Kroger, the grocery store chain operator that is struggling to compete with Amazon now that it owns Whole Foods Market, is considering buying the online wholesaler startup Boxed.
CNBC, citing a person familiar with the matter, reported that a Kroger deal could value Boxed at between US$325 million and US$500 million. The idea of a sale came as the New York startup was looking for funding.
Boxed sells bulk items, including staples such as toilet paper and pet food, and delivers to consumers’ front doors. The startup expects to get competing offers in the coming weeks, noted the report. Morgan Stanley is acting as the advisor to Boxed.
In December, Target announced it would pay US$550 million to acquire Shipt, the same-day delivery platform.
In April, Boxed revealed it spent tens of millions of dollars on a new automation system in hopes that it would reduce the company’s costs. According to a report in Bloomberg News at the time, the new automation system was expected to triple the output of its warehouse in Union, New Jersey, without the need for more space or added employees.
“By having a smaller number of products, Boxed can get stuff out the door more cost-effectively by reducing the warehouse footprint and the complexity of the operation,” said Clint Reiser, director of supply chain research at ARC Advisory Group, in an interview with Bloomberg. “It becomes a competitive advantage.”
With warehouses in New Jersey, Dallas, Las Vegas and Atlanta, Boxed offers bulk-sized products similar to those found at big warehouse retailers like Costco Wholesale. Boxed told Bloomberg the company had sales of roughly US$100 million last year, which is up from US$50 million in 2015. According to the report, the average order size is US$100 and includes 10 items. Orders must total at least US$50 to get free shipping.
“Our strategy is to not chase Amazon,” Boxed founder Chieh Huang said. “We have to build our business our own way.”
Full Content: PYMNTS
Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.
Featured News
UK Probes Lindab’s Acquisition of HAS-Vent Amid Fears of Market Monopoly
Apr 28, 2024 by
CPI
Shein Faces EU Regulations Over User Data
Apr 28, 2024 by
CPI
Google Fights Back Against US Antitrust Lawsuit
Apr 28, 2024 by
CPI
US Homeland Security Establishes Blue-Ribbon Board with Tech CEOs to Advise on AI
Apr 28, 2024 by
CPI
FTC Accuses Amazon Executives of Using Disappearing Messaging Apps to Conceal Evidence
Apr 28, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI