Grocery e-commerce startup Boxed plans to expand footprint with new funding

Huang told the New York Times that suitors weren’t interested in his company until Amazon purchased Whole Foods last year. That deal quickly increased retailer’s appetite for online shopping and automation — Boxed’s bread and butter — but the Costco competitor hasn’t gotten any convincing takeover offers. This includes a bid from Kroger earlier this year, which valued Boxed at around $400 million.

Now, Boxed has $111 million more to focus on scaling quickly, potentially threatening bulk competitors such as Costco, and perhaps even Amazon and Walmart.

The company has made the most of growing demand for bulk goods online, including snacks and groceries. Boxed also effectively differentiates itself from the likes of Costco, which has expanded its online shopping, with an endearingly quirky approach. This includes slipping handwritten notes into shipments and sending “selfies” of orders to customers when they ship.

Other retailers may benefit, too, as Boxed looks to license its technology. Such an opportunity, which is similar to Kroger’s establishment of Sunrise Technologies in March, could help level the digital playing field against deep-pocketed Amazon as it continues to feel its way in the grocery space.

Helping others could be an especially lucrative opportunity, since companies across retail are looking to upgrade their systems and their store experience, but don’t have the capability in-house. Boxed and Kroger are taking two similar approaches in outsourcing their technologies, but their own models are otherwise not too similar. Boxed sells about 1,600 products, mostly bulk. Huang also expects its business-to-businesscustomer base to surpass its consumer-based business.

Further, Boxed claims to be “one of the very few commerce companies in the world that writes its own software, runs its own fulfillment centers and builds its own automation robotics in-house.” This could provide an advantage over other retailers, including Kroger, as well as Target and Walmart, all of which have recently gobbled up startups to chase the tech savvy and speed of Amazon.

The opportunity is significant for all of these companies developing a brick and click balance. In a recent Forbes interview Huang marveled that a huge driver such as consumer packaged goods accounts for only 1.5% online. Boxed’s opportunity is perhaps even more substantial as the three warehouse club retailers collectively account for $200 billion, yet none of that is coming from mobile, Huang told the Times.

Online grocery sales are expected to double over the next four years, reaching $334 billion by 2022. This trajectory means that retailers need to think beyond their core grocery competencies and start to think of themselves as technology companies as well. Boxed has always done this and may have a bit of a head start here.


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