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Innovation Economy

From Netflix to necessities — on demand

By Scott Kirsner
Globe Correspondent / February 27, 2011

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When people think about getting movies through the mail, one brand pops to mind: Netflix. The California company started shipping DVDs to subscribers only a dozen years ago, when heading to the video store was still a Friday night ritual. By 2010, Netflix was generating more than $2 billion in revenues, and serving more than 20 million households.

Matching the scale and speed of Netflix’s success is an entrepreneur’s fantasy. But several companies with local ties are trying to build Netflix-style businesses by sending products through the mail that haven’t often traveled that way before. Offering boxer shorts, bucolic landscape paintings, and body butter, they aspire to build subscriber bases that number in the millions.

Providence-based Manpacks, aims to solve a problem that afflicts many women: the men in their lives are content to don holey socks or graying briefs. Manpacks sells men’s essentials on a subscription basis boxes with fresh undershirts, underwear, and socks that arrive quarterly (more often if you like.) Customers choose brands and styles; a Manpacks box containing a pair of Gold Toe dress socks, a Hanes t-shirt, and a pair of Calvin Klein boxer briefs costs $33, shipping included.

The company also aspires to help customers “discover new products they will likely enjoy’’ — much as Netflix suggests movies you might like, says cofounder Ken Johnson. To that end, Manpacks is adding products such as razors, all-natural shaving cream, and condoms.

The company reached 1,000 subscribers in December, and is talking with several “angel’’ investors to raise money. Manpacks has attracted so much media attention through outlets like Maxim magazine and National Public Radio that it even spawned a Chinese knock-off site.

The idea for Birch Box came to Hayley Barna and Katia Beauchamp while they were students at Harvard Business School. “We had a friend who was a beauty editor at a magazine, and she would sometimes send us product samples,’’ says Beauchamp. “We started thinking about how we could give other women a fun way to experience samples of new beauty products, and give the industry a better way to get samples into the hands of people who value them.’’

They began testing the business model last year, while they were still in school. For $10 a month, Birch Box sends a box with four or five sample-size products, based on a subscriber’s profile. “You might tell us that you have curly hair, or dry skin, and that will affect what products come in the box,’’ says Beauchamp. Birch Box gets the samples for free from cosmetics and perfume companies that hope recipients will get hooked. On the Birch Box site, subscribers can learn more about each product, and purchase full-size versions.

Like Netflix, Birch Box’s founders thought a lot about packaging. “Our outer wrapping is really bright and happy and pink,’’ Beauchamp says. “We thought about how fun it is to get something that stands out in your mail, and Netflix does that really effectively with their red envelopes.’’ The company also took care to select a box that would fit into most mailboxes, so customers wouldn’t have to schlep to the post office to pick it up.

Birch Box, now in New York, has raised $1.4 million and says it is approaching 14,000 subscribers.

TurningArt, of Cambridge, got its start when founder Jason Gracilieri moved into a Somerville apartment four years ago. “I had 10 or 15 empty walls that needed to be filled,’’ he says. “I wanted to move beyond mass-produced artwork, but original stuff was too expensive.’’ His girlfriend (now his wife) was an artist, and Gracilieri knew most artists struggle to connect with buyers. “Price is one hurdle for people, but so is the time and effort it takes to find a piece you really like,’’ he says. “Our vision was to knock down those barriers.’’

For $9.99 a month, TurningArt sends a framed print of contemporary artwork. Every three months, you can remove the print from the frame, roll it up in a mailing tube, and exchange it for another work in TurningArt’s inventory. If you love it and want to own the original, you can apply membership fees you’ve paid toward the purchase. (TurningArt limits the discount to 40 percent.)

Like Manpacks, TurningArt is trying to raise money. Gracilieri says the company is launching subscription plans for corporate customers, which would allow it to rent multiple prints at once.

When I first interviewed Netflix chief executive Reed Hastings in the fall of 2001, he was already talking about the company’s plan to shift from DVDs by mail to digital delivery. “Our 10-year play is to be the world’s leader in downloadable DVDs,’’ he said. “We’ll have a residual mail business, but that won’t be the core of Netflix.’’

It’s hard to understand how skivvies or wrinkle cream could be delivered digitally. But Gracilieri at TurningArt has already conducted some early experiments. Fifty-inch flat-screen TVs might be ideal canvases, and TurningArt displayed some of its catalog on a flat screen at the Consumer Electronics Show in Las Vegas earlier this year. “It was a first step,’’ Gracilieri says.

For these businesses, finding new customers without spending jillions on marketing will be crucial. Hastings told me in 2001 that Netflix executives were “entranced’’ by the possibility of doubling its customer base if everyone just told one friend. The new mailbox entrepreneurs have that same wish.

Netflix benefited from strong word of mouth, but it also spent heavily on marketing. John Gallaugher, a Boston College professor who wrote a case study about Netflix, notes the company sent out mass mailings and bought TV spots. That kind of marketing investment can help a start-up gain momentum and get enough “early adopters’’ to talk up a service. (Gallaugher jokes that Manpacks may have the least word-of-mouth potential: Who wants to brag about the fresh undies they just got?)

“There has to be some spending and smart marketing strategy,’’ Gallaugher says. “ ‘If you build it, they will come’ has always been wishful thinking.’’

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.