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To throw some actual _data_ into this conversation: From the S-1, this is a 68% COGS business, meaning their unit margins are 32%. You can debate whether some

To throw some actual _data_ into this conversation: From the S-1, this is a 68% COGS business, meaning their unit margins are 32%. You can debate whether some of their opex belongs above or below the line, but let's assume the 32% number is baseline credible. The business had 4.1 orders/customer last quarter with an average order value of $57.23, meaning 73.21 of gross profit per customer. That means they recoup their marketing spend in 6 quarters. The big questions, in my mind, are (1) will people continue to be customers after a period of time and (2) will CAC stay the same, rise, or fall? I think there's more room for disagreement here than people admit. I haven't looked too closely at their IPO pricing, but there is some amount I would pay for a share of stock in this company - it's >$0. I'm just not sure how that number compares to the current share price.

jamesash 9y ago
From yesterday WSJ: "Daniel McCarthy, a professor of marketing at Emory University, analyzed Blue Apron’s numbers and estimated that roughly 60% of customers stop using the service after six months." https://www.wsj.com/articles/blue-apron-chops-its-ipo-price-range-1498652104 https://www.wsj.com/articles/blue-apron-chops-its-ipo-price-...
- Declanomous 9y ago
  I can't read WSJ, so I don't know if they address this, but I wouldn't be surprised if people find favorite recipes over time and then just go to the store and buy the ingredients. I've never tried Blue Apron, but that seems pretty likely given their business model.
- naravara 9y ago
  It makes sense. My girlfriend and I have been doing it for about a month. We like the variety, the sense of surprise, and the ingredients are actually fresher than most of the produce at our grocery stores so the price per meal is almost worth it. (Though we'd prefer bringing it down to about $7 per rather than $10. Where the value falls down is in how much of a time sink it is. These meals take a fair amount of prep, and in exchange for all that time you only get two meals. When I cook on my own I usually batch enough to have at least another 2-3 meals worth of leftovers. If they set it up as a channel for weekly meal prep rather than 3 fun new recipes to try we'd be much more inclined to stick with it, but as it is it's just too much work for busy people to do every week.
  - m_mueller 9y ago
    Ah that would be a deal breaker for us as well (married w/ small child). Leftovers are essential to make the timing work, every bit we have to spend at the stove the kid needs to be kept busy somehow, so batching everything is the only way to stay sane.
  - jaggederest 9y ago
    It's funny because the difference between their current prices and the price people would prefer to pay is exactly their margins, per above.
    - naravara 9y ago
      That is pretty funny. If they provided larger meal sizes it would probably come closer. They'd be able to provide you one meal's type of food (less variety, fewer things to measure, and fewer types of ingredients = easier supply chain management) and you could get 5 or so meals out of one cooking session's worth of prep. It probably still wouldn't come down to $7. But I assume there are people more willing to pay than me out there who would be happy with it.
      - curun1r 9y ago
        I know I'd do it if I could lower the per-meal cost by buying more of the same thing. I typically do all my prep work for a whole week of meals on Sunday night so that cooking each night takes 10-20 min. I'd pay for a Blue Apron type service that saved me that work and the trip to the store. Plus, it would be somewhat more environmentally sustainable to ship a week's worth of food instead of just 2 meals. But Blue Apron, as it is now, isn't cheaper or easier than what I do now and it's a nightmare of wasted packaging.
  - mcpherrinm 9y ago
    Go for the "4 person" option instead? Then you cook more each meal.
  - mi100hael 9y ago
    Yeah I had the same experience. Ingredient quality was fine, recipes were pretty good, but prep time was too long for just a weeknight dinner. Makes a good date-night activity, but my wife & I don't have time to do that three times per week.
- hyperbovine 9y ago
  I wonder what fraction of that 60% are people who come to realize that doing your own shopping and cooking is actually not that hard, in addition to being way cheaper.
  - coldpie 9y ago
    Yeah. I kind of appreciate these services as a way to introduce people to home cooking, but I imagine most people end up a grocery store at some point and realize they can get an onion for a couple cents instead of a couple dollars.
jliptzin 9y ago
These days it's really not a great idea to buy a stock at IPO. There's no shortage of idiots out there who are bidding up the price because they equate a good product with a good business.
- codewithcheese 9y ago
  Some would see that as a good reason to buy.
  - hyperbovine 9y ago
    Juicero
ghaff 9y ago
I wonder how they define a current customer. I haven't used Blue Apron for a while but, with a lot of these services, if you want to make it so that "don't send me anything else until I explicitly tell you to" you have to cancel. Added: Interesting. I originally read orders as meals but it does seem be a typically $60-ish order. Which means that their typical customer does seem to be someone who uses the service as an ongoing subscription. I'm not sure if I'm surprised or not but, assuming I'm reading their S-1 correctly, their customers seemingly tend to be all-in or they drop the service.
ghaff 9y ago
It's really hard for me to believe that there are a lot of people who keep getting three meals or so a week for six quarters. I'm sure they exist but I see a lot of people tryig this for a while and then dropping it or at least taking a break. This is also a bit different from that HBO subscription that you know in the back of your head you're not using all that much but the pain doesn't reach the threshold of calling up and canceling. These are groceries either rotting in your refrigerator or guilting you into spending a fair bit of time to prepare food when you don't really want to.

