How Bokksu Helps Family Businesses Get Global Distribution

0:00If you subscribe to Boxu every month, you're supporting not only their families and their livelihoods, but literally centuries of tradition. Hello, welcome to Shopify Masters. I'm Shuang Esther Shan. Getting small family-run businesses to sell online is one way to help them grow. Another way, helping them sell internationally. That's what Bokksu does for businesses in Japan. Bokksu is a subscription service selling boxes full of Japanese snacks, candies, and treats. Some of these makers are centuries old and certain products are exclusively produced for Bokksu. Founder Danny Tang is here with us today.

0:39He actually joined us on Shopify Masters five years ago, and we're having him back to tell us how they've grown into a hundred million dollar company. Oh, and we're also going to sample some Bokksu snacks by going through one of the boxes together. Danny, thank you so much for joining us. Thank you for having me. It's good to be back. Wow. I can't believe it's been five years. When you said that, I was like a little shocked. Time has flown. I know. Well, so glad to have you back on the show. Certainly so much has changed and Bokksu has grown so much since 2018. You've doubled the subscriber base every single year since 2018.

1:16What do you think attributed to the growth? There's, I mean, a bunch of things, right? When I first talked to Shopify Masters, I think I had only like four employees, maybe. Like we were a really small, scrappy team. totally bootstrapped but also one is that like I've hired the good people I've gotten right people in place and like grown the business done the right kind of paid media stuff but also really taking advantage of any type of upswing opportunities a lot of times it's about like surviving and being positioning yourself for when lucky times happen and for us one of them was just like many other people like the pandemic like it was really terrible in a lot of ways and especially supply chain and shipping and of course all the normal pandemic stuff.

1:58But like a lot of people were really hungry for experiences and foreign snacks and like tasting new flavors. And so Box was well positioned at that time to kind of really pick up and people discovered us online. And then we grew a lot for the last those two years during COVID. If I can't take a trip to Japan, I can definitely give some snacks to my friends. So really cool that you were leveraging that momentum. him. Another aspect is that you've actually reached a lot of customers, and I think you're shipping to over 100 different countries now. What were some of the strategies you used to actually keep shipping costs at a minimum during that time?

2:35It was pretty intense. I'm not going to lie. During that time, shipping costs went through the roof. I think a lot of people are familiar with that. If you're shipping domestically in America, I mean, it did go up. But if you're shipping internationally, it like double, tripled even more sometimes because you couldn't use the same solutions you're using before. Like global shipping just came to a standstill and only a few carriers were even still going. And for example, in our case, before COVID, we were shipping about 100 % of our parcels through Japan Post, so through the Postal Service Network, which as you imagine is like relatively affordable.

3:08But then Japan Post suspended shipping to pretty much the whole world, over 200 countries in April 2020. And our business came to almost like a grounding standstill. I thought that I would have to just close up shop because I couldn't ship anymore, even though there was a lot of demand at that time. And so for us, it was that I fortunately like worked really hard during that time period for like two plus weeks to like reach out to my whole network, talk to everybody in logistics, freight forwarding, like introduce me, help me. and I had like conversations with well over 30 different possible vendors and like most of them couldn't do what we wanted and like most of them were too expensive.

3:47But I fortunately found one that was able to come up with this kind of solution for us where we kind of first bulk ship the boxes over and then we kind of ship them domestically in America as opposed to doing direct to consumer. Like, I mean, still direct to them, but it kind of allows us some kind of like alternative method of sorts and that allowed us to keep shipping costs. It was still more expensive, but it wasn't like double or triple. and that allowed us to keep shipping during a time when a lot of people actually have to stop. Sounds like you were being creative with the fulfillment process.

4:15And of course, during the last few years, there's definitely been more subscriber fatigue as well. What have you done in the last few years to keep subscribers re-engaged during that time? You know, it's one of the big reasons why I even fundraised. As you mentioned about the valuation before, I, in 2021, went out and raised like a fairly large round, 20 plus million dollars. And it was because I wanted to be able to diversify the business so that it's not just this single product. Having said that, our Box2Snackbox subscription, which has a totally new curation every single month, and we put a lot of thought into it.

