Another pandemic hit bites the dust.
Boxed, an online bulk grocery company that saw favor with consumers during the pandemic, announced on Sunday it will file for Chapter 11 bankruptcy.
The New York-based company thrived during the pandemic as online grocery delivery grew. In 2021, funding to the sector reached its peak with almost $8 billion worth of venture deals. Boxed went public in 2021 via a SPAC deal along with a spate of startups.
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In its Chapter 11 filings, Boxed listed around $102 million in assets and $190 million in liabilities. The company said the purpose of filing is to sell Spresso, its software-as-a-service business, as it wound down operations.
Boxed said in Securities and Exchange Commission filings during the Silicon Valley Bank debacle that the bank held a majority of its deposits and liquid assets.
Online grocery takes a hit
Grocery delivery services like Boxed, Instacart and Amazon Fresh exploded during the pandemic as those who could afford those services elected for delivery. Social distancing mandates originally made it difficult to grocery shop, but many venture firms assumed it would be one of the pandemic-era behaviors that would last.
Indeed, a 2021 survey from Coresight Research found that 59% of people were using grocery delivery services, compared to 52% in 2020 and around 40% in 2019.
Boxed particularly found its niche by delivering bulk items without the need for a membership, making it a more accessible option than Costco or Sam’s Club.
But the sector was flooded with new companies without a quick path to profitability. In 2021, the grocery delivery industry saw almost $8 billion in funding, according to Crunchbase data. The number of entrants in the space was the highest it had ever been, with nearly 200 deals conducted that year.
In 2022, funding to grocery delivery startups dwindled 51%, down to less than $4 billion. The last time funding was lower than that was in 2019.
Illustration: Dom Guzman
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