When four tech guys gathered around a rec room table in Manhattan last April with a decidedly low-tech pen and paper to brainstorm their next business venture, they had no idea it was going to be so…big. Just a month after they left troubled gaming company Zynga—which had bought their Astro Ape Studios following the outsized success of their social mobile games, like Office Heroes—they were itching to start something new. The result is the Boxed Wholesale app, which lets you use your phone or tablet to score bulk warehouse club deals without the hassle of navigating a maze of aisles, languishing in long lines, or struggling to stuff that 100-roll pack of toilet paper into your trunk.
"I grew up loving to go to Price Club, and later Costco, with my parents. But one day in 2012 I was shopping and I thought, how can I have one of the most connected devices ever assembled by man in my pocket, and be sitting in line with a massive amount of toilet paper? These two things have to be able to help each other," says Chieh Huang, co-founder and CEO of Boxed. "People are spending more time on their mobile devices than on their desktops, and we thought shopping was probably going to flow after that. So when we sat down in 2013 and realized no one had offered a solution for the warehouse shopping problem, we thought it was a good thing for us to build so that we could use it ourselves!"
And just like that Huang, who was an attorney before entering the tech space, was once again reunited with childhood buddies Christopher Cheung (Head Designer) and William Fong (CTO), and long-time colleague Jared Yaman (COO). Just over three months of full-time work later, they had built the platform and launched in beta in New York and New Jersey. What happened next shocked even Huang. "We went from two states, to being able to fulfill nationwide, across the 48 contiguous states in another 90 days," he says. "In the beginning, we thought, if we can be the service in New York, that's a pretty big market. But purely based on word of mouth, our inbox was flooded with ‘When are you coming here?’ emails, and we realized we were on to something. We took a serious look at expanding and then we just did it. It was a gamble, but luckily it’s paying off."
An early infusion of cash from eager investors didn't hurt. In July, ahead of the August 22 hard launch that brought the service to customers on the eastern seaboard, Boxed secured $1.1 million in seed funding from Bessemer Venture Partners, ENIAC Ventures and Social Starts. Those investors likely already knew what Huang now counts as the biggest surprise of this journey so far. "We were under the impression that only people in Manhattan would use this service, because they don't have cars. But we're indexing just as well in non-urban environments. At the end of the day, it’s a time saver," he explains.
Being a purely mobile play ups the convenience factor. Though they've gotten pushback from folks who want to use the service on a computer, Huang wants to perfect the current experience before redirecting resources. "The ultimate goal is to be the leader in mobile commerce. I'm not just saying revenues; if you're trying to find a good experience of buying something on your phone, I want you to automatically think, 'Boxed has one of the best, if not the best, experiences of buying something on your mobile device,'" says Huang, 32.
Value is key, too. Shipping is gratis for $75+ orders, and membership fees are nil, unlike brick and mortar warehouse clubs. Most who use the free app (available for Android and Apple) receive orders within two days—and those in Southern California and between Boston and DC get goods the next day, at no extra charge. There's a mix of mainstream and smaller, natural and organic brands, and all offerings are munched and spritzed in office to see if the staff likes them enough to take them home. They include household staples, health and beauty finds, packaged foods, and baby essentials, all in bulk sizes that pass on real savings to shoppers.
Huang credits Boxed's meteoric early success to a culture where every one of the 10 people who work out of their New York office feel empowered. "Companies are not lead by a single person, they're lead by a group of individuals, collectively making good decisions on behalf of the company. That's what makes or breaks this company, and I’m humbled by that every day," says Huang, who also served as CEO of Astro Ape. The dad-to-be (his first daughter is due in April) is already eying expansion in the form of new verticals, though the team hasn't yet landed on the right ladder to climb.
After customers check out, they receive an email warning that "objects on Boxed are bigger than they appear." Turns out, that sentiment is right in more ways than one.
[Image: Flickr user Ken Teegardin]