4:48A lot of people always say it's obvious how much care and love goes into each box. That retention has actually stayed steady year over year, which we're really proud about despite all the different crazy stuff going on in the world. I mean, transparently, there is still headwind in acquisition, which a lot of people are facing in the world of subscription boxes right now. So where we're actually diversifying a lot of our growth is with one of our new businesses that we launched just last year, but then revamped recently and have upgraded a lot called Boxu Market, which is kind of like our Asian version of like Thrive Market.

5:17And this was an online Asian kind of curated marketplace grocery store shipping nationwide. And we're seeing like rapid growth there. And it's pretty exciting to see a lot of people are still wanting things delivered just in a different way. What do you attribute to that retention? Is it because of the variety of the boxes or is it because of different factors you're experimenting with in the company? Part of it is that we're always reiterating. We've never stopped reiterating and improving the box of Snackbox, which is our core subscription product and what a lot of people know us for. And, you know, I think when you let it go stale is when there's a lot of subscription fatigue that might happen.

5:55But for us, we constantly survey our customers. We constantly interview them, find out what they like, what they don't like. And we actually build new curations every month based on previous months' data. On top of that, we refresh the branding just like late last year and like kind of kick out a new look. We upgraded the way we present the culture guide. We have a lot of exciting new things coming. We're introducing new campaigns to kind of invigorate. All of those things, I think, is what's held the retention steady for us is that it's not the same old thing every single month. And, you know, just the box alone is always a brand new creation every month.

6:29And that alone is already kind of fun as a baseline. Yeah, giving people that ritual experience, but also adding novelty to it as well. Exactly. Yeah. So when you first came on the show, you were actually bootstrapped. And you mentioned you've raised over$20 million in fundraising. What do you think changed that allows you to receive that funding? And do you feel like yourself or your mindset has changed during that process as well? That's a great question. So first question to answer is that, yeah, what changed around, right? I mean, there was probably two things. One, and this was the smaller part of it, is that as the years have gone by, there has been this growing understanding and acceptance of Asian flavors and this rising tide of like, there's a whole bunch of other kind of rising, crushing Asian food brands out there right now from like, When Coffee Supplied, Fly by Jing, and Imi, and Sanzo, and Omsom.

7:22A lot of folks are aware of a lot of these brands. And like these brands didn't even exist back then. Like when I started, there was almost no other ones. And so investors just didn't even understand why anybody would care about Asian flavors. But then as I was growing, these also just started and also were growing. And I think the whole pie grew and exposure helped. But number two, in a much bigger way, was that people were just super impressed. We went from bootstrapped and we were already growing pretty steadily there. But a good example is that from like 2018 to 2021, in those three years, our revenue essentially 10x during that time period.

8:01And we also in 2021 flipped to EBITDA profitability at that time. And so that was like, like mind blowing for a lot of investors to that less than five years from launch because we launched April 2016. We were able to achieve over 20 million ARR and get to profitability. And so like they knew that something was going right. I mean, this is way beyond product market fit. and I had a really big vision for Boxing Market and all these other things I wanted to expand. So all of that came together well for a pretty successful fundraising story. To answer the second question, it has changed everything for me.

8:30I'm so glad I did it. A lot of people ask me a lot of times, why did you even fundraise if you were already profitable? Like, why would you give up equity? Like, won't you want to control your destiny? And I didn't really see it that way. I saw it as like, one, I wanted to de-risk the whole pie because I was just all in at that point. and then two, I'm a first-time founder. So I kind of wanted the advisory of like a VC, a seasoned VC who knew the space well. And like my lead investor, Valor Equity Partners slash Valor Siren Ventures, they're also the lead in like Misfits Market and Little Spoon and like all these really kind of growing big food brands, GoPuff.

9:05And so I knew they could help me go to the next level. But on top of that, it's biggest of all is that it switched me as a founder, as a leader from a scarcity mindset to more and more of an abundance mindset. And back in the day, like, I was so scared to spend at all because there was no money to take risks with and to hire the right people. But having fundraised now, I have a strong executive leadership team. I have the right people in the right places to, like, take us to anything that goes wrong, we can kind of deal with it. It won't just, like, kind of put us under. And lo and behold, the last couple of years have been kind of tough in a lot of ways for DTC.

