Startup Puts a New Twist on the Samples-in-a-Box Trend: Everything’s Free
Subscription commerce companies such as Birchbox and NatureBox are building businesses mainly by charging their customers for the packages they receive each month.
But an Australian startup called PinchMe is betting that it can build a business by sending out product samples every month, completely free of charge.
The company tested out its service in Sydney, Australia, and said it amassed 480,000 customers. Now it’s launching in the U.S., where it thinks it can build a much larger customer base. Products samples offered by PinchMe range from chocolate to coffee to acne ointments.
To sign up, sample seekers need to provide PinchMe with some information about their demographics and interests. They are then shown two sets of three samples each, but can only choose to receive one sample in each set. The thinking is that product brands will reach a more targeted audience that is more likely to convert into regular customers if the PinchMe shoppers are raising their virtual hand by picking a product.
The catch for PinchMe users is that they have to answer a short survey within 30 days about the product, indicating whether they went out and bought more of it, and if they want to receive more samples from the company.
PinchMe then compiles the responses into a report for the brand whose products were sampled.
Among the first brands to offer samples through PinchMe in the U.S. is Gevalia, a Kraft Foods coffee brand. The brand has committed to sending out 200,000 samples to PinchMe subscribers before year’s end, according to Lisa Levin, an associate director of consumer engagement at Kraft.
The big question for PinchMe won’t be whether it can get people to sign up for its service; everyone loves free. It will be whether PinchMe can really make the economics of its model work.
Founder Jeremy Reid said the company is charging brands a per-sample cost just to cover the costs of packaging and shipping. “We’re not making money on the sample side,” he said.
Instead, PinchMe will only make money through an affiliate model: It shows its subscribers links to where they can purchase the products they’ve sampled.