Online grocery shopping is hotter than ever, and Boxed is cashing in: It’s going public in an $887 million deal with a special purpose acquisition company.
Boxed, which was founded in 2013 and has 7 million users, delivers wholesale grocery and bulk items to consumers and businesses across the country.
The company will merge with Seven Oaks Acquisition Corp. through a SPAC deal, a so-called blank check merger that allows companies to make their market debuts without the fuss of an initial public offering. Like grocery delivery, SPACs have also been super hot as of late.
Boxed benefited as consumers increasingly turned to online shopping and avoided going to stores in person during the pandemic. The online grocery shopping market grew a whopping 81% to $55.5 billion in 2020, according to retail advisory firm Coresight Research.
Boxed CEO and co-founder Chieh Huang chose a SPAC over a traditional IPO because the company will be able to raise a “quantum of capital” by comparison, he said in an interview with CNN on Monday from his parents’ garage, from where he shipped the first-ever Boxed order eight years ago.
SPACs also tend to have fewer regulatory hurdles to jump through, a huge benefit for smaller private companies that are less seasoned.
Boxed is also planning to cash in by selling to other companies the software it uses on its platform. In January the company signed a multi-year deal with Aeon Group, one of Asia’s largest retail firms.
The deal, which is expected to close in the fourth quarter of 2021, shows that Boxed has been able to find success in a space that has quickly become increasingly crowded, oversaturated and competitive.
Behemoth Amazon has a significant foothold in the space, while Instacart and FreshDirect are also big contenders. Upstarts like Thrive Market and Gorillas are also keeping the industry competitive: Gorillas, for example, aims to deliver groceries to customers’ New York City apartments in 10 minutes or less.
— CNN’s Nathaniel Meyersohn contributed to this report.