Boxed CEO Chieh Huang calls the success of Prince & Spring “definitely a top-five — if not top-three — surprise.”
It’s a pleasant surprise, of course. Huang told Business Insider in a recent interview that Prince & Spring, the private-label brand of the online bulk retailer Boxed, now accounts for about 15% of the company’s sales sitewide.
Sales of Prince & Spring grew 400% from October 2016 to October of this year, Huang said, adding that the third quarter of this year saw the highest sales ever for the brand.
Of course, it hasn’t always been this way. The brand launched just three years ago, in 2015.
“It’s driven a lot of growth on Boxed and is definitely something that we’re proud of and want to continue to invest in and grow,” Jeffrey Gamsey, the head of private brands at Boxed, said.
A bare necessity
Huang describes the inception of Prince & Spring as a necessity more than anything.
“In the very beginning, it was just like, ‘Man, it’s really tough to make money on shipping toilet paper online,'” he said.
So Boxed developed its own private-label paper towels and toilet paper to take a larger share of the sales.
“We then started expanding into items where we just could not get our hands on either the product itself or the right size of product,” Huang said.
Through Prince & Spring, Boxed offers food items like snack mixes and emoji-shaped fruit snacks called Fruitmoijs, as well as household items such as hangers, batteries, laundry detergent, and disinfectant wipes. Boxed now sells more than 100 products through the Prince & Spring line.
The line also keeps customers coming back, Gamsey said.
“Fifty percent of Boxed repeat customers buy at least one Prince & Spring item every time they shop at Boxed,” Gamsey said.
Customers who shop Prince & Spring also tend to spend more, with average cart sizes “well over $100,” Gamsey said.
Boxed is far from the first retailer — selling in bulk or otherwise — to come up with the idea of a private label.
Costco’s Kirkland Signature is often touted as one of the great successes in this field. It accounted for about 28% of Costco’s total sales as of 2017.
Private brands give retailers a better handle on margins, and their unique offerings provide a hedge against big competitors like Amazon.
“If you have something unique, it’s un-Amazonable,” Simeon Gutman, a retail analyst at Morgan Stanley, told The Wall Street Journal in 2017.
Name brands still matter
Huang predicts that Boxed could eventually earn as much as 40% of its sales — or higher — through private labels, which Gamsey says would put it well ahead of its bulk-selling, brick-and-mortar competitors.
There is a limit, however, and he says Boxed will never shift to be 100% private label.
“There’s still a lot of value in the national brand in driving awareness for the service,” Huang said. “And also in some categories people just trust the national brand.”
Most customers who shop online are looking for the national brand first, according to Sucharita Kodali, the vice president and principal analyst at Forrester Research.
“Usually when people are shopping online, they’re often shopping for brands,” Kodali said.
But private labels for both grocery items and consumer goods do have room to grow online, just as they do in stores, as customers begin to trust a retailer and its unique offerings.
Private label “should succeed online over time online the way that it succeeds offline because often it’s very price competitive,” Kodali said, adding that “the packaging is very attractive.”