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Boxed: online grocery service is a bargain for users, not investors

Chains like Costco have built an empire that sells two-gallon mayonnaise tubs to American bargain hunters. A boxed product called Online Costco for millennials wants young shoppers to be as enthusiastic about bulk purchases as their parents. It’s a hype.Losing companies will be published through a nearby special acquisition company Valuation of $ 900 million It looks too expensive.

Founded in 2013, Boxed offers home staple foods and groceries at discounted prices without the need for paid members. Free shipping on orders over $ 49.

Without sign-up requirements, new customers can easily be attracted. Still, net sales in 2020 were $ 187 million, up just 8%. Boxed hopes investors will ignore the small number and expect $ 1 billion in sales by 2026.

These targets look overly optimistic. While online grocery sales growth has created many opportunities, Boxed is not the best choice for monetization. One of the biggest challenges in online retail is delivering so-called “last mile” customers. Both Target and Walmart have provided a click-and-collect service to partially avoid this and allow orders to be picked up at nearby stores. Both sometimes use stores as warehouses to process online orders. This will reduce the cost of shipping your last mile. Boxed does not have this option and shipping bulky items will be expensive.

Gross profit makes a difference. Boxed reported a gross profit of 14% last year, compared to 28% and 24% for Target and Walmart.

There is no shortage of competition in the grocery delivery business. Amazon and Instacart offer well-known options for shoppers looking to buy household items.

Nevertheless, stocks are rarely stolen. Spac’s trading estimates Boxed’s stock as about five times its 2020 earnings, but Costco only once. Wal-Mart trades at twice the grocery sales in 2020. Potential investors need to shop elsewhere.

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Boxed: online grocery service is a bargain for users, not investors Source link Boxed: online grocery service is a bargain for users, not investors

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