When it comes to getting good deals on staples, it’s hard to beat going to big club retailers like Sam’s Club or Costco or whatever other retailers there are where you can buy a 64-pack of bathroom tissue for a highly discounted rate. But you know, not everyone has one of those stores just a few miles away.
A new startup called Boxed, founded by former gaming execs from places like Zynga, hopes to change that, with a mobile app for having wholesale goods delivered to your door. The app launches today, and at first will solve this problem for users on the eastern half of the U.S. with free two-day shipping for orders of $75 or more.
The idea behind the app is to save customers time by shipping the same type of goods they would get at a warehouse club to customers directly to their doors. It accomplishes that by stocking its own warehouse with the most popular items that customers tend to buy at those retail outlets. Unlike Costco, which might have 4,000 or 5,000 items in its stores, Boxed keeps about 500 SKUs available for users in its own warehouse, according to CEO and co-founder Chieh Huang.
That’s right, its own warehouse. While a number of services — like eBay Now or Google Shopping Express are working to partner with retail outlets to provide low-priced same-day shipping, Boxed is taking the contrarian approach of actually holding inventory and fulfilling shipments from its own facility. After the failure of Web 1.0 stalwarts like Kozmo.com, that’s become a no-no for the new generation of local delivery startups.
That said, Boxed isn’t promising same-day delivery, or even next-day delivery. It’s shipping wholesale staples out via regular ground mail, with the expectation that goods will arrive at their destination within two-days of shipping. That’s one of the reasons that for now, the service is only available on the east coast.
By holding its own inventory and shipping in bulk, Boxed believes it can keep margins high and offer lower prices than what one could find online elsewhere. The free shipping on orders of $75 helps, but Boxed believes it can also save its customers time. That’s because the average warehouse club trip lasts more than 100 minutes on average, while an order from its mobile app can be placed in a fraction of that time.
Boxed was founded by former Zynga execs Huang, William Fong, Christopher Cheung, and Jared Yaman, who had joined the gaming company through the acquisition of their startup Astro Ape in 2011. Now the group is looking to switch from mobile gaming to mobile commerce, with the launch of the new app.
The startup has raised a seed round of $1.1 million from ENIAC Ventures, Social Starts, and Bessemer angel group 15 Angels. Former Zynga COO David Ko is also a Boxed investor and will lead the company’s board of advisors.