Boxed is thinking outside the box and creating the perfect package for mobile retail

Chieh Huang

This is not a grocery delivery service. Nor is it a tech company selling non-perishable foods. "We're a mobile company selling consumables," is how Chieh Huang, CEO and co-founder, describes Boxed.

Launched just 10 months ago, Boxed is innovating warehouse shopping by eliminating the need for consumers to haul large quantities from the check-out, to their car, and then their homes. Instead Boxed's mobile shopping platform allows consumers to purchase in bulk everything from diapers to detergent and have it delivered directly to their homes. The company has already grown enormously thanks to satisfied customers, loyal employees, viral publicity and, of course, a unique niche in the retail space.

Huang and his team began their road to retail a little bit differently. They started as mobile game developers. And while working in a medium-sized office of about 100 gamers, Huang was constantly asked to make runs to the store to pick up supplies for everyone, from water bottles and pens to paper towels and snacks. The office runs, coupled with memories of family trips in the suburbs to warehouse stores, triggered an idea.

"We knew mobile was the most mature vertical for how to nail experience and engagement with consumers," said Huang.

And that's how it all began, with a belief in the power of mobile and the desire to fulfill a need. What comes next is guts and confidence, as Boxed enters into the fiercely competitive world of online shopping and delivery. 

FierceRetail: How did the idea for Boxed come about?

Chieh Huang: It started as a thesis. We knew we wanted to solve a problem: I thought, 'I can't be the only one who has no means of getting to Costco.' Soon we found out that there's a big market for people who don't have the time or the patience. Since we launched nationwide in November, we've grown 100 percent month-over-month.

FierceRetail: Does it frighten you to compete in a world with big players such as Amazon and Walmart?

Chieh Huang: Listen, this space is so big and no one has really solved the online purchase and delivery problem yet. At the moment, there is room for multiple players.

Look at offline behavior. There is a Walmart and a Costco literally right next to each other in my hometown. Both have similar savings but Costco charges a membership fee to go in the door, yet they still get more shoppers. Sometimes it's about what you're offering. A lot of shoppers want bigger sizes so warehouses are the place to go. And the brands you want may be on Amazon, but you can only get the big sizes through a marketplace seller. So where do you get your large quantity of Bounty or Charmin? That's where we come in.

This is how we differentiate. We truly discover the brands people want to buy. And it shows. A vast number of shoppers browse the app and while it varies, the average order is more than nine items and well over $100. (The day we spoke, Huang said the highest order was $2,600.) Compare our cart to Amazon or another online retailer. Our prices are competitive. Listen, I'm not going to say we are the lowest prices, but we often are.

FierceRetail: Who is the Boxed shopper?

Chieh Huang: We go after the premium consumer. Our average shopper has a household income upwards of $100,000.

FierceRetail: Is there anything surprising about your core demographic?

Chieh Huang: When we first started, we were aiming for the young professional in the city. We still have a good fair share of these shoppers. But then we got notes from moms asking why we carried so many kinds of protein bars and realized it was mothers with families who were looking for us. We decided this is a far better demographic to serve.

FierceRetail: What makes Boxed unique from other online retailers?

Chieh Huang: We have a test method in our office. We try everything. If we don't like it, we don't give it to our families, then it's not on the site. Everyone in the office is gaining weight because of all of the sampling. 

We'll never carry millions of SKUs. In fact, when we first launched we carried only 200 or 300 items. But then we got mail from our customers and we now carry 1,000. I think eventually we'll settle on a number a bit north of that, but less than a wholesaler that carries between 3,000 and 5,000 SKUs.

FierceRetail: How is your customer service?

Chieh Huang: Our NPS score is incredibly high and we really grow on word of mouth. Our belief is that if you put your toe in the water and try us out, you'll get a handwritten note. Really, each order comes with a handwritten message, sometimes with a generic note but often with a personalized connection.

When we first started, the mantra hanging on the wall was "create a service that you'll use." Now, with customer service as a priority, it's "create a service that you'll love."

FierceRetail: How will new dimensional shipping prices in 2015 affect Boxed and its customers?

Chieh Huang: Well it won't affect our consumers at all. Our average box is huge, 2 ft. by 2 ft. by 18 ft., so we will get dimensional summary penalties. But we're used to the size issue so we are working with carriers to create deals and so there is no impact on the consumer.

FierceRetail: Where do you see Boxed in five years?

Chieh Huang: We're in it for the long run. We're a mobile first company and we will continue to stay that way, especially as 16 year olds that grow up on tablets become customers themselves.

FierceRetail: Any new markets you plan to go after in the future?

Chieh Huang: It's a good thing that we don't feel the need to keep an eye on the competition or we'd be paralyzed by fear. We focus on the consumer, and people love our service. We will continue to deliver a better experience. We hope to deliver even faster shipping in the future. Right now some areas get overnight shipping, and 88 percent of our delivery areas offer two-day shipping. And 100 percent of customers get two-day shipping, all without membership fees.

I think what we're doing right now is crazy but I believe in two things. One, someone is going to solve consumer packaged goods online and there will be a huge prize for that retailer. Second, this won't seem crazy in five to 10 years when mobile retail is dominant.