Boxed joins the subscription model trend

Boxed
Boxed rolls out its first subscription model. (Boxed)

Boxed rolled out its first membership program, taking loyalty to the next level. Called Boxed Up, member perks include 2% cash rewards, free priority shipping and access to special promotions. In addition, members will get VIP customer service and price-matching for competitors for the cost of $49 a year. 

According to Ash Prashar, VP of communications for Boxed, the company decide to roll out Boxed Up now as a premium service because customers were asking for deeper discounts and unique promotions. 

"So, we decided to roll out a premium service that rewards loyal customers with perks and promotions for shopping on Boxed," he said. 

One of the big differences between this and the traditional service is the free, two-day shipping on all orders, versus free for only orders over $49.

Special promotions and gifts will include deals on Boxed Hotels, and partners like Keurig, Pepsi and Kraft. 

In addition, Boxed Up is available for both B2C and B2C customers so that businesses can get in on the promotions. 

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Jim Fosina, CEO of Fosina Marketing Group, says that the move could benefit Boxed, as consumers are always looking for a good price-value relationship. And if the company can maintain subscriber retention, the long-term benefit will outweigh the initial expense on shoppers, similar to Amazon Prime. 

"Boxed Up provides the consumer who understands the need for the service on a regular basis to be rewarded by paying the annual fee and receiving free shipping and incremental discounts as a result of greater contracted loyalty," he told FierceRetail. 

Of course, Fosina notes that there will be naysayers.

"There will always be consumers who react negatively to being charged when they have been getting discounts and benefits free—i.e., 'why do I have to pay for this?'" Fosina said. The challenge will be for Boxed to constantly reinforce in the message that there is great value in a small, incremental fee, which is still almost half the price of an Amazon Prime membership.

So why now? Fosina says that Boxed is no doubt riding on the success it sees with Amazon, Costco, BJ's and other similar programs that are charging a membership fee to build brand affinity and loyalty

"The millennial consumer has demonstrated that they are more than willing to pay for premium services and discounts, so the time is right for businesses like Boxed to address these consumer purchasing patterns and preferences," Fosina said. "There is no need to 'leave money on the table' and/or not take advantage of building greater loyalty and predictability around their customer retention. The model is working well."

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Fosina expects to see many more online retailers and some brick-and-mortar players step up to the opportunity of subscription programs in the near future. He notes that the secret to the success of this entire model is the ability to retain and grow the relationship over time. 

"Marketers must keep the value of the relationship front and center throughout the length of the subscription in order to retain customers and build a strong and valuable foundation," he added.