Boxed is rolling out a premium serviced dubbed Boxed Up, with a slew of membership perks and exclusives for $49 per year, the company told Retail Dive in an email.
Members get free priority shipping on orders over $20, which Boxed spokesperson Ashish Prashar called the program's biggest differentiator, along with 2% rewards, exclusive deals and gifts, and "VIP customer service." Exclusives include deals on the Boxed Hotels booking site, extra entries for prizes like Vitamixes, Keurigs and Dyson fans, and special discounts worked out between Boxed and the likes of Keurig, Pepsi and Kraft, he said.
Boxed customers, including consumer or business accounts, can try out the premium service for a 30-day free trial. Otherwise, for those not in the Boxed Up tier, shipping is free on orders over $49, and the company says that most arrive within two business days.
Membership-based retail seemed to have reached its limit in 2015 when Jet abandoned its own $50 membership model — which founder Marc Lore had touted as its sole source of profits — almost immediately after launch.
Walmart last year also ditched its "Shipping Pass," where members paid $50 for free expedited shipping, in favor of a minimum order and a boast that no membership is required — prompting Amazon to dial back its own non-Prime minimum order twice in the ensuing months.
But the membership approach does seem to have staying power. Costco, for example, continues to post healthy sales and profits, along with gains in memberships and renewal rates, banishing previous concerns that Amazon's rising Prime membership would curtail its momentum, and research shows that plenty of consumers are willing to pony up for both. That's good news for Boxed, too.
"The membership play is not truly 'saturated,'" Jim Fosina, CEO of Fosina Marketing Group, told Retail Dive in an email. "The challenge with all marketing efforts is the ability for the brand to build and sustain a strong, value-based, unique selling proposition in their customer relationships. The success of the Boxed Up effort is contingent on the company keeping the offering vital, exciting and engaging with their customers."
That means keeping a steady, fresh supply of value-based, subscription-based value streaming to members on a regular basis, he said. But Boxed is more than likely hoping to lock in its own best customers than trying to steal members from Amazon Prime, Fosina said.
"I am sure that Boxed isn't really worrying about Amazon in this regard," he said. "They are utilizing the membership program to build a much stronger and sustaining base of their current customers, focused on moving ''trial' customers to subscribers, which is critically important to their overall business model."
Prashar said the service was developed by popular demand, and noted that, "The benefits will only grow and I think those customers will enjoy the premium offering."
And Boxed isn't likely to be the last to move toward that model. "If you are a retailer today you need to be investigating some sort of subscription model for your business," Fosina warned, saying grocery and fashion retailers are likely next.