9:43And thankfully, we're weathering the storm and then now finding growth in different areas. It's really amazing to hear. And I wanted to highlight the fact that you were one of the first Asian food brands we've had on the show. And then since then, the brands you've mentioned like Sanzo, Omsom, Fly by Jing, and Imi, they've all come on the show to talk about their journey. So it's really cool to see you lead the way. So one of the things that funding has helped is actually diversifying the business. tell us more about Boxu Market and also that fun Hello Kitty box. It's been a lot of work. It's been really challenging in a lot of ways, but this is kind of what I love.

10:22Like being a founder has been the funnest job I've ever had in my life because every few months my job kind of changes. And in addition to just being kind of fun and challenging for me to develop new products, the big part is that I always knew that different products work in markets at different times. Subscription boxes are actually a really great example because I remember back in the day, Birchbox was super hot in the early 2010s. And then they started going down. When I started Boxoo in late 2015, early 2016, already there was like this decline in sub boxes. Everybody's like, oh, sub boxes are dead.

10:54Like, why would you even do that? And then they rose up again in like the 2017, 2018 time period. And then certainly during a pandemic. And then now there's like maybe some difficulties again. But I just see it as like, you got to be able to have counter cyclical products as well as like a diversified because sometimes you just don't know what's going to hit as long as those each of those products can have positive gross margin and maintain and like grow and such and so that's one of the reasons why I have my big vision for Boxoo is to become this online premier awesome destination for like Japanese food snacks like products like culture all of that and these two that we've launched relatively recently kind of like different avenues for that the Hello Kitty box is the world's first and only officially partnered Hello Kitty snack subscription box.

11:40We spent a whole year negotiating and planning that deal with Sanrio. And we're really, really excited. We launched that just in April and really kind of big success there already. A lot of like good positive reviews. And that's just getting beginning from that. And the great thing about a new box is that, you know, a lot of times they can only go up for the, if it has a good product market fit. And if we're boxed in market, that to me is to allow us to kind of target a wider audience because box of snack box and the Hello Kitty, the Box2Box, they both ship from Japan and they were both these like Japan exclusive, premium exclusive items that you have to kind of pay a premium for it.

12:18And the shipping is not cheap to kind of ship these things from Japan. But that kind of cuts out this whole wide, probably majority of the country that is not able to either afford that or sustain that type of subscription. And some people would also just like to buy things one off. And so that's kind of where Box2Market comes in, where it's going to be more and more of this like premium, but also curated and wise selection of products that people are familiar with. We kind of call them bridge products internally, as well as like more authentic products. So we have everything from the like Pockies and Haichus to like Japanese Kit Kats.

12:50And now like very recently, which has been selling like crazy, these like awesome Lay's potato chips from Asia. They have like Kobe beef steak flavor, teriyaki chicken flavor. They're so delicious. But, um, and then like hook people in with these products. And then they can also look for like mochi and like senbei and like sauces, condiments, instant noodles, all of that. And we're seeing that kind of work right now. And people are just like looking to buy these baskets to ship to them. And because that operates out of our own warehouse in New Jersey, we made the decision to take that in-house operations.

13:21And we launched that warehouse in March. That has changed everything. Like we ship things out with excellence once again, like everything goes out same day. Things usually arrive next day in like kind of a 10 state radius and like customers are just reordering like mad. And it sounds like a really interesting way to reach existing customers who might want to experiment with like new snacks or old favorites and then new customers who are perhaps not into subscription boxes but are into crazy fun Lays flavors. So super cool. Exactly. We're trying to create a whole ecosystem where we can capture net new customers that aren't right for this product but then also potentially cross-sell them to the other ways and eventually also build a whole membership program that spans across all the different product lines.

14:05Very cool. So the last time you were on Shopify Masters, you talked about actually adding teas to the boxes. And we have a clip from your interview that we're going to play. And yeah, let's hear it. And then let's talk about teas and boxy. I personally love tea. I drink tea every day, multiple times a day. And I want to kind of start building that out a little bit more. Where up until now, we always put in a complimentary tea pairing that kind of goes with the snacks of that month or goes with the theme. In the future, we potentially would work directly with tea farmers in Japan to kind of create our own Baksu branded teas.

