Online wholesale shopping site Boxed announced yesterday that it's launching a paid membership program that will offer customers rewards and discounts. The membership program, Boxed Up, will not replace the standard free membership. However, it does offer perks, including free “priority shipping” for orders over $20, as well as 2 percent cash rewards based on what customers spend, price-matching for competitors, and “VIP customer service.“ In the free tier, Boxed customers need to spend $50 to get free shipping. A Boxed Up membership will cost $49 a year, and there's a 30-day free trial for customers interested in checking it out.
“Boxed Up is the premium offering customers have been asking for,” Ashish Prashar, Boxed’s head of communications, told Business Insider. “They were looking for deeper discounts and unique offerings, and were willing to pay a little to get those. He added: "All the best services have some sort of subscription model. People will pay for that premium service if it’s unique and brings value to their lives.”
Total Retail's Take: If Boxed is hoping to create customer loyalty in an uber-competive environment (and what retailer isn't nowadays), a membership program is a smart way to go. Paid membership services are increasingly seen as drivers of customer loyalty. The shining example is Amazon Prime, which the e-commerce giant uses to encourage customers to spend more money more frequently. Boxed Up differs from Prime when it comes to benefits, however. Boxed Up's priority shipping doesn't guarantee two-day delivery — though Boxed says on its website that already most orders get to customers within two business days — and it doesn't come with Prime's entertainment perks. Boxed Up is, however, significantly cheaper, at $49 a year to Prime's $99 (or $13 a month). Given Boxed's track record, it won't be surprising if its paid membership program is a success. Consider that in 2015, with just 30 employees and three warehouses, Boxed raised $25 million in a Series B round of funding. Now, the company boasts an average customer order of $100 and an order size of 10 items. And, earlier this month, the company turned down Kroger’s $400 million acquisition offer — and is still sending out feelers to Amazon.com, according to news reports.