jamesash 9y ago

From yesterday WSJ: "Daniel McCarthy, a professor of marketing at Emory University, analyzed Blue Apron’s numbers and estimated that roughly 60% of customers stop using the service after six months." https://www.wsj.com/articles/blue-apron-chops-its-ipo-price-range-1498652104 https://www.wsj.com/articles/blue-apron-chops-its-ipo-price-...

Declanomous 9y ago
I can't read WSJ, so I don't know if they address this, but I wouldn't be surprised if people find favorite recipes over time and then just go to the store and buy the ingredients. I've never tried Blue Apron, but that seems pretty likely given their business model.
naravara 9y ago
It makes sense. My girlfriend and I have been doing it for about a month. We like the variety, the sense of surprise, and the ingredients are actually fresher than most of the produce at our grocery stores so the price per meal is almost worth it. (Though we'd prefer bringing it down to about $7 per rather than $10. Where the value falls down is in how much of a time sink it is. These meals take a fair amount of prep, and in exchange for all that time you only get two meals. When I cook on my own I usually batch enough to have at least another 2-3 meals worth of leftovers. If they set it up as a channel for weekly meal prep rather than 3 fun new recipes to try we'd be much more inclined to stick with it, but as it is it's just too much work for busy people to do every week.
- m_mueller 9y ago
  Ah that would be a deal breaker for us as well (married w/ small child). Leftovers are essential to make the timing work, every bit we have to spend at the stove the kid needs to be kept busy somehow, so batching everything is the only way to stay sane.
- jaggederest 9y ago
  It's funny because the difference between their current prices and the price people would prefer to pay is exactly their margins, per above.
  - naravara 9y ago
    That is pretty funny. If they provided larger meal sizes it would probably come closer. They'd be able to provide you one meal's type of food (less variety, fewer things to measure, and fewer types of ingredients = easier supply chain management) and you could get 5 or so meals out of one cooking session's worth of prep. It probably still wouldn't come down to $7. But I assume there are people more willing to pay than me out there who would be happy with it.
    - curun1r 9y ago
      I know I'd do it if I could lower the per-meal cost by buying more of the same thing. I typically do all my prep work for a whole week of meals on Sunday night so that cooking each night takes 10-20 min. I'd pay for a Blue Apron type service that saved me that work and the trip to the store. Plus, it would be somewhat more environmentally sustainable to ship a week's worth of food instead of just 2 meals. But Blue Apron, as it is now, isn't cheaper or easier than what I do now and it's a nightmare of wasted packaging.
- mcpherrinm 9y ago
  Go for the "4 person" option instead? Then you cook more each meal.
- mi100hael 9y ago
  Yeah I had the same experience. Ingredient quality was fine, recipes were pretty good, but prep time was too long for just a weeknight dinner. Makes a good date-night activity, but my wife & I don't have time to do that three times per week.
hyperbovine 9y ago
I wonder what fraction of that 60% are people who come to realize that doing your own shopping and cooking is actually not that hard, in addition to being way cheaper.
- coldpie 9y ago
  Yeah. I kind of appreciate these services as a way to introduce people to home cooking, but I imagine most people end up a grocery store at some point and realize they can get an onion for a couple cents instead of a couple dollars.

jliptzin 9y ago

These days it's really not a great idea to buy a stock at IPO. There's no shortage of idiots out there who are bidding up the price because they equate a good product with a good business.

codewithcheese 9y ago
Some would see that as a good reason to buy.
- hyperbovine 9y ago
  Juicero

ghaff 9y ago

I wonder how they define a current customer. I haven't used Blue Apron for a while but, with a lot of these services, if you want to make it so that "don't send me anything else until I explicitly tell you to" you have to cancel. Added: Interesting. I originally read orders as meals but it does seem be a typically $60-ish order. Which means that their typical customer does seem to be someone who uses the service as an ongoing subscription. I'm not sure if I'm surprised or not but, assuming I'm reading their S-1 correctly, their customers seemingly tend to be all-in or they drop the service.

ghaff 9y ago

It's really hard for me to believe that there are a lot of people who keep getting three meals or so a week for six quarters. I'm sure they exist but I see a lot of people tryig this for a while and then dropping it or at least taking a break. This is also a bit different from that HBO subscription that you know in the back of your head you're not using all that much but the pain doesn't reach the threshold of calling up and canceling. These are groceries either rotting in your refrigerator or guilting you into spending a fair bit of time to prepare food when you don't really want to.