction with the launch of subscription boxes.

The extension, said Co-Founder Daniel Broukhim (his brother Michael Broukhim is the firm’s second co-founder), was a lot more natural than it may look on first glance.

“Brands would send us products for editorial review and provide us with VIP gift bags at media events,” he says. “Nobody was replicating that experience — of getting to try all these amazing products — for public consumption. We thought we could deliver that experience for our audience.”

Subscription boxes are, of course, nothing all that new, and giving consumers the opportunity to try out a host of products is in the marketing material of many different kinds of firms working to tap this market. But FabFitFun does a few things differently. First, the boxes don’t come monthly — they come once a quarter.

And the FabFitFun box is a bit less singly focused than others in the “box-of-the month” retail club. Birchbox will always bring a customer makeup, BarkBox will always bring dog treats. The mix in the FabFitFun box is going to be a little more varied, with products from a variety of categories, including beauty, fashion, food, wellness, technology and home. Each box contains eight to 12 products.

Customers receive about $200 worth of products for $49.99 in a seasonally-decorated box that is, in essence, a swag bag on demand for a modern consumer.

The business model makes money, according to the firm, because the goods it sends to its customers in the curated offerings are acquired at or below production costs, or even for free when brands are looking for exposure. CPG companies, like Crest toothpaste, have also run paid campaigns on the platform.

Plus, while FabFitFun expanded from its original business in content creation, it never actually left it behind.   FabFitFun’s media business puts a magazine in every subscription box, and publishes five to 10 pieces of original content per day, including a newsletter. Last year it expanded into video content with the launch of a live-stream video channel that runs on Facebook every day, and a forum for members to connect.

And while many subscription boxes have some difficulty attaining profitability — or managing churn as consumers drop their subscriptions — FabFitFun has progressively grown its subscriber/member base to over 1 million.

And, after taking in $80 million in a growth round of funding led by Kleiner Perkins, with participation from its previous investors Upfront Ventures and NEA, FabFitFun is clearly gearing up to grow that base even larger. Before announcing last week’s big fundraising round, the firm had raised less than $10 million from investors.

“FabFitFun has emerged into an exciting and entirely new distribution channel that brings retail to the platforms where consumers are most engaged,” said Mood Rowghani, a general partner at Kleiner Perkins, in a statement. “The company’s personalized connection with its community allows brands to better understand and interact with consumers — establishing a long-term relationship rather than simply a transaction.”

And with a now very much larger war chest, Broukhim says the firm will be hiring — and expanding its offerings.  Some of that expansion, he noted, will be quite visible, particularly in the arena of developing more and differentiated video content.

But it will also be improving its core product, and tapping more deeply into consumer feedback so it can build better boxes that feel totally personalized to the consumer, without the consumer having to do the time-consuming work of customization.

“At some point we will know our customers well enough to hand them a perfect box for their individual needs without asking them to make a lot of choices,” Broukhim says.

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