Boxed believes it can give merchant partners a more direct link to consumers, with better insights into their digital sales than a standard retail store intermediary would.
“As an ecommerce brand, you have a lot more data about your customer at your disposal,” he argued.
Boxed isn’t trying to be Walmart or Jet.com, according to its CEO, Chieh Huang. And it’s certainly not Amazon, which Huang compared to an “endless aisle” of SKUs with the data and algorithms to determine what consumers will buy next.
Boxed only has 1,200 items in stock. Its average basket size is about 9.8 items.
So while Amazon might drive higher purchase volume at a greater frequency over any given interval of time, Boxed aims to capture people when they’re looking to stock up on bulk products.
In addition to consumers who fit that shopper mindset, Boxed has three other targeting considerations: those who don’t own or have access to a car, those in rural areas who aren’t in close proximity to a wholesale club and those without the time or patience to visit a store.
Huang predicts the latter, psychographic attribute will make up the largest segment of Boxed’s business eventually.
In the past, driving value at the retail level was the equivalent of driving low prices and deep discounts.
Now, people value time and efficiency as much if not more than saving money, “which has thrown a huge curveball to the industry,” Huang claimed. “How CPG is sold, consumed and marketed is going to fundamentally change over the next 10 years.”
That shift in purchase behavior is also spurring big investments from legacy CPG brands like Unilever, which dropped $1 billion on Dollar Shave Club last summer.
“It’s not just the Walmarts of the world, but the P&Gs and Unilevers, which want more data about their customer and how they’re shopping,” Jeyanayagam said. “You could argue that toilet paper and paper towels are low consideration, but coming out of the recession … there’s a bigger ecosystem around convenience, price and saving time.”