Skip to main content

Where does Blue Apron go after Amazon wraps up its Whole Foods deal?

Last week, Amazon said that its massive $13.7 billion deal to acquire Whole Foods is wrapping up on Monday — giving it access to one of the strongest food brands in the United States, as well as hundreds of grocery stores in metropolitan areas.

That means it’s going to be easier and easier for people to get access to great ingredients, and there’s been a continued trickle of suggestions that Amazon will be gunning for a massive business that helped Blue Apron go public — a trickle that has since tempered Wall Street’s appetite for that business.
All this raises a ton of questions as to what the future of Blue Apron is as Amazon looks primed to bulldoze into its territory in a very Amazon move. But as the specter of Amazon getting into meal-kit delivery looms, let’s review really quickly what Blue Apron has going for it:

It has a strong brand in meal-kit delivery. The company wouldn’t have been able to go public, much less sustain unicorn status even as its stock continues to plummet. Originally pricing its shares between $15 to $17, and then subsequently dropping that while Amazon ruined its road show, it showed that there was a strong amount of good will for the Blue Apron brand as it approached its IPO.

It exposed a $800 million business in annual revenue at a minimum. That clearly got Amazon’s attention, as the company seems constantly looking to build new lines of consumer businesses where it can duct tape Prime into the package. Even at the kind of margins that Blue Apron may operate at given its complex web of operations and delivery, if that’s able to work at a large scale, it’s a non-trivial business.

Its customer base is still growing year-over-year, despite its challenges in holding on to customers for a long time. In its most-recent quarterly results, Blue Apron said its customer base grew 23%. Even as its customer base declined quarter-over-quarter, as it pares back marketing, it shows that consumers still want a product like Blue Apron’s — if it can capitalize on that brand.

The lifetime value of those customers is theoretically very high given the cost of the product. Churn is going to be a perpetual problem for Blue Apron as people hop on and hop off the service, especially based on promotions and other factors. But the company is trying to pull back on marketing and, in a past life, showed that the business could be profitable in an earlier quarter.


Still, Blue Apron’s stock fell quite dramatically again after it released its most-recent quarterly earnings report, even though the business showed some signs of life. It signaled that the company would likely continue to see losses going forward — projecting a net loss between $121 million and $128 million. Investors looking for a kind of performance like the flash of life that it showed earlier even amid a heavy burn rate to acquire customers seem likely to be disappointed in the near term as the company calibrates for a future where Amazon may go after its business.

While Blue Apron requires an aggressive marketing engine — especially as it tries to expand beyond metropolitan areas, which are probably its sweet spot — still seems primed for a product that could grow organically. One example would be that the product seems like a very natural fit for a gift for occasions like weddings, birthdays or the holidays. This seems like obvious low-hanging fruit, where it can turn around and rely on that branding and consumer experience in order to convert those customers to more long-term ones and start the cycle again.

Blue Apron can again lean on that strong brand that it’s built as one of the big anticipated consumer IPOs for 2017, even if it was a flop. Blue Apron at the beginning of 2018 — if it can last out to the holiday quarter — may end up looking like a much healthier Blue Apron at the middle of 2017.


To be sure, Blue Apron’s growth has greatly decelerated (in the same fashion most companies do as they mature), and there really isn’t a lot of data to predict that forward:




One of Blue Apron’s biggest challenges may end up being Amazon’s Prime business. The company said Prime members will soon see “special savings” when it comes to Whole Foods, which could end up being pretty much anything. Knowing Amazon, it’s likely to run a ton of experiments to figure out how to quickly quash any competitors and then decide how to grow it into a mature, profitable business later.


In the end, the drip-drip-drip of aggressive news about a potential Amazon competitor will probably continue to put a lot of pressure on Blue Apron, especially as it still seems to be racking up losses. But the company has shown that it’s willing to re-orient itself following the IPO, including making some changes in the executive ranks and some organizational changes.

And while Amazon even seems to be testing a product in the vein of Stitch Fix, that company has still filed confidentially to go public — and is going to charge forward despite the specter of Amazon. There are still a lot of things going for the company and, if it’s able to lean on what initially made it able to expose that huge business, Blue Apron may have a shot to be a company that continues to exist even if the Amazon behemoth tries to get into its 
market.




Comments

Popular posts from this blog

So, when will your device actually get Android Oreo?

