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Boxed represents a departure from traditional wholesale retail, which has created some unique difficulties since its founding. In its infancy, the company had to establish brand awareness or face irrelevance. The team launched the Boxed app as part of its brand awareness strategy.
Given the novelty of the company’s service, the company was unable to rely on a handful of major investors in its first year. Huang told Forbes, “In general, folks were like, ‘Okay, crazy idea, not what we would do, but here’s a small check and go figure it out.’” The company instead had to rely on many small investments (although major investors did come along in subsequent years).
Maintaining cost-efficiency while shipping a wide variety of wholesale products also presented several challenges. The average order received by the company is about 10 items. Huang stated that fitting that many items into a box can prove challenging, comparing the act of stuffing the box to a game of Tetris. The company now purchases flat carboard to cut and score in house to use as little material as possible. This also reduces shipping costs by keeping boxes small.
In addition, because the company decided not to charge a membership fee, it faced the problem of incentivizing customers to offer repeat business. To get customers engaged, the company designed what it hoped would be a “ridiculous customer experience” through its app. It also committed itself to offering consistency and relevance.