14:45Oh my God. What a blast from the past. Yeah, give us the tea. What's the tea update? So that's amazing. I totally forgot about that. Well, the good news is that we have created a whole bunch of boxier-branded teas that have gone into the box of Snackbox. I mean, one big difference from 2018 from now is that we have more direct relationships with makers than before. At that time, we probably had maybe like, I don't remember, like 20-plus relationships or more. But now we have over 100 direct relationships with both snacks and tea makers throughout Japan, family businesses and such. and so like it just gives us a lot more flexibility and our order volume has grown large enough that we can do these custom command builds and things and so we've created all sorts of teas from like gyokuro to genmaicha to hojicha to like these different types of japanese roasted teas and such and it's been pretty awesome we had considered for a hot minute as well i think this was in like 2019 or so making like a tea subscription box like a box of tea box but we ended up not doing it.

15:47We even had a prototype and everything because when we went a little further and did market research, like there just wasn't enough demand for that on a regular basis. But as like a single tea or tea that we sell on Boksu boutique or market, these are things that we have accomplished. But I will be frank and say that they haven't been like huge needle movers because I think tea is not as big in America just yet, but it's getting there. Well, very cool to hear that you've been able to make those direct partnerships and have the Boksu branded teas. And I assume you still drink tea every day. So the clip stands true.

16:22That is still true. Yeah, I don't really drink coffee. I drink tea every single day. I love it. It's my favorite thing. Amazing. Well, we're going to get to so many other aspects of the business. I'm chatting with Denny Tang, founder and CEO of Bokksu. We've covered how the company has grown over the last five years. and we're going to dig into a Bokksu box in a bit. I hope Shopify Masters is helping you grow your business. If you haven't already, follow or subscribe to the show wherever you listen to podcasts. And please leave us a review or feedback for the show. Thanks. One of the core values and the thing that hasn't changed for Bokksu is the fact that it's super important to work with local Japanese makers.

17:08Why is that mission so important to you? It's something that gets overlooked a lot in consumerism, I feel like, in the world, is that we kind of forget because a lot of it has become mass-produced and sold readily with a click on Amazon or Walmart or other places that there's sometimes a human capital and there's also sometimes good for good or bad, right? And what I'm trying to do is help show the faces and show the people that are actually making these products and showing that in our case, these all come from Japan. And these all come from people where if you subscribe to Boxer every month, you're supporting not only their families and their livelihoods, but literally like centuries of tradition.

17:54And that's kind of what Japan's all about. Like, I also really love anime, just like anybody else in a lot of pop culture. But Japan has this awesome other side that's all about the like history and the tradition and this obsession with craftsmanship that I have just never seen in any other country. and that's what I'm trying to, like, share with people, and I just think stacks and food is, like, one of the easiest, best ways because it's so visceral where you eat and smell and see it, and it tingles all your senses. And so then people can, like, both eat it and then understand that by doing so, you're preserving their whole family legacy and, like, helping Japan out.

18:31You know, on the related side, really, for Japan is that they themselves are still trying to figure it out, and this is my small way of helping out because Japan has a declining population. Family businesses are kind of closing left and right because just domestic sales, I mean, if your publish comes down. And on top of that, young Japanese people are just not that interested, even now, if anything, less and less in Japanese traditional snacks. But the rest of the world is growing in interest. So acting as that bridge is really fun and also just a really good business idea. And helping these businesses reach new markets is also helping them have the ability to pass on the craft to new generations as well.

19:09Exactly. It also makes it really cool for their families, to be honest. Like, instead of just being like an insular domestic business, the fact that their products are shipping globally gives it a different vibe and a different energy that I think would make it easier to pass on as well. Because then it's like, oh, we're a global business. And that's something that a lot of these family businesses are trying to strive for but have a hard time doing on their own. So the last time you were on the show, you also talked about the challenges of running Bokksu, one of them being getting makers on board.

19:38and educating them on subscriptions. We have that clip now. Let's take a listen. It's definitely not a well-trodden business model in Japan, actually, to be honest. It was very much a struggle in the beginning and it's still sometimes difficult now. We've gotten a lot better at it at the kind of almost sales pitch to the suppliers, but we have to do a lot of education because subscription boxes or just this, a lot of e-commerce in general hasn't quite taken off nearly as much in Japan as it has in the rest of America and the West. Do you feel like that has changed in the last five years? Has it maybe perhaps gotten easier to get more makers on board?

