Can Boxed Deliver the Warehouse Club Experience Online?

Discussion
Aug 29, 2013

Billing itself as "Costco in your pocket," Boxed is a new mobile app that promises to offer warehouse club savings without the need for a lengthy trip to the store.

Founded by former executives of the gaming powerhouse Zynga, the app launched last week in major cities in the Northeast with plans for further expansion this fall.

"For many years, the mobile gaming industry has pioneered the best practices in user engagement and enjoyment on smartphones," CEO Chieh Huang, a former director at Zynga, said in a statement. "We’re now using all of that knowledge to attract and retain a similar, mobile-focused audience whose buying habits are quickly migrating away from desktops."

Boxed offers about 500 of the top-selling SKUs available in club stores like Health and Beauty, Household, Grocery, and Kids and Diapers. That’s well below the 4,000 or 5,000 a Costco may carry in its stores. Boxed execs believe the limited and more targeted approach works better for shopping on mobile devices.

Mr. Huang, told VentureBeat, "People don’t want to scroll through lots of items while on their phones."

Holding its own inventory supports the opportunity for higher margins vs. outsourcing delivery to existing retailers such as eBay Now or Google Shopping Express, according to TechCrunch.

To cut down expenses, Boxed uses regular ground mail. Shipments are expected to arrive within two days. Delivery costs $6.99 but is free for orders over $75.

For consumers, Boxed promises savings of an average of 54 percent per unit on most products compared to local drug stores, Mr. Huang told VentureBeat.

But it particularly saves time, including the "long drive, parking nightmares, winding aisles and being stuck at checkout behind someone’s truckload of goods," that comes with club shopping, according to marketing copy. It claims the average warehouse club trips takes over 100 minutes.

"Boxed makes wholesale savings convenient for you; whether you’re a college student without a car, a busy professional without time, or a new parent without the ability to make an all-day warehouse club trek," said Mr. Huang on the company’s website.

The startup recently completed a seed round that totaled $1.1 million that included ENIAC Ventures, Social Starts and 15 Angels.

How would you rate the upside and downside potential of Boxed? Do you see a sizeable opportunity for online sales of bulk staples? What challenges will they face?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

11 Comments on "Can Boxed Deliver the Warehouse Club Experience Online?"


Sort by:   newest | oldest | most voted
Ron Margulis
Guest
9 years 5 months ago

I’d give it a 50 percent chance of making it. Just not sure the “treasure hunt” model of Costco and others can be translated to a mobile app without the loss of many sales opportunities to other online retailers.

Al McClain
Guest
Al McClain
9 years 5 months ago

Without the buying power of a major chain, and with the cost of postage, even parcel post, I can’t see how they can make money. Postage for bulky items quickly gets very expensive.

Ben Ball
Guest
9 years 5 months ago

I already have “Costco in my pocket”—it’s called Costco.com.

It appears Mr. Huang and company are approaching the CPG world from a paradigm commonly held by the digital generation—”if it hasn’t been done online by the digital community, it hasn’t been done online right.”

Applying new paradigms to old problems often yields great new ideas—nothing wrong with that. But Boxed looks poised to fall into a common trap. Namely, thinking of the web as a business system instead of a browsing/order entry device. And Costco is very, very good at creating appealing “browsing/order entry” environments.

Tony Orlando
Guest
9 years 5 months ago

When the average ring at Costco is huge, the free delivery will eat up all of the profits for Boxed, and I agree with the treasure hunt concept too. This will be a tough nut to crack, and I still don’t believe they can compete on the price, plus free delivery over $75. Good luck.

Lee Kent
Guest
9 years 5 months ago

And let’s not forget the value of the private label. People who shop at Costco are looking for quality and Costco offers great quality through their Kirkland brand at a lower price.

How is Boxed planning on competing with that?

Ed Dennis
Guest
Ed Dennis
9 years 5 months ago

There is little new here! Amazon, has been selling COSTCO products for years. Just go to Amazon and search Costco! Again we seem to want to get excited about nothing. Also when you buy via Amazon, you get their reliability and product guarantee.  If you are a Costco member you can order directly from their web site. You can also do the same with Walmart (Sams). Boxed is providing nothing new that I can see.

Vahe Katros
Guest
Vahe Katros
9 years 5 months ago

I recall that the membership fees represented a bulk of Costco profits early on—not sure. Ben Ball nailed it, so nothing to add here.

Peter J. Charness
Guest
9 years 5 months ago

As previously mentioned, there are already online warehouse club-types out there that aren’t bad little merchants:

Membership fee = Prime
Delivery = Free
Assortment = Huge
Pricing = Pretty good, to best, to not usually bad enough to make a difference.

Their competition isn’t Costco, it is Costco.com and Amazon. (and maybe eBay) That’s a tough set of competitors to enter against.

Shep Hyken
Guest
9 years 5 months ago

I’m not sure the “tipping point” has occurred for the Box program to work. Home delivery of product is being rolled out by a number of retailers, big and small. That said, will the public buy into the concept that, as Chieh Huang said in the article: “Boxed makes wholesale savings convenient for you.” Customers like convenience. Are they ready to move into a different experience than they have had in the past? The past is on premise. New is using a smartphone to shop. I’m sure that this is the future—or at least a version of it. But is the future taking place today?

Tom Smith
Guest
9 years 5 months ago

I go to Costco once a week for gas and while I’m there, I may or may not go inside to buy paper products, almond milk, Clif Bars or generic antihistamine based on what I’m out of.

I already buy cereal, by the case, and prescription dog food online.

I don’t see where Boxed will/can replace Costco for me.

Steve Montgomery
Guest
9 years 5 months ago

Agree with Ben on the concept. Hard to beat someone at the game that they were one of the inventors of.

wpDiscuz

Take Our Instant Poll

How would rate the idea for Boxed?

View Results

Loading ... Loading ...