Online bulk products retailer Boxed.com enters the arena of fast grocery delivery with plans to acquire New York City pure online grocery store MaxDelivery.
The financial terms of the deal were not disclosed. Boxed said Monday that the transaction is scheduled to close in December, pending usual closing conditions and other terms. Once the deal is finalized, Chris Siragusa, founder, president and chief technology officer of MaxDelivery, will join Boxed’s senior management team as senior vice president of operations.
One of New York’s first on-demand grocery deliveries, MaxDelivery launched in 2004 and has since processed around 2 million orders. Boxed noted that MaxDelivery stands out from other “ultra-fast” grocery delivery operators by generating a high average order value of around $ 100, which in turn produces strong unit economy. The plans call for MaxDelivery to adopt Boxed’s proprietary e-commerce technology and services for more scalable operations and expansion to more markets over time.
MaxDelivery operates a 10,000-square-foot warehouse in Midtown Manhattan, and customers place orders via their website or mobile app. (Image courtesy of MaxDelivery)
With the addition of MaxDelivery, Boxed said it aims to expand its capabilities in “dark stores” micro-fulfillment and fast on-demand grocery delivery. In select markets, Boxed customers will also see a “significantly expanded” range of fresh foods, the company reported.
“This acquisition of MaxDelivery will mark our entry into the fast-growing area of fast food delivery, in addition to expanding our capabilities in supplying micro-dark stores 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 pleased to be able to deliver a more comprehensive product range while enjoying a complementary business model with similarly high average order values as Boxed.”
Founded in 2013, Boxed offers club-style shopping in stock – including groceries, pantry items, household items, health and beauty aids, office supplies and a range of organic and green products – through its website and mobile app. Consumers and businesses can purchase club-sized packages with free two-day delivery in the continental United States for purchases over $ 49 with no membership fees for traditional stock clubs. It also offers Boxed Express, an on-demand delivery service for perishable goods.
“In the months following the closure, we plan to implement MaxDelivery’s model in 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 customer of our software business.”
Boxed said the addition of MaxDelivery will also help expand its micro-fulfillment capabilities and fresh foods.
MaxDelivery serves most of Manhattan and offers delivery in less than an hour from a selection of more than 10,000 foods and groceries – including fresh ingredients, organic meat and dairy products, local gourmet and specialty foods, wine and spirits – as well as non-food products such as over-the-counter medications and daily home and office supplies. The e-merchant’s offer, accessed via its website and mobile app, also includes a curated “Best of New York” collection of local favorites and craft 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 under this amount.
“Giving New Yorkers the opportunity to get their fresh groceries online has been our vision since our inception,” Siragusa said, “and with Boxed’s support, we will be able to replicate our highly scalable, profitable model to more emerging 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 has also announced plans to expand to New York City’s Brooklyn and to the West Coast.
In the unveiling of the acquisition agreement, Boxed pointed out that MaxDelivery’s employees are full-time employees rather than independent contractors, enabling the online merchant to deliver more consistent service quality and strong customer loyalty, as around 98% of orders come from repeat customers.
“We are excited to be part of a company that is ready for success, led by a unique management team and has a proven commitment to ESG,” commented Siragusa. “We look forward to being 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 scheduled to be headed by Huang as CEO and Seven Oaks Chairman and CEO Gary Matthews as chairman. Its ordinary shares and warrants will be listed 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 through a software-as-a-service offering.
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