Online bulk-products retailer Boxed.com is entering the fast grocery delivery arena with plans to acquire New York City pure-play online grocer MaxDelivery.
Financial terms of the deal weren’t disclosed. Boxed said Monday that the transaction is slated to close in December, pending customary closing conditions and other terms. Once the agreement is finalized, Chris Siragusa, founder, president and chief technology officer of MaxDelivery, will join Boxed’s senior leadership team as senior vice president of operations.
One of New York’s first on-demand grocery delivery services, MaxDelivery launched in 2004 and has since processed about 2 million orders. Boxed noted that MaxDelivery stands out from other “ultrafast” grocery delivery operators by generating a high average order value of approximately $100, in turn producing strong unit economics. Plans call for MaxDelivery to adopts Boxed’s proprietary e-commerce technology and services for more scalable operations and expansion into more markets over time.
MaxDelivery operates a 10,000-square-foot warehouse in midtown Manhattan, and customers place orders via its website or mobile app. (Image courtesy of MaxDelivery)
With the addition of MaxDelivery, Boxed said it aims to expand its capabilities in “dark store” micro-fulfillment and rapid on-demand grocery delivery. In selected markets, Boxed customers also will see a “significantly expanded” fresh food assortment, the company reported.
“This acquisition of MaxDelivery will mark our entry point into the rapidly growing fast-grocery delivery space, in addition to broadening our capabilities in micro dark-store fulfillment and fresh supply chain,” Boxed CEO and co-founder Chieh Huang said in a statement. “Boxed customers have expressed how they value fresh groceries, and we are excited to be able to deliver a more comprehensive product offering while benefiting from a complementary business model with similarly high average order values as Boxed.”
Founded in 2013, Boxed provides warehouse club-style shopping — including groceries, pantry items, household staples, health and beauty aids, office supplies, and a variety of organic and green products — through its website and mobile app. Consumers and businesses can buy club-sized packages with free two-day delivery in the continental U.S. on purchases of over $49, without the membership fees of traditional warehouse clubs. It also offers Boxed Express, an on-demand delivery service for perishables.
“In the months after closing, we plan to implement MaxDelivery’s model into several additional regions as we generate value for the entire Boxed ecosystem,” Huang added. “We believe that MaxDelivery will also benefit from the use of Boxed software technology as it becomes a client of our software business.”
Serving most of Manhattan, MaxDelivery offers delivery in less than an hour from a selection of more than 10,000 food and grocery items — including fresh produce, organic meat and dairy products, local gourmet and specialty foods, wine and spirits — as well as nonfood products like over-the-counter medicines and everyday home and office supplies. The e-grocer’s offerings, accessed via its website and mobile app, also include a curated “Best of New York” collection of local favorites and artisanal brands such as Pat LaFrieda Butchers, Wild Edibles Seafood, Murray’s Cheese and Balthazar Bakery. Delivery is free for orders over $125 and costs $5.95 for purchases less than that amount.
“Empowering New Yorkers to get their fresh groceries online has been our vision since our inception,” Siragusa stated, “and with Boxed’s support, we will be able to replicate our highly scalable, profitable model into several new markets.”
MaxDelivery, which operates a 10,000-square-foot warehouse in midtown Manhattan, reported that demand doubled during the height of the COVID-19 pandemic. The company also has announced plans to expand into the New York City borough of Brooklyn and to the West Coast.
In unveiling the acquisition deal, Boxed pointed out that MaxDelivery’s employees are full-timers rather than independent contractors, enabling the online grocer to provide more consistent service quality and strong customer loyalty, as about 98% of orders come from repeat customers.
“We are thrilled to become a part of a company that is poised for success, led by an exceptional management team, and has a proven commitment to ESG,” Siragusa commented. “We are looking forward to becoming a part of the Boxed family.”
In mid-June, New York-based Boxed announced plans to become a public company through a merger with special purpose acquisition company (SPAC) Seven Oaks Acquisition Corp. Boxed Inc., the proposed name of the merged company, is slated to be led by Huang as CEO and Seven Oaks Chairman and CEO Gary Matthews as chairman. Its common stock and warrants will list on the New York Stock Exchange under the respective symbols BOXD and BOXD WS. As part of its plan to go public, Boxed said it also aims to monetize its end-to-end e-commerce platform via a software-as-a-service offering.