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

  • Boxed has launched its new paid membership program, Boxed Up.
  • For $49 a year, members of the new program will receive free rush shipping on all orders $20 and over, improved customer service, and cash back on purchases. Boxed will also price match for members
  • The membership program also offers exclusive discounts and entry to giveaways.
  • The company 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 trap more customers in its square ecosystem.

The online bulk-selling store, known as the Costco for millennials, launched Boxed Up on Monday, its first paid membership tier. It is not intended to replace the standard free membership, but instead offer added benefits for die-hard shoppers.

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Vacations

Did you know that you can actually book vacations through Costco?

But, according to former Costco marketing manager and Quora user Dan Holliday, that doesn't mean that you should.

In a 2013 post, he wrote that Costco Travel deals aren't "terrible" by any means. Still, he wrote that, "you're simply not going to find some crazier deal on Costco Travel than you would anywhere else."

He wrote that, like with any travel site, there's a possibility you'll find a gem of a vacation package.

"If you're just booking airfare or hotels, then don't bother," Holliday wrote. "There are better sites."

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Standard membership if you spend a ton of money

A standard membership at Costco goes for $60 a year. An executive membership will cost you $120 a year.

Costco manager and Quora user Jeremy Falletta recommended springing for the more expensive option if you tend to be a big spender.

The reason? A standard membership just gets you access to Costco. An executive membership will net you an annual 2% reward up to $1,000 on your purchases.

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Cookware and patio furniture, if you live in Japan

Some Costco products are more useful in some countries than others.

Quora user and Costco member David Grace wrote that some of the cookware at his local Costco in Japan is too big for typical Japanese ovens.

"Similarly they also carry large patio furniture sets, but nobody here has a yard or patio big enough for them," he wrote. "For almost everything else, I'm at Costco every couple of weeks!"

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Lots of perishables

Is buying large quantities of perishable vegetables and fruit worth it at Costco?

The answer pretty much depends on your circumstances in life.

On Quora, Falletta wrote that you should take the size of your household into consideration.

"If it's just you and your partner, Costco's packages of produce and fresh foods may be too much for you to buy regularly," he wrote. "If the food that you're buying is going bad before you get to it, then obviously there's an issue."

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Electronics

In a Quora post, Falletta wrote that, while the warehouse is the best spot to buy most items, you should consider buying electronics elsewhere. And that's only because of the advent of the internet.

"With internet shopping being what it is today, there are an unbelievable amount of hot deals going on at any given time in every major category of electronics," he wrote. "On a day to day basis, I stand by the statement that no one will beat Costco's price in a direct comparison, but for electronics, I will allow that one might get lucky to the tune of a few bucks here or there."

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Any product where you're buying more than you need

It can be easy to get caught up in the Costco shopping experience and come away with more items than you'd intended to buy.

Costco member and Quora user Betsy Megas wrote that, because of the warehouse's bulk sizes, it's "easy to buy far more of something than one household needs and can use."

And regardless of what the product is, it's a waste of money if you don't end up using it at all.

"If you're going to buy something, make sure you'll get the right amount of use out of it, otherwise that all-important value will be lost on you, and this whole argument will be moot," Falletta wrote on Quora.

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Towels and sheets, if you're picky about color

If you roll up to Costco expecting to find the perfect shade of periwinkle, you're probably going to be disappointed.

"If you want 20 colors, this isn't the place," Costco merchandise manager Jim Klauer told CNBC.

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

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

Regular Boxed members must spend $50 on an order for free shipping, and only get 1% cash rewards back. 

Discounts and giveaways will rotate in and out, with discounts on Boxed' private label Prince & Spring starting with 15% off 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.

Up differs from Prime when it comes to benefits. Up's priority shipping does not gaurantee tw0-day delivery, thoughBoxed says on its website most orders already get to customers within two business days, and it doesn't come with Prime's entertainment perks.

Up is, however, significantly cheaper, at $49 a year to Prime's $99 or $12.99 a month. Customers interested in becoming Up members will be given a 30-day free trial of the service.

Boxed has recently been the subject of rumors of acquisition by firms like Kroger and Amazon earlier in the year, but a deal has yet to be realized.

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