Glossybox finally reports profit after ‘over-expansion' problems in Asia
The beauty sampling trend took off five years ago with the launch of US based firm Birchbox, which inspired the likes of Berlin-based Glossybox to get a piece of the action.
The concept involves a subscription service where customers sign up to receive samples of the latest skin care, perfume and other cosmetics products on a monthly basis for around $10-15.
Despite the trend being huge in Europe and the US, Glossybox found itself having to downsize a workforce of 350 to 130 in 2013, after expanding into more than 20 markets including Asia.
Things started to look up in 2014 for the brand though, as it reported its' customer base to have grown by 25 per cent, despite having to cut marketing costs by 33 per cent.
To date, Glossybox counts 200,000 mostly female customers who pay around 10 euros ($11).
Demand in Asia for beauty boxes is there, but supply is not
In 2013, Cosmetics Design was reporting beauty boxes to be gaining momentum in Asia, particularly in the Southeast and Korea. However by 2014, analysts were questioning whether the market was over saturated with ‘all too easy to replicate’ subscription services.
By the second half of the year, a number of these sampling companies in Southeast Asia had already shrunk from 51 to less than 20.
One analyst, Terrence Lee, of SGE Insights points out that Rocket Internet (a major stakeholder of Glossybox) avoided Southeast Asia's markets.
Lee reports the brand to have pulled out of Australia and Taiwan after it was decided that both competition and market circumstances did not make a favourable business proposition.
“The problem is limited availability of beauty samples. The demand is there, but the supply is not. Ultimately, it boils down to the fact that the marketing budgets of cosmetics companies in Asia aren’t that great,” Douglas Gan, CEO of Singapore-based beauty box business 'VanityTrove' told regional publication ‘Tech In Asia’.
Despite the news that this segment may be over before it really got a chance to take off, other brands like Little Black Beauty Box, Glamabox, BellaBox, Black Box Malaysia – Modbox, CosmoBox, The Lilac Box, Mivva Box are still working to make ends meet.
