Ive been semi obsessed with Amazon lately. After reading THE EVERYTHING STORE (strongly recommend) I can't get enough of the commerce and strategy and thought process behind Amazon and similar sites.
While it's nice to see a startup doing great, I was more interested in this part. Since they sell in bulk, people won't be buying stuff that often. Which leaves them with not a lot of buying data to extrapolate from. I wonder how they're gonna tackle that. Or how they will handle the slightly insulting ones. We think you're out of 'Lots of Cheap Wine' from us in one week. Do you want us to order more? Will they predict pregnancies too?Huang wants to go further, and understand how customers are living their lives and how fast they consume the things they buy in bulk. The idea is that, as soon as you're out of toilet paper or granola bars, Boxed will know, and offer to re-supply you before you even think to go shopping.
As a former General Manager of a restaurant that actually had a good amount of storage space and as a former employee of a food distributor, I'm betting that this will do very well in that space. Currently food distribution companies are selling various verticals like: Dairy, meat, produce and disposables. I imagine that this last category disposables will be almost entirely overtaken by this type of an application. Worth noting that the disposable category can often be one of the highest margined items for a food distributor. -Restaurant owners will go through great pains to compare prices on things like Center of the Plate (COP) items, such as steak, seafood etc but they largely ignore what the cost of a beverage napkin or box of straws is. While I doubt that Boxed will start selling COP items, I bet napkins, straws, dish soap, to go containers etc will be a focus for restauranteurs. This has potential!
I never thought of it solving those types of problems but you are absolutely right. I believe targeting and marketing to these niche markets are the key to success for businesses like this. They stated in the article that they expected the core demographic to be guys who want protein shakes but it ended up being busy mothers. That shows how far off your initial impressions of the market may be. The fundamental problem I see with this app is that it is mobile only. It seems like they are cutting out a huge portion of people who prefer to make purchases (especially large ones) via computer. Chances are, you are going to want a single company account to make purchases like these for restaurants, etc. That way you can have the restaurant manager, owner, or new employee make the purchases from the back room. When I worked children's birthdays, the distributor we used for paper plates, cups, paper towels, etc was only contacted via phone. Anyone could call (including me at 16) and place an order for 2 boxes of plates or whatever. They would then send our order to our location and invoice over to the head office. I wasn't trusted with the credit card information but it was my job to make sure we never ran out of plates. The system currently in place with this app would have never worked for us, although having a reminder that we might be low on plates would have been helpful on numerous occasions.