The Rise and Fall of Blue Apron
When Blue Apron, an American ingredient-and-recipe meal kit business, launched in August 2012, the company promised to disrupt grocery stores and restaurants with its innovative meal kits, delivering fresh, precisely-portioned ingredients and easy-to-follow recipes that consumers could prepare in the comfort of their own kitchens. After a positive initial reception, the company quickly found success, and reached its peak with a two billion dollar valuation in 2015 (Yahoo Finance). Two years later, however, its valuation had sunk to 120 million (Saasquatch). How then did a company that was once hoped to “reach 99% of potential home cooks” become an utter financial disaster, struggling so heavily to raise its stock price above one dollar that it was nearly delisted from the NYSE (Observer).
Struggling to Keep Customers
While the concept of an easy-to-prepare meal kit enticed prospective customers to make their first Blue Apron Purchase, the company proved unable to retain its consumer base. In 2017, for example, it is estimated that 72% of Blue Apron users canceled their subscriptions within the first six months (Yahoo Finance).
One potential explanation for this is that the company too frequently offered discounts. Customers purchased their first week of Blue Apron boxes at a reduced rate, but canceled their subscription when the cost of the product rose to its original intended value (The Wall Street Journal). And the week-by-week model of the company’s program made it so that consumers could jump ship with ease, abandoning their subscription in favor of another company offering a sign-up discount (Yahoo Finance).
As found by scholar Kevin Dowd, “another, perhaps simpler hypothesis is that the idea of meal-kit services was more appealing to consumers in theory than in reality” (Yahoo Finance). The notion of preparing a home-cooked meal sounded appealing, but proved time-consuming and inconvenient in practice.
A Disastrous Supply Chain
Blue Apron also struggled from the capital-intensive nature of the meal kit industry. Between shipping ingredients from farms to their distribution center, refrigerating perishable items, packaging boxes by recipe type, and then sending boxes to consumers, the company faced constant threats of its delivery going awry (Yahoo Finance). Furthermore, just one package arriving in sub-optimal condition proved reason enough for a customer to cancel.
Competition
Blue Apron’s recent downward trajectory can also be attributed to the loss of “its novelty factor” (Observer). The company’s product no longer appears innovative, as consumers can find similar offerings from Sun Basket, Hello Fresh, and Marley Spoon (The Wall Street Journal). Additionally, more and more grocery stores have begun offering delivery services, undercutting Blue Apron’s claims of convenience (Observer).
Financial Disaster
Since its IPO in July 2017, Blue Apron’s financial downfall has been rapid. Scholar Kevin Down finds that “in their first month and a half of trading, shares in the company were down nearly 50%” (Yahoo Finance). As hundreds of employees were laid off, the company’s CEO and COO both stepped down. And in December of 2018, Blue Apron’s stock price dipped below the one dollar mark for the first time, a far cry from its original ten dollar price point (Yahoo Finance). After years of floundering financially, the company has agreed to be purchased by the food technology company Wonder Group for a value of roughly $103 million, a billion-dollar-company no more (CNBC). The company’s future, once promising, is uncertain and grim.
Ultimately, the rise and fall of Blue Apron stands as a cautionary tale, demonstrating that a competitive market, over-complicated supply chain, and subsequent financial instability can sink even the most promising of companies.
