Delivery is free for orders more than $49, and Boxed says the goods arrive in two days or less. The average Boxed customer — 80 percent of whom are between the ages of 25 and 44 — spends about $100 on around 10 items per order. That allows the company to keep costs low by splitting shipping costs over a wide range of products, instead of just a few.
“Most retailers ship 1 to 1.5 items” on average per order, Huang said.
That’s one metric that might make Boxed’s business appealing to competitors. Survival in a world dominated by Amazon — especially after its $13.7 billion acquisition of Whole Foods last year — is the most pressing question for online and brick-and-mortar retailers alike.
Even the nation’s bigger retailers are trying to keep up with Amazon. Walmart acquired e-commerce site Jet.com in 2016 and recently announced that same-day grocery delivery will be available at hundreds of stores by the end of 2018. Target bought delivery platform Shipt. And Kroger is also ramping up its online and delivery offerings.
“A number of traditional brick-and-mortar grocers, Kroger included, recognize that they need to have a robust presence in e-commerce to stay relevant with consumers as habits evolve rapidly,” said Ben Bienvenu, retail analyst at research firm Stephens.
“All American consumers have the same needs — to buy great consumer products, with savings and value, and with the convenience of easy delivery. Boxed offers that,” said Patricof, noting that he trusts the Boxed management team to make “the right decision” about the company’s future.
For his part, Huang said he’s pleased his investors remain supportive of Boxed’s vision to remain independent for now, adding he hopes to go public in the “medium-term.”
Huang started Boxed about five years ago in the garage of his parents’ New Jersey home after selling a mobile gaming company he founded to social videogame firm Zynga. Within eight weeks of launching, Boxed received its first approach for a potential acquisition.
He said he drew inspiration from childhood trips to Price Club, which merged with Costco in 1993, and he recognized that buying in bulk was a good way to save time and money.
When he moved to Manhattan during the financial crisis in 2008, Huang still wanted to stock up but bulk retailers weren’t as common in the big city — and getting the big items home was no easy task, either.
“I didn’t have a car anymore,” said Huang. “I wondered how many others wanted to buy in bulk but didn’t have the physical means to access it.”
In solving for those problems, Boxed was born.