Does a Boxed acquisition make sense for Kroger?
Boxed, the online retailer and wholesaler of bulk items, reportedly has a surprise possible suitor: Kroger.
The news was first reported by Forbes and then confirmed by a number of other media outlets. Forbes said Kroger was the first of multiple bidders for Boxed, which could fetch as much as $500 million. Others listed as possible suitors include Aldi, Costco and Target.
Often compared to an online version of Costco, Boxed sells a wide variety of food and household items in bulk sizes at a discount, with an average delivery time of two days. Boxed doesn’t require a membership fee like a wholesale club, but does add free samples to mimic another part of the warehouse experience. Most of Boxed users are Millennials, and most purchases are made on mobile devices.
Launched in 2013, Boxed now reaches 48 states, with warehouses in Las Vegas, Atlanta, Dallas, and Union, NJ, where it is based.
For Kroger, the purchase of Boxed is seen as a response to aggressive moves made by others, including the acquisition of Whole Foods by Amazon, Walmart’s acquisition of Jet.com and Target’s purchase of same-day delivery platform Shipt.
Such a deal could put Kroger in a better position against warehouse clubs like Costco, even though Boxed co-founder and CEO Chieh Huang told The Associated Press last year that he sees his business taking share from local supermarkets, drugstores and c-stores as Millennials embrace the convenience of online shopping across categories.
Last year, Boxed launched a new program called SmartStockUp, which uses information about customer habits such as purchase data along with broader restocking trends to anticipate when customers will need to replenish a particular item. Boxed then displays a “Need this Now” or “Need this Soon” recommendation when the customer visits the website.
In forming its 84.51⁰ analytics arm through its 2015 acquisition of dunnhumby’s tech platform, Kroger claims to be the largest collector of food purchase data in the U.S. and sees being able to deliver personalized recommendations as its competitive advantage.
But some see Kroger downplaying its online opportunity. In mid-December, Kroger rolled out its ClickList click-and-collect grocery shopping service at its 1,000th location, reaching about 36 percent of its stores. At its Investor Day in October, one analyst questioned why Kroger was still charging $4.95 for the service.
Kroger only began offering home delivery earlier this year. The service is now in about 300 locations through partnerships with Strip, Roadie, Uber, Instacart and others.
- Kroger And Rivals In Talks To Buy Wholesale Startup Boxed For Up To $500 Million – Forbes
- Kroger is said to consider buying online wholesaler Boxed for up to $500 million – CNBC/Reuters
- Kroger said to bid for online retailer Boxed – Supermarket News
- Will the ‘SmartStockUp’ program drive replenishment sales for Boxed? – RetailWire
- Can Boxed Deliver the Warehouse Club Experience Online? – RetailWire
- Insider Q&A: Boxed CEO Takes Bulk Buying Mobile – The Associated Press/U.S. News & World Report
DISCUSSION QUESTIONS: Does an acquisition of Boxed make sense for Kroger? In your opinion, has Kroger made the necessary investments in its online business to keep up with Amazon, Walmart and others?