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The Spoon

Daily news and analysis about the food tech revolution

Boxed

Online Grocer Boxed Bulks up by Going Public via SPAC

Boxed, a grocery e-commerce site that specializes in selling bulk items, is going public via special purpose acquisition company (SPAC). Announced today, the deal is being done via merger with Seven Oaks Acquisition Corp., and the combined company will be valued at roughly $900 million. To date, Boxed had raised $243 .6million in funding.

Founded in 2013, Boxed is kinda like a Costco without the membership requirement, selling bulk goods to both consumers and businesses. In addition to selling stuff online, Boxed also licenses out its order fulfillment and logistics technology to other retailers. In January of this year, the company entered into a multi-year partnership with Aeon Group, one of Asia’s largest retail conglomerates. (Aeon also led Boxed’s $100 million round of funding back in 2018.)

Boxed’s decision to go public via SPAC comes at a time of drastically increased interest in grocery e-commerce. COVID drove record amounts of people into online grocery shopping last year, and while those numbers have come down as the pandemic recedes, Coresight Research data shows that more than one-third of online grocery shoppers will keep up the new habit post-pandemic. Additionally, the ship-to-home category of grocery e-commerce that Boxed is in has hovered around $2 billion from month to month over the last year, according to Brick Meets Click.

All of this increased interest in online grocery shopping also means Boxed is facing increased pressure on a number of fronts. Not only does Boxed need to compete with traditional retailers like Walmart, which is rapidly expanding its delivery options and automating its fulfillment, but there is a raft of well-funded newcomers to contend with as well. On the ship-to-home side, companies like Imperfect Foods and Misfits Market both raised sizeable rounds of funding this year to expand. And on the smaller end of the spectrum, startups like Gopuff, Fridge No More and JOKR promise grocery delivery in as little as 15 minutes.

Boxed will now have additional funding to better compete. According to today’s press announcement Boxed “is expected to receive $334 million in net cash proceeds from a combination of Seven Oaks’ cash in trust of approximately $259 million, assuming no redemptions by Seven Oaks’ public stockholders, as well as a $120 million fully committed private placement financing.” Boxed CEO Chieh Huang will remain in charge of the new entity.

Grocery Logistics is Hot as Boxed Nabs $110 Million Investment from Aeon Group

Boxed, an e-commerce company that sells bulk grocery items, yesterday announced a $110 million investment led by Aeon Group, one of the largest retailers in Japan. This minority stake brings the total amount raised by Boxed to $243.6 million and values the company at $600 million.

The news was first reported by The New York Times as part of a larger story about Boxed‘s high-tech warehouses and the larger role fulfillment is playing for grocery retailers. Amazon’s purchase of Whole Foods last year shook up the grocery business with its combination of technology-driven logistics and groceries. Now, having an optimized logistics infrastructure to handle e-commerce and delivery is an essential component for every retailer.

All the major grocery retailers are getting into the logistics game. Amazon is bringing its delivery expertise to Whole Foods, Target acquired Shipt and Grand Junction, and Walmart acquired Parcel after previously acquiring Jet.com. All of this activity means how you get your groceries is becoming as important as the quality of groceries you are getting.

Which brings us back to Boxed, which in addition to operating its own e-commerce, has a robust fulfillment offering. The Times writes that the investment deal between Aeon and Boxed is structured such that Boxed can license its technology, which includes “mobile app technology, personalization software, a packing algorithm that maximizes space in shipping boxes, software that tracks item expiration dates, order management software and warehouse robotics automation” to other retailers in the U.S.

The Boxed/Aeon deal is reminiscent of the recent Kroger/Ocado deal. Earlier this year, Kroger upped its investment in U.K.-based Ocado, which runs a number of automated smart warehouses for more efficient last-mile grocery delivery. As part of that deal, Kroger will be building out twenty similar warehouses for grocery delivery here in the U.S..

Fulfillment centers are also moving from dedicated warehouses and into the grocery stores themselves. Walmart is building out a robotic fulfillment center at one of its locations to bolster its curbside pickup service. And the startup Takeoff will unveil its first robot-driven micro-fulfillment center inside a grocery store later this fall.

The good news is that as Boxed and all these other grocers bring fulfillment into the modern era, consumers will be the beneficiary, with expanded options for faster grocery shopping.