Boxed
- Boxed filed for Chapter 11 bankruptcy on Sunday and plans to end retail operations.
- The grocery startup kept he majority of its cash in Silicon Valley Bank, which collapsed last month.
- Lower demand for grocery delivery hurt sales long before the bank's collapse.
E-commerce grocery company Boxed filed for Chapter 11 bankruptcy on Sunday weeks after reporting it had most of its cash deposits and other liquid assets in accounts at the collapsed Silicon Valley Bank. But Boxed's struggles began long before its bank of choice went under.
Boxed said it would wind down its retail operations over the next few weeks and sell Spresso, its software busines. In January, Boxed said it was considering a sale of the company.
Boxed is one of multiple startups founded over the past decade that delivered groceries, cleaning products, and other household essentials directly to consumers' front doors. Like many of its competitors, the early years of the pandemic were boom times for Boxed. The company saw "tremendous growth" starting in 2020 when shoppers were staying at home to avoid COVID-19, Huang told industry publication Progressive Grocer in 2021. Like Boxed, many of its competitors are now struggling as consumers' habits have changed and e-commerce growth has slowed.
Founded in 2013, Boxed sells groceries in bulk — a "Costco for millennials," as Forbes called it in 2016. Items for sale on its website Monday included a 24-pack of single-serving pouches of tuna and a box of 30 Elmer's glue sticks.
It raised over $300 million and reportedly rejected an acquisition offer from Kroger before going public in a SPAC deal in late 2021, according to Pitchbook.
Boxed looked beyond straightforward retailing to grow its business. It started offering advertising for food brands, ran a marketplace for third-party sellers, and sold its software as a service to other retailers.
After the company went public in December of 2021, its share price rose to an all-time high of $13.70.
But since then, the pandemic-fueled demand for grocery delivery has dissipated.
In its latest earnings report last November, Boxed said its sales fell 15% over the year prior to $41.7 million and that its net loss quadrupled over the same period.
Boxed's stock has lost almost all its value, and the company was warned that it could be delisted from the New York Stock Exchange. The startup's shares were trading at 19 cents each on Monday.
Consultancy Brick Meets Click forecasted in January that grocery e-commerce sales will grow at a rate of 12% through 2027. That's a tremendous slowdown from early in the pandemic when e-commerce grocery jumped an average of 300% each month. E-commerce grocery companies like Boxed also face increased competition from brick-and-mortar grocers who have beefed up their e-commerce offerings and order pick-up services, which have become more popular with consumers.
Other startups in the grocery delivery space have faced issues. Imperfect Foods, for instance, saw orders slump before being acquired by rival Misfits Market. Rapid delivery players that aimed to get goods to consumers in 30 minutes or less, like Gorillas, Fridge No More, Buyk, have ceased operations in the US. Startups still operating in the grocery delivery space, like Instacart, Weee!, and Gopuff, have laid off staff or delayed plans to take their companies public.