Boxed Gets Into Fresh Groceries With MaxDelivery

Boxed MaxDelivery bike feature

Boxed, a seller of subscription bulk CPG items through its automated facilities that competes with Costco, BJ’s Wholesale and Sam’s Club, is expanding into fresh, on-demand grocery delivery with the acquisition of New York-based MaxDelivery.

The acquisition, for an undisclosed sum, is expected to close later this month, as will Boxed’s hitting the public markets via a SPAC combination with Seven Oaks Acquisition Corp. Boxed plans to leverage MaxDelivery’s model into other major markets as it goes after companies like Ahold Delhaize’s Fresh Direct, Amazon Fresh, Farmstead and Thrive Market, among others.

Chris Siragusa, founder, president and CTO of MaxDelivery, will join Boxed’s senior leadership team as SVP of operations.

“Empowering New Yorkers to get their fresh groceries online has been our vision since our inception and with Boxed’s support, we will be able to replicate our highly scalable, profitable model into several new markets,” Siragusa said in a release.

MaxDelivery, founded in 2004, was one of the first providers of on-demand grocery delivery. It uses a dark store model to distribute a range of fresh meats, dairy, fruits and vegetables as well as beer and wine, organic products, household goods and health/beauty items. To date, MaxDelivery has processed more than 2 million orders.

Boxed co-founder and CEO Chieh Huang said the company chose MaxDelivery as it stood apart due to its high average order value (AOV) of about $100, a major focus of Boxed, and has extremely loyal customers. The deal will also significantly expand Boxed’s own 2,000 or so SKUs.

“Also, all of its employees being full time aligns well with our core values, as 1099 contractors dominate the industry,” Huang said. “And MaxDelivery’s higher AOV drives improved unit economics, a wider delivery range, and broader market coverage. All of this creates a highly scalable platform we can replicate.”

Like many others in the e-grocery and CPG space, Boxed has seen its growth explode in the pandemic era, as much more business has shifted online and order frequency has increased. It has also created a marketplace to expand its business to third-party sellers, and licenses its homegrown technology to other retailers.

Huang said Boxed’s customers have expressed an increasing interest in fresh groceries, so expanding into the category will enhance its offerings and deliver more value.

“Additionally, expanding into the sector through this acquisition will provide us with an increase in incremental revenue while capturing accretive total addressable market,” he said.