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Boxed CEO on surge in online grocery as co. sees sales jump

Boxed CEO Chieh Huang joins Yahoo Finance’s Zack Guzman to discuss the company’s jump in sales as many Americans stay at home during the coronavirus.

Video Transcript

ZACK GUZMAN: Right now though, we're digging into the way that the coronavirus pandemic has shifted the way Americans have shopped. Of course, we've highlighted a shift to shop for groceries online and not only is that playing out for public companies but for private companies as well. One of those companies is Boxed-- Boxed. It's seen revenues surge by 89% year over year. And we're lucky enough to be joined by Boxed CEO Chieh Huang who joins us right now in his warehouse, the Boxed warehouse. Now, Chieh, appreciate you taking the time to chat, man. Talk to me about what you've seen in this surge. And I guess more importantly as we've seen maybe some of the panic buying level off, what have you seen in terms of retention among customers who have turned to you?

CHEIH HUANG: Yeah, I'm really happy to be here today, Zack. I wore a collared shirt, changed out of my PJs and actually came to work today. So it's great to be back. But the most interesting thing I think I can provide for the viewers is that, you know, when we first started through this pandemic, everyone-- it was anyone's guess whether the traffic that we were seeing, the customer behavior, whether it was going to be sticky or not.

And what we found over the last 90 days is that the customers that have come in throughout this COVID period have actually performed better than any other cohort we've ever had in the history of our company. And so in at least in the 90 days that we have data on, the cohorts are behaving in a manner that we've never seen before. So I think that would lend us to believe that a significant part of this traffic will be sticky going forward.

ZACK GUZMAN: Yeah I mean, I guess that's kind of the big question mark too. So I'm glad you provided that because as we noted Nielsen highlighted the shift to shopping online. Before it was only about 4% of grocery sales. We've seen surveys now that 33%, maybe 1/3 of consumers have been purchasing groceries online.

When you look at the demographics, though, that you've seen it and customers coming to you, you guys were hailed before as the Costco for millennials. How has that demographic maybe shifted as maybe older Americans have also been seeking getting groceries delivered?

CHEIH HUANG: So we have seen a slight geographic shift as well. So traditionally early on at Boxed, we were very coastal, we were very urban. So we've definitely kind of branched out into suburban and, in most recent times, rural areas as well. What we've also found is that our audience has gotten a little bit older over the last 90 days, certainly not a bad thing. But folks who are either immunocompromised or simply don't want to go out or can't go out because they are of an older, higher risk generation are starting to come online. And we've definitely that. We've seen it in our customer service tickets anecdotally and also in some of the data that we have.

What's most interesting is that those customers are also proving to be quite sticky. For a lot of them in that the Nielsen survey I think you just mentioned, I think 41% were new to the channel. And it's kind of like the first time you touched an iPhone or the first time you got a ride in your friend's Tesla, it's like-- it's kind of an eye-opening moment. It's like, wait, this mundane task that I was going to a store for, I could just have someone bring it to me? So it's eye-opening. And it's hard to say why it wouldn't be sticky after this is all said and done.

ZACK GUZMAN: And I mean, in-- in that-- in that segment though, obviously, there's a lot of competition in terms of the delivery business. There's a lot of names that have probably been seeing similar moves in terms of revenue growth that you've seen when we look at it. So what really has been the differentiating force for a Boxed we are trying to meet the demand right now. Is it still all focused on the consumer side? What else has been being done to really differentiate what you do versus maybe an Instacart delivering from a Costco itself?

CHEIH HUANG: So we spend a lot of time thinking about that. And so originally Boxed was all about bulk and being able to stock up and having it delivered. What we're finding now is that customers are coming to us because of trust. And trust comes in different forms. One is that the items that we have are direct from the manufacturer. So you're not going to get mailed a bag of flour that's duct taped from somewhere that clearly doesn't make that brand of flour. And so that's one, trust that what we sell is authentic, it's safe, not expired, directly from the manufacturer.

Two is trust that we have it in stock. And so we've been in stock on critical items like hand sanitizer, wipes, diapers, toilet paper, paper towels throughout the pandemic. And then third, that trust that when you order it you're not going to get it in two weeks. And so right now if you order today, we've already recovered for now months where 91% of our customers are getting their boxes in two days or less, 43% overnight. And so that trifecta of trust, I think, is really important for our customers and how we're differentiating ourselves today.

ZACK GUZMAN: All right, lastly, I've got to ask you before we let you go, because we're starting to see a lot of IPO action on the market right now in all of this. We've asked you before. Haven't really gotten any definitive answer out of you, Chieh. So I'm going to try one last time here when we think about it. Why not be going public at this time? You raised over a quarter-- close to a quarter of a billion dollars. Right now we're seeing a lot of companies hot out the gate. Clearly seeing the right momentum here with-- with the lockdown and everything else.

So what's the timeline? And why not jump out right now?

CHEIH HUANG: One of the reasons is I feel like if we were a public company, I can't be as open, and I can't do as many of these shows anymore. So I quite enjoy being on the show, Zack. So you know, I'd be harder pressed to make it every few months if we were a public company. But all joking aside, I think you're exactly right. We're getting calls non-stop from folks looking to take us public. And so whether that's the end result or if it's raising another round, we're still determining that.

But the very, very fortunate thing that we're seeing in a very unfortunate time for the world is that we have options. And so hopefully you're going to see some definitive action from us on that front over-- over this year.

ZACK GUZMAN: All right. Well, you have to keep us posted. Appreciate you taking the time to call from your very busy warehouse. Exciting to watch that behind you. Chieh Huang, the CEO of Boxed. Appreciate it, man.

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