Google officially just took the wraps off of Android Oreo, but there are still some questions left to be answered — most notably, precisely when each device will be getting the latest version of the mobile operating system. Due to Android’s openness and a variety of different factors on the manufacturing side, it’s not an easy question to answer, but we’ll break it down best we can. First the good news: If your device was enrolled in the Android Beta Program, you’ll be getting your hands on the final version of the software “soon,” according to Google. Exactly what that means remains to be seen, but rest assured that you’ll be one of of the first people outside of Google to take advantage of picture-in-picture, notification dots and the like. No big surprise, Google handsets will be the first non-beta phones to get the update. The Pixel, Nexus 5X and 6P are at the top of the list, alongside Pixel C tablet and ASUS’s Nexus Player set-top box, which will be receiving the upgrade i...

Get 56GB of free cloud storage in one folder!

Bring Your Box, Dropbox, Google Drive, & OneDrive All Together In One Folder With odrive! Dropbox gives you up to 16GB free.  Google Drive & Gmail give you 15GB. OneDrive gives you 15GB. Box gives you 10GB. odrive brings all your cloud storage apps together in one folder right on your desktop. Just link your Dropbox, Google Drive, Gmail, Box, and OneDrive accounts to odrive and instantly get all your files scattered everywhere in one place! You can even link multiple accounts from each app to get even more! 1. Install odrive. DOWNLOAD It's free! And available for Windows & Mac :) 3.Get all your stuff! 2. Link all your cloud storage accounts. Note:  This gives odrive permission to download your files for you. odrive doesn't store anything, we promise! OXYGEN CLOUD, INC., 1600 SEAPORT BLVD, REDWOOD CITY, CA, 94063, UNITED  ...

Shatterproof screens to protect smartphones

Polymer scientists at the University of Akron in Ohio have developed a transparent electrode that could change the face of smartphones, literally, by making their displays shatterproof. In a recently published paper, researchers show how a transparent layer of nanowire-based electrodes on a polymer surface could be extraordinarily tough and flexible, withstanding repeated scotch tape peeling and bending tests. This could revolutionise and replace conventional touchscreens, according to Yu Zhu, UA assistant professor of polymer science. Currently used coatings made of indium tin oxide (ITO) are more brittle, most likely to shatter, and increasingly costly to manufacture. “These two pronounced factors drive the need to substitute ITO with a cost-effective and flexible conductive transparent film,” Zhu says, adding that the new film provides the same degree of transparency as ITO, yet offers greater conductivity. The novel film retains its shape and functionality after tests i...

Windows 10 for phones will be released on this Friday

Microsoft's head of the Windows Insider program, Gabe Aul, has announced today on Windows Weekly that they will release a  new build of Windows 10 for phones  on Friday at 10 AM PT. Windows 10 release date A few weeks back, the company announced a new list of supported devices for the next release but for the version that will be released on Friday, the Lumia Icon and Lumia 930 will not be supported. Gabe said during the announcement that it came down to the new UI being too small on these devices and as such, will not be included in this release. List of supported devices Lumia 1020 Lumia 1320 Lumia 1520 Lumia 520 Lumia 525 Lumia 526 Lumia 530 Lumia 530 Dual Sim Lumia 535 Lumia 620 Lumia 625 Lumia 630 Lumia 630 Dual Sim Lumia 635 Lumia 636 Lumia 638 Lumia 720 Lumia 730 Lumia 730 Dual SIM Lumia 735 Lumia 810 Lumia 820 Lumia 822 Lumia 830 Lumia 920 Lumia 925 Lumia 928 Lumia ICON Microsoft Lumia 430 Microsoft Lumia 435 Microsoft Lumia 435 Dual SIM Microsoft Lumia 435 Dual ...

Facebook Messenger For Apple Watch Officially Launches

During Apple’s keynote in September, they announced that Facebook Messenger would be coming to the Apple Watch, as long as you’ve updated to watchOS 2. Well, it’s here.   You can now share things like voice clips, likes and stickers from your Apple Watch. From my experience, little interactions like this are what works best on the Watch. I’ve found that as soon as I have to do anything more than pick a person and an action, things go haywire. Sure, there’s a lot more to do with watchOS, but I’d say that 2 is lightyears ahead of what the device shipped with. When Messenger for Apple Watch was first announced, our own Josh Constine said: The more platform ubiquity Facebook Messenger can achieve, the stronger its network effect will be entrenched. Each time a friend messages you from Facebook Messenger, it draws you closer to the Facebook ecosystem. Each time they text you from SMS or another app (other than WhatsApp), it pulls you further away. That’s why despit...