Boxed Considering Sale of Company as eGrocers Flounder

Online consumer-facing wholesale retailer Boxed is considering selling the company as eGrocers face economic challenges.

The eTailer announced Thursday (Jan. 5) that its board and advisors are exploring the possibility of selling the company as well as looking into new ways to access additional capital, aiming to announce a new fundraise within the next couple of months.

“There can be no assurance that any offers will be made or accepted, that any agreement will be executed, or that any transaction will be consummated,” the company stated. “Boxed does not intend to make further announcements about [these] processes unless and until the Board has approved a specific transaction or otherwise determines that further disclosure is appropriate or necessary.”

The news comes as eGrocers see sales growth, but not enough to offset their economic challenges. Research from PYMNTS’ recent study “12 Months Of The ConnectedEconomy™: 33,000 Consumers On Digital’s Role In Their Everyday Lives,” which draws from responses from tens of thousands of U.S. consumers over the course of a year, notes that online grocery adoption actually rose throughout 2022. Between the end of 2021 and November 2022, the share of consumers digitally ordering groceries for home delivery at a later date rose from 35% to 40%, and the share ordering same-day delivery rose from 29% to 34%.

Yet, major players continue to struggle. Blue Apron, for instance, announced last month that it is laying off about 10% of its corporate staff. Plus, Berlin-based multinational meal kit company HelloFresh has just pulled out of Japan less than a year after entering the country, as German news agency Deutsche Presse-Agentur reported Wednesday (Jan 4).

In an interview with PYMNTS earlier this year, Boxed CEO Chieh Huang observed that online grocery is something of a long-term bet, with the consumers most interested in the technology not yet at an age to purchase their own food.

“Right now, some of the people that care most, they might still be too young to be shopping for [themselves], but you fast forward five years, these folks are going to enter the workforce. … So, that might be another point of innovation that no one’s really talking about that will matter.”

South Korean eGrocer Kurly Cancels IPO Plans

In related news, these economic challenges are affecting not just United States-based online grocers but also those overseas. Most recently, grocery delivery startup Kurly has backed out of its plan to go public via initial public offering (IPO), citing an unfavorable market, as TechCrunch reported Tuesday (Jan. 4).

“We have decided to postpone listing on the Korea Exchange (KOSPI), considering market sentiment remained weak amid the global market uncertainties,” the company told the outlet, also stating, “Kurly will resume the IPO at the optimal time when we can fully evaluate our valuation in the future.”

The news stands in stark contrast to where the company was a year ago, a time of great optimism. In December 2021, the eGrocer announced a roughly $210 million funding round in the leadup to its IPO (then slated for last June), bringing its valuation to more than $3.3 billion. Plus, the company was expecting sales growth by the billions.

HelloFresh Bets on Prepared Meals as Meal Kit Business Struggles

As HelloFresh pulls its meal kit business out of new markets overseas, the company is bringing its ready-to-eat meals to new markets in North America. The company announced Monday (Jan. 3) that it has launched its direct-to-consumer (D2C) ready-to-eat business, Factor, in Canada, beginning in Ontario with a nationwide expansion coming soon.

“Doubling down on our investments in the ready-to-eat market and bringing Factor to Canada is a key pillar of HelloFresh’s long-term growth strategy,” HelloFresh Co-founder and CEO Dominik Richter said in a statement. “Ready-to-eat allows us to offer new meal occasions and unlock new customer segments, such as more male customers, single households and convenience seekers.”

While demand may be strong for ready-to-eat meals, companies in the space have certainly not been thriving in the recent past. Most notably, Freshly recently shut down its meal deliveries just one month after Nestlé partly offloaded the company, disappointed by its results.