E-commerce company Boxed, which has pitched itself as a kind of online version of Costco, yesterday announced that it has sold a minority stake in the company to Japanese retailer Aeon Group, which sunk $110 million into the company. The deal is said to value Boxed at around $600 million.
The New York Times notes that Boxed has been looking for investment for years, but was unable to get traction. “That changed a year ago,” the Times writes, “when Amazon bought Whole Foods Market. The $13.4 billion deal shook the grocery world, setting off a frenzy of deals and partnerships that continues to intensify. Traditional retailers pursued digital technology, and online companies reconsidered their relationship with brick-and-mortar retail.”
In the case of the Boxed deal, the Times writes that “the ownership structure allows Boxed to license its technology to its retail competitors in the United States as they try to become more digital. The company is in talks with 10 or so potential partners for various pieces of its technology. They include 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.”
The Times story points out that “food shopping is one of the last major holdouts to online retail. Groceries are unique in that their inventory is perishable, fragile and heavy. Grocery customers often shop at the last minute, like to see the food they are about to eat and don’t want to pay high delivery fees … Grocery delivery is difficult to do affordably, but tech-driven efficiencies like those developed by Boxed, Amazon and others have forced change on the industry.”
The New York Times notes that Boxed has been looking for investment for years, but was unable to get traction. “That changed a year ago,” the Times writes, “when Amazon bought Whole Foods Market. The $13.4 billion deal shook the grocery world, setting off a frenzy of deals and partnerships that continues to intensify. Traditional retailers pursued digital technology, and online companies reconsidered their relationship with brick-and-mortar retail.”
In the case of the Boxed deal, the Times writes that “the ownership structure allows Boxed to license its technology to its retail competitors in the United States as they try to become more digital. The company is in talks with 10 or so potential partners for various pieces of its technology. They include 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.”
The Times story points out that “food shopping is one of the last major holdouts to online retail. Groceries are unique in that their inventory is perishable, fragile and heavy. Grocery customers often shop at the last minute, like to see the food they are about to eat and don’t want to pay high delivery fees … Grocery delivery is difficult to do affordably, but tech-driven efficiencies like those developed by Boxed, Amazon and others have forced change on the industry.”
- KC's View:
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Just in the past year, Kroger has partnered with the UK’s Ocado, an online retailer with unique robotics technology … Target acquired delivery company Shipt … Walmart acquired delivery service Parcel … and Albertsons acquired meal kit company Plated. At the same time, Kroger and Walmart have both partnered with self-driving car companies, Kroger wanting to use them to delivery groceries to people and Walmart looking to deliver customers to its stores.
Everybody is looking for an angle and an acquisition that will give them an edge in an increasingly cutthroat marketplace. Which means that there are a lot of small companies out there coming up with unique takes on products and services, hoping that they’ll attract attention and investment dollars.
Then, it’ll be up to the acquiring and investing companies not to screw things up.
