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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"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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