Boxed, the 'Costco for millennials,' is launching a free-shipping membership program — and it has one big advantage over Amazon Prime

Boxed is saying that for $49 a year, members of the new program will receive free rush shipping on orders over $20, improved customer service, price matching, and cash back on purchases.
The membership program also offers exclusive discounts and entry to giveaways.
Boxed created the paid tier because customers were "looking for deeper discounts and unique offerings and were willing pay a little to get those," Ashish Prashar, the company's head of communications, told Business Insider.

Boxed is hoping to lock more customers into its ecosystem.

On Monday, the online bulk retailer known as the "Costco for millennials" launched Boxed Up, its first paid membership tier. It is not intended to replace the standard free membership, instead offering added benefits for die-hard customers.

"All the best services have some sort of subscription model," Ashish Prashar, Boxed's head of communications, told Business Insider, pointing to Netflix and Spotify as examples. "People will pay for that premium service if it's unique and brings value to their lives."

Boxed says the key benefit for Boxed Up is free "priority shipping" for all orders over $20 for members, who will also see 2% cash rewards on what they spend, price-matching for competitors, and "VIP customer service."

Boxed members in the free tier must spend $50 on an order to get free shipping.

Boxed says there will be rotating giveaways and discounts, including 15% off items in Boxed's private label, Prince & Spring, at launch.

The service is designed for customers who shop often on Boxed and were looking for a little something extra.

"Boxed Up is the premium offering customers have been asking for," Prashar said. "They were looking for deeper discounts and unique offerings and were willing pay a little to get those."

Paid membership services are increasingly seen as a way for online stores to ensure customer loyalty in a competitive environment. 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. Boxed Up's priority shipping does not guarantee two-day delivery — though Boxed says on its website that already most orders get to customers within two business days — and 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). People interested in becoming Boxed Up members can get a 30-day free trial.

Earlier this year, Boxed was the subject of acquisition rumors by firms like Kroger and Amazon.

Boxed, the 'Costco for millennials,' is launching a free-shipping membership program — and it has one big advantage over Amazon Prime

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