In crowded Hong Kong, a startup race-to-the-bottom has begun, and the contestants have barely passed the starting line.
Boxful is a Hong Kong-based startup that enables customers to store unwanted items in warehouses. It has landed $6.6 million to develop its domestic business and expand into other parts of Asia.
The company was launched in January 2015 and founded by Norman Cheung and Carl Wu. Cheung founded the company in October 2014 after departing from ZOOQ, a Shanghai-based ecommerce company that remains active. He says he moved on because they wanted to return to Hong Kong.
The company serves uses mobile apps to simplify the process much like US companies MakeSpace and Clutter. Boxful charges upwards of HK$29 ($3.70) per month per box, which includes free pick-up and door-to-door delivery.
It has emerged to import a winning business model to a city strapped for space. A person with too much stuff lying around can order a plastic box to be delivered to his apartment. After its arrival, the customer throws his or her junk box in the box, which is then sent to a warehouse for storage. The customer is charged a minimal fee per month for each box in the facility.
The service is designed to give those living in crowded Hong Kong, where real estate prices are higher than many other parts of Asia. This is a great way to stash their goods while maximizing their living space or office.
Boxful operates in a fairly crowded space. In addition to traditional storage companies which have been operation in Hong Kong for nearly 20 years, half a dozen or so startups have sprung up offering on-demand services. Boxful handles logistics collection and delivery itself, while it uses storage facilities slightly out of town to maximize cost savings. The boxes used by them are standard issue, which means they can be stacked to use the warehouse space more efficiently.
Norman Cheung told TechCrunch in an interview, “All these things help us to reduce rent and increase efficiency of the units. We really squeeze out all the efficiency within the warehouses”.
The company raised a $1.5 million seed round earlier this year and will use this Series a capital to invest in growing its logistics and team, as well as increasing its tech capabilities. Cheung said the company is focused on Hong Kong right now, but it is planning to expand overseas next year.
He also said, “Ultimately, the funding is also earmarked for other major cities that we want to expand into, but we do not have any concrete plans. The launches will initially be small scale, we will test out each market and if things go well we can be comfortable scaling. We have quite a few exciting initiatives in the pipeline which will require significant funding in the coming months”.
In essence, Boxful opens the market for storage by streamlining parts of the booking and management processes. It likely spends more on labor, logistics, and technology than traditional facilities and makes less money per customer. But by making storage more feasible for the average consumer, more customers will hopefully shell out.
On this, Carl Wu said, “The logistics will be the largest fixed cost for the business. The barriers to entry for this business are quite high because it requires lots of fixed infrastructure. The first mover and market leader will have the benefit of economies of scale”.
Although Boxful has moved at lightning speed, its services are up and running, but the company has yet to release mobile apps for iOS or Android.