With Subscriptions Slipping, Blue Apron Looks To Tie Up With Retailers

After losing more than a quarter of its subscribers over the past year as competition has exploded, Blue Apron CEO Brad Dickerson tells the Wall Street Journal’s Heather Haddon that the six-year old company soon will start selling its meal kits at retailers — including, perhaps, some who have their own kits.

“The access to consumers is much broader in this avenue than the avenue we’ve been operating in in the past,” says Dickerson, who took over from co-founder and executive chairman Matt Salzberg as CEO at the end of  November. 

“Dickerson said the quality of a Blue Apron meal would speak for itself, no matter where the kit is sold,” writes Haddon. ‘Of course we’d say our food is better,’ he said. ‘We’ve been doing this longer than anyone else has. That means a lot to the consumer.’”



But so, too, do a plethora of additional choices that aren’t tied to an agreement.

“As of last month, Blue Apron had 750,000 subscribers, a hefty dip from its peak of over 1 million subscribers last year. Its stock has also plummeted, and it’s currently trading at about one-fifth of its debut price of $10,” points out Dani Deahl for The Verge.

“Independent surveys have pinpointed the loss of interest on the expense and commitment of a subscription, but an increase in shelf-ready meal kits at supermarkets is also a factor. Walmart introduced meal kits from third-party brands last year and is now producing its own, priced between $8 and $15 for two servings. Additionally, Amazon is selling pre-portioned meal kits via AmazonFresh. Both options do not require a subscription. By contrast, Blue Apron’s subscription kits start at $9 per person,” Deahl continues.

“The New York-based pioneer of boxed meals is still very much focused on its core online subscription model, but it’s also considering selling single kits on its website and is in ‘active conversations with a variety of retailers’ to put its meals on store shelves in 2018, said Louise Ward, a spokeswoman,” write Molly Schuetz and Craig Giammona for Bloomberg Technology. “Currently Blue Apron’s offerings consist of weekly deliveries of two to four recipes for as many as four people.”

“It’s costly to acquire subscribers online and moving into stores could give the company access to more customers, said Jennifer Bartashus, an analyst at Bloomberg Intelligence,” they write.

And, in virtuous circle fashion, “the in-store kits could also serve as a user acquisition strategy for Blue Apron’s subscription business, as they’d offer consumers a way to sample the recipes ahead of signing up for shipments,” observes Sarah Perez for TechCrunch.

But “meal kits aren’t the only way Blue Apron is attempting to grow its business ….,” she writes. “It also in January began selling a Whole30 meal plan, focused on wholesome foods that align with partner Whole30’s nutrition guidelines. And it launched Mediterranean Diet recipes to cater to those looking for other ways of healthy eating.”

A Blue Apron spokeswoman “confirmed that public photos of the in-store offering (like the one on this story, which depicts a one-pan beef stir fry) show a real example of what consumers can expect to see in stores, but declined to provide any further insight on additional recipes or per-box cost. On the subscription plans, customers can pay $8.99 to $10.99 per serving,” writ es Forbes’ Maggie McGrath.

“[We're] optimizing for convenience with this offering, but it will still be the food quality and meal experience that our customers expect from us,’” the spokeswoman tells McGrath.

The company “has cut expenses and improved profit margins” since Dickerson, who joined Blue Apron on as CFO in February 2016, took the reins, the WSJ’s Haddon reports. Among the cutbacks, “the company has been slimming down its marketing budget in an effort to turn profitable, but in doing so, its customer acquisition has slowed,” writes CNBC’s Sarah Whitten. “In the fourth quarter, the company said the number of customers fell 15% from a year earlier and fell 13% from the prior quarter.”

Shares of Blue Apron rose 5% after the news of its expanding its channels broke yesterday but they are down 45.13% year-to-date, Business Insider’s Kimberly Chin reports.

So much for first-mover advantage when the likes of Walmart and Amazon take a seat at the table.

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