The Incredible Bulk: Boxed Is Ready to Take On Amazon

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Boxed

Chieh Huang, the 35-year-old CEO of Boxed, epitomizes today’s self-starter entrepreneur with his out-of-the-box vision and tireless perseverance. The Co-Founder and CEO of Boxed, the mobile solution for bulk shopping without membership fees, also proved to be an entertaining speaker at Interbrand’s Best Global Brands Summit last week in New York.

His e-tailer startup, founded in 2013, is an online and mobile membership-free wholesale retailer that offers direct delivery of bulk-sized packages via the Boxed app or the website. Its customer base: a few million users spread across the US, all looking for deals on bulk purchases.

For example, customers can purchase 160 mini chocolate bars for Halloween for $16, 12 rolls of toilet paper or 60 Clif bars below retail price. Billed as the Costco of e-tail, Boxed’s New Jersey warehouse has two miles of conveyor belts using humans and iBots to fulfill the thousands of items shipped daily.

Boxed

ANYTHING BUT BOXED IN

Boxed now has “one of the most advanced fulfillment centers in the world,” Huang said, but “the reality is there’s not an ability to have lights-out automation. The reality is the dexterity of a human hand still hasn’t been replicated.”

A serious contender to Amazon and big box stores like Sam’s Club, Costco and BJ’s, Boxed offers deep discounts on branded products, and an inclusive, egalitarian and charitable workplace ethos for its workers.

The brand includes free samples with every order and produces videos encouraging users to reuse delivery boxes in creative ways, such as making kids’ castles or a garden.

The energy-efficient model distributes products regionally at four warehouses – Union, NJ; Atlanta; D and Las Vegas – and decentralizing distribution with 94 percent of all packages delivered in two days and 51 percent delivered in a single day.

Huang and two high-school friends, Will Fong and Chris Cheung. created Office Heroes, one of the first social games designed for the iPhone and while a failure as a game, it caught the eye of a Japanese gaming company that invested $800,000. Eight months later they sold their company to Zynga and came up with the idea for Boxed. Fong is now CTO and Cheung is CCO.

THE PROFIT MOTIVE

The company has yet to turn a profit – but now plans to introduce a real-time auction platform for top-of-page sponsored search results, pitting bidders against each other, in pursuit of competitors Amazon, Walmart and the latter’s newest site, Jet.com.

With e-commerce advertising projected to top $400 billion in the U.S. this year, according to the National Retail Federation, Boxed is poised to seize its piece of the pie.

“It’s a little bit of a different mindset—we are a virtual warehouse,” said Boxed CMO Jackson Jeyanayagam, former head of digital at Chipotle, to Adweek. “Amazon shoppers spend 1 to 2 minutes there because they already know what they want. People spend 15 to 20 minutes on our platform”—more time for targeting with relevant ads.

THE RIGHT FORMULA

“They’re doing a lot of things right,” said John Impellizzeri, director of the Center for Supply Chain Management at Rutgers Business School in New Jersey. “A large portion of the population has to drive 20 miles to a Sam’s Club, so at some point the 55-year-old mom or dad will say, ‘Do we really want to drive 40 miles and pay a membership fee?’”

Boxed has captured its initial market, millennials, and 81 percent of its users are between 25 and 44, but with no membership fee and most orders qualifying for free shipping, the next goal is to add large families and small- to medium-sized businesses.

What attracts them: Boxed carries around 1,500 items at a time, and keeping inventory low engenders favorable deals from manufacturers who appreciate the curated shelf-space. By comparison, Costco carries around 3,500 products and WalMart inventory is in the hundreds of thousands.

THE HEART OF BOXED

Huang’s progressive customer and employee policies include parity to pricing for women’s wellness and beauty items (often costing 108 percent more than equivalents for men) and two senior managers are actively lobbying against the pink tax levied in 30+ states on basic items like tampons and sanitary pads. The company funds college after scholarships for employees and even pays for weddings up to $20,000.

“At its core, it just comes from me growing up poor and seeing my parents come home pretty beat up,” said Huang. “It was tough. In New Jersey, you have all different types of worker. You get exposed to part of the workforce you don’t get exposed to in [affluent] Silicon Valley.”

Huang says he’s committed to investing in New Jersey where Boxed employs 115 skilled and low-skilled workers in New Jersey on a site that was once “a huge dairy factory. Now Union County is home to one of the most advanced fulfillment centers in the world. We started by selling toilet paper, and now we have organic coconut oil. It’s a little bit old school versus new school. It’s old school in that we use old school merchandising to pick products, but when you look at the back end there’s nothing old school about it.”

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