In a move that has sent shockwaves through the e-commerce industry, online wholesale retailer Boxed.com has been acquired by U.S.-based regional distributor MSG Distributors, Inc. The acquisition comes after Boxed filed for Chapter 11 bankruptcy protection in April, marking another high-profile casualty of the struggling online grocery market.
A Brief History of Boxed
Boxed was founded in 2013 with a simple yet ambitious premise: to offer consumers an online version of bulk retailers like Costco or Sam’s Club without the need for annual membership fees or long drives to physical stores. Instead, customers could buy in bulk and have their purchases shipped directly to their doorstep.
Over the years, Boxed has made headlines with its reported $400 million buyout offer from grocery giant Kroger in 2018, which it ultimately rejected. The company later partnered with one of Asia’s largest retailers, Aeon, in 2021 for an expansion into new markets. At the time, Boxed boasted over 7 million registered users and claimed to be close to profitability.
The Acquisition
MSG Distributors, Inc., a leading regional distributor of natural food brands and sports nutrition products, announced its acquisition of Boxed.com and "other intellectual property portfolios and affiliates" in an all-cash transaction. While the exact price of the deal was not disclosed, it is unlikely to be a high-value transaction given Boxed’s struggles and bankruptcy filing.
According to MSG’s President, Mark Gadayev, the acquisition will enable the company to continue serving Boxed customers, vendors, and brands while expanding its distribution models nationwide. "The loyalty and trust that customers and brands have in Boxed is priceless," Gadayev stated, adding that the company is committed to continuing the model of offering bulk-sized products at wholesale prices.
Challenges Facing Online Grocery Retailers
Boxed’s struggles are a microcosm of the broader challenges facing online grocery retailers. Despite promising market conditions and significant investments from venture capital firms, many players in the space have struggled to achieve profitability or even stay afloat.
In recent years, several notable online grocery services have shut down or announced layoffs, including fast-delivery services like Food Rocket (closed in 2023) and Gopuff’s multiple rounds of cost-cutting. Regional services such as Peapod and Bay Area-based Zero Grocery have either scaled back or closed their operations altogether.
Boxed’s Financial Struggles
In January 2023, PitchBook reported that Boxed was in talks to be acquired for an undisclosed sum, but the deal ultimately fell through. Later that year, the company filed for Chapter 11 bankruptcy protection, citing significant financial struggles and a need for restructuring.
According to court documents, Boxed had approximately $150 million in debt and $50 million in cash at the time of its filing. The company’s financial struggles were further compounded by declining sales and revenue, which plummeted from $1.3 billion in 2020 to just $430 million in 2022.
Implications for the E-commerce Industry
The acquisition of Boxed.com by MSG Distributors, Inc. serves as a sobering reminder of the challenges facing online retailers, particularly those focused on the grocery market. As consumers increasingly turn to e-commerce and digital platforms for their shopping needs, companies must adapt quickly to changing consumer habits and preferences.
For Boxed, the acquisition represents an opportunity to revitalize its business model and operations under new ownership. However, it also highlights the need for innovation and disruption in the online retail space as players navigate a rapidly evolving market landscape.
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