20:16It has definitely changed from a lot of different ways. One is, as I mentioned, we have a whole lot more direct makers now. Part of that is that we have grown in both our own team size, but also our presence in Japan. Like, makers generally know us. Makers actually approach us now to work with us because then they can get their products out there. So it's totally flipped the script. We actually don't even need more makers per se. Back then we kind of did. But now like we have a good amount of suppliers that we know who to work with. And like if we find a new one, they generally already have heard of us.

20:48But two is that e-commerce has grown a lot in Japan. So like Shopify has grown in Japan, just in e-commerce in general. It was very dominated by like Amazon and Rakuten, the two kind of big e-commerce marketplace giants back in the day. But now like independent stores, similar to what happened in America 10 years ago, I would say, the Shopify revolution is happening in Japan. And it's pretty amazing to see that. And so there's just a lot more understanding about that. And subscriptions have risen. Subscription boxes are still kind of rare from what I've heard, but there are sake subscriptions or other types of things you can get throughout Japan now.

21:24And so it has kind of changed very drastically over five years, it feels like. But it was very slow because Japan is slow to change sometimes. I can definitely add to that because one of my earliest articles at Shopify was actually writing about makers who were building on Shopify based in Kyoto. So it was really cool to see the market grow and grow with a platform as well. Okay, so I never thought I would be doing this on a podcast, but we do have one of Box's boxes here, and we're going to try some of these snacks. And I love the fact that there's a pamphlet walking you through all the snacks and which region they come from.

22:04Is there a favorite that you would like us to sample first and kind of share the story and also background on the maker? Yeah. Is it the Seasons of Japan box? It is. Nice. I mean, I think it's got to be the white strawberry. It's a fan favorite. It's my favorite still after all these years. And it's super duper delicious and rare. So the story behind that is that it's this one maker in Nagano, Japan, who kind of invented this, I forgot the term, it's some type of like transfusion process or something, where he takes fruit and he like infuses it with liquid chocolate. And it's just like a wild thing.

22:44He's like got this patented process. like we don't really know how exactly it works. This main flagship product that we now exclusively distribute in America, so we now only, not only is in a box, but we've gotten to some retail locations throughout the country now too, is this white strawberry, which is a freeze-dried strawberry infused with liquid white chocolate. And it looks very cute and unassuming, but then when you bite into it, it is crunchy, it's smooth, it's tart, it's not that sweet, which is always the highest compliment for me for Asian snacks. and it's just super delicious. I feel like it's such a trippy experience because it looks like a strawberry and it's like perfectly preserved, but it tastes exactly like you described.

23:27It tastes like a chocolate, but also still a strawberry at the same time. Yeah. So like people are always like, wait, is this a chocolate dip strawberry? I'm like, no, no, no. The chocolate's inside the strawberry. And they're like, what? I was like, it replaces the water content and it's just like mind blowing. It feels like every single cell of the strawberry is actually a chocolate. So that makes sense. So the liquid has been replaced. Funny enough, when we were working on the script, I actually wrote in the strawberry looked interesting. And I wondered if this would be one that you picked out, but I'm glad you mentioned it.

24:02It looks super cool. And you also have it specifically branded for Bokksu as well. So very cool. What should we try next? Yeah, let's let's do this. So let's walk us through. I think we should then hit up the, let's go savory next. Sounds good. Yes. Let's definitely do the seaweed tempura sudachi citrus chips. Those are still my favorite after years as well. Like we refresh our Season of Japan box. So for clarity, it's the first box every new customer gets because it's like the best hits based on like data, customer interviews, our own taste preferences over the years. Every year or so we like refresh it.

24:40But we have some like mainstays that like we never cycle out because they're just so good. And that's one of them. It's from a Hiroshima maker. And they are a family business. And they've been around for a few decades, I believe. And they take fresh seaweed and then they batter them and fry them in this process. And then they use this Sudachi citrus. It was a Japanese citrus from that kind of Hiroshima-ish area, which is kind of like a Kalamansi, if people are familiar with that. But kind of like a sweeter lime. It's crunchy, it's tart, it's salty, and it goes really well with beer, perfectly honest.