Boxed.com derives 70% of its orders each month from repeat shoppers, CEO Chieh Huang said at NRF.

Boxed.com may not be an online-only retailer for long.

Chieh Huang, co-founder and CEO of Boxed, No. 326 in the Internet Retailer 2017 Top 1000detailed the retailer’s fast-paced sales growth and its future this week at the National Retail Federation 2018 conference in New York City.

Boxed.com launched in 2013 as a way to bring bulk shopping of consumable products with warehouse savings to shoppers who didn’t have a warehouse retail store, such as Costco Wholesale Corp. (No. 9), available nearby. Meanwhile, for those shoppers with access to a warehouse-style store,  online ordering from Boxed.com could save them time and money, Huang said.

In its first year, Boxed.com generated $40,000 in sales, and Huang said he felt on top of the world. Then, in less than 36 months, the web merchant hit the 9-digit revenue mark, he said. In a previous interview with Internet Retailer, Boxed said it generated more than $100 million in sales in 2016.

One of the ways the retailer achieved this growth was by launching its own private-label products, Huang said. When Boxed launched, it did not have access to or carry a wide range of products, and shoppers often noted that the retailer didn’t have product X or Y, Huang said.

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Private-label brands also allow Boxed to have more control over its supply chain. Previously, if a supplier was short on an order, the retailer would have to delay a package delivery to a customer. Such problems are less common if Boxed makes the product in-house, he said.

Huang also attributes the retailer’s success to Boxed keeping its e-commerce back-end system and warehouse fulfillment center in-house. Its e-commerce warehouse has robots, built by its own in-house robotics team, picking orders.

“Walking in [to the warehouse] does feel like a scene from ‘Star Wars,’” Huang said.

About 60% of Boxed.com’s shoppers are between 25-44 years old, Huang said, which is younger than Costco’s core shoppers who skew 45-65 (53.7% are ages 45 and older, according to Internet Retailer data) so there is not much overlap. The demographics are encouraging, Huang said, because as Boxed’s young shoppers enter their core spending years, the retailer aims to build loyalty and keep them coming back because of Boxed’s convenience.  

Unlike traditional bulk shopping warehouses, Boxed does not charge a membership or subscription fee. About 70% of Boxed.com’s orders each month are from repeat shoppers, which is much higher than the Top 1000 average of 34% repeat shoppers in 2016, according to Top500Guide.com.

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In the future, Boxed.com plans to grow sales by increasing its SKUs and carrying more general merchandise, Huang said. Boxed also has a growing business-to-business division.

Huang would not directly comment on a report that grocery giant Kroger might acquire Boxed. However, he did say that stores are “absolutely” in Boxed’s future because stores and e-commerce are important to grocery retail. He points to Wal-Mart Stores Inc.’s acquisition of Jet.com as a way for Walmart (No. 3) to quickly step up its e-commerce strategy and Amazon.com Inc.’s acquisition of Whole Foods as a way for the web giant (No. 1) to ramp up its store strategy, as proof that online and offline components are essential to retail success.

“Grocery online is not a sideshow, it’s a major battleground,” Huang said.

To date, Boxed has raised $180 million in funding.

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