how-does-fabfitfun-make-money

How Does FabFitFun Make Money? The FabFitFun Business Model In A Nutshell

FabFitFun is an online subscription box service sending electronics, cosmetics, fitness, wellness, and fashion items every quarter. Founded in 2010, it started as a simple website, and as it gained popularity, thus following later on a similar subscription-based model to Birchbox. It now generates revenues through membership services and brand sponsorships.

History of FabFitFun

FabFitFun is an online subscription box service sending items in electronics, cosmetics, fitness, wellness, and fashion every quarter.

The company was founded by brothers Daniel and Michael Broukhim and Katie Echevarria Rosen Kitchens in 2010.

FabFitFun was initially launched as a website providing female-oriented content, featuring a newsletter and deals section among other things.

After three years of consistently publishing content, the site started to become very popular. Witnessing the popularity of Birchbox, the founders set about monetizing their traffic.

In early 2013, they sold 2,000 boxes to site users in just two days. These boxes were intended to mimic the so-called “swag bags” of full-size products given to editors at brand-sponsored events. 

By 2016, the platform had surpassed 200,000 subscribers after receiving the first round of funding totaling $3.5 million.

When similar businesses experienced a downturn, FabFitFun continued to grow by partnering with influencers and brands and building a strong community through video content.

In late 2019, the platform passed 1 million members and $300 million in sales.

FabFitFun revenue generation

Most FabFitFun revenue comes from monthly subscriptions.

In this case, there are two options:

  1. Annual – $45 per box, billed annually at $179.99. This gives users four boxes per year with up to eight different products. Users can also customize their entire box and get early access to add-ons, sales, and shipping.
  2. Seasonal – $49.99 per box, billed quarterly. On this plan, customers can only choose a maximum of four customizations per box. 

Both options contain products from premium and emerging brands. These subscription plans also give access to the FabFitFun Shop, online community, and streaming video channel.

FabFitFun Style

FabFitFun Style is an exclusive personalized styling service for members who must take a quiz to answer questions about their preferred styles and body shape.

With this information, a stylist selects five to six items of tailored clothing and ships them to the customer. The company charges a non-refundable $20 Styling Fee for this service, though the cost can be recouped if the user decides to keep one or more items from the box.

A FabFitFun Styling Pass can also be used to cover the cost of the Styling Fee. This is a prepaid voucher that serves as a form of credit for the purchase of styling services and fashion items.

Brand sponsorships

When FabFitFun assembles its boxes, the company works with brands who want to advertise their products through the subscription service.

Brands may opt to let the company feature its products for free. Alternatively, they may pay an advertising fee.

Key takeaways

  • FabFitFun is an American online subscription box service for beauty, cosmetic, health, fitness, and electronics products. The service was originally launched as a content website offering female-oriented advice and deals.
  • FabFitFun generates revenue through a subscription service, offering two plans according to how frequently the customer would like to pay. The company also charges for a personalized styling service based on information from user questionnaires.
  • FabFitFun works with brands whilst assembling the products for its boxes. Brands may offer products for free in exchange for extra exposure. They may also pay the company an advertising fee.

Read Next: Subscription Business ModelHow Does BoxyCharm Make Money, How Does Birchbox Make MoneyHow Does Dollar Shave Club Make Money, How Does Stitch Fix Make Money.

Related Visual Concepts

Subscription Business Model

subscription-business-model
Subscription-based business models are built on a recurring customer base, where customers usually have access to the product or service rather than their own. The customer can have the upside of the service without owning the good underlying it, which is maintained by the company running the subscription-based business.

Ipsy Business Model

how-does-ipsy-make-money
Ipsy is a monthly subscription service for cosmetic and beauty products founded in 2011 by Michelle Phan, Marcelo Camberos, and Jennifer Goldfarb. Phan used her large YouTube following to launch and grow the platform. Ipsy makes money by charging customers monthly for beauty subscription boxes. Various subscription plans are available depending on the beauty product size and customization level. Ipsy also operates an eCommerce store selling branded and in-house beauty products. The company also sells product placement spots to brands eager to receive highly targeted exposure.

Birchbox Business Model

birchbox-business-model
Birchbox is an online American monthly subscription service for skincare, perfume, and other cosmetic items. Birchbox was among the first players to start leveraging a subscription-based model to reshape how value is delivered to customers. Instead of a one-off purchase, Birchbox curates a set of samples that each time are sent to its subscribers, enabling them to discover new cosmetic products while reducing the friction and cost of discovery for new products.

FabFitFun Business Model

how-does-fabfitfun-make-money
FabFitFun is an online subscription box service sending electronics, cosmetics, fitness, wellness, and fashion items every quarter. Founded in 2010, it started as a simple website, and as it gained popularity, thus following later on a similar subscription-based model to Birchbox. It now generates revenues through membership services and brand sponsorships.

Dollar Shave Club Business Model

dollar-shave-club-business-model
Dollar Shave Club is an American online subscription service delivering razor blades and grooming products monthly. The Dollar Shave Club business model flipped upside down the “razor and blade” model popularized by Gillette. In short, where Gillette sold its razors at cost while making fat margins on its blades, Dollar Shave Club offered a subscription model to cut off the costs and friction of getting new blades and grooming products with a curated package.

BoxyCharm Business Model

how-does-boxycharm-make-money
BoxyCharm recognized a gap in the popular beauty subscription box market. Most companies were shipping boxes with sample-sized products that were not on trend or seasonally appropriate. As a proponent of the subscription box business model, BoxyCharm makes money via subscription revenue.

Razor and Blade Business Model

razor-blade-business-model
The razor blade business model, also known as the razor-razorblade model, involves selling a product at a lower price to sell a related product later for a profit. The razor and blade business model was popularized by King C. Gillette, founder of the safety razor company Gillette, which sold a durable razor at cost while selling disposable blades at a premium.

HelloFresh Business Model

hellofresh-business-model
HelloFresh is a German provider of meal kits founded by Dominik Richter, Thomas Griesel, and Jessica Schultz (née Nilsson) in 2011. HelloFresh has a relatively simple revenue generation model. The company makes money by charging users a weekly subscription fee for meal deliveries.

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Related Business Model Types

Platform Business Model

platform-business-models
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

Marketplace Business Model

marketplace-business-models
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Network Effects

network-effects
A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.

Asymmetric Business Models

asymmetric-business-models
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Attention Merchant Business Model

attention-business-models-compared
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Wholesale Business Model

wholesale-business-model
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Retail Business Model

retail-business-model
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

B2B2C

b2b2c
A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

Crowdsourcing Business Model

crowdsourcing
The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.

Open-Core Business Model

open-core
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Open Source vs. Freemium

open-source-business-model
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.

Freemium Business Model

freemium-business-model
The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.

Freeterprise Business Model

freeterprise-business-model
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.

Franchising Business Model

franchained-business-model
In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.

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