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Cash-Burn Threatens Blue Apron 3.5 Months After IPO
- ben174 9y agoI found this case study video to be a good summary of what went wrong with Blue Apron: https://www.youtube.com/watch?v=UpQkAEei08w https://www.youtube.com/watch?v=UpQkAEei08w
- jobu 9y agoGreat analysis! Why the hell did Blue Apron buy a ranch? https://youtu.be/UpQkAEei08w?t=10m59s https://youtu.be/UpQkAEei08w?t=10m59s
- jrs235 9y agoSomeone thought going vertical was a good idea. Which might be after you're mature and profitable and going vertical can be shown to reduce costs. Someone got ahead of themselves though. Now they are beholdened to the cost of the ranch raised meat. What if it's more than other suppliers?!
- toomuchtodo 9y agoSpin the ranch off as an upscale brand. "Blue Apron Reserve", "Blue Apron Farm To Table", etc.
- jrs235 9y agoWhich makes sense, once you've nailed down what you need to be good at and profitable. It's sounds like a good idea and differentiator, but it seems like a premature pivot too.
- BoiledCabbage 9y agoI'm not familiar with the presenter, but I found this "case-study" to be mostly filler. ie a case study by someone looking for things to say, but doesn't really understand the problem. A summary of his critiques: "They grew too quickly for their own good." Ok, so his conclusions, they should've grown more slowly "The giant Amazon entered the market and scared people away from them" Being an even smaller company wouldn't have helped fight amazon. Being larger and in a sufficient position with high enough revenue to try to fight amazon or get negotiate better rates would've. But this exactly contradicts growing too fast] "Don't buy a ranch" This point is funny, and makes for a catch phrase, but buying that single ranch had no significant impact on their profits. They aren't succeeding or failing because of that ranch. It's something convenient to point to and say a cliche like "you're not focusing on your core competencies", but honestly that likely had a .001 percent impact on their actual business. And no I don't imaging 70% of their management team is focusing on that ranch at the expense of their core business. This entire video feels like fluff, mad-money style analysis to me. And really gives no insights as to what is happening to their business. Things I would've found interesting. Are they losing customers? Has growth stopped? What are competitors spending on marketing? What are competitors acquisition rates? How long does the average customer stay? Was it priced assuming it was long term customers, but customers actually only stay less than 1yr then move on? Are single people using it to learn cooking then leave? Do customers that leave, leave the industry or just move to another service? Are customers just hopping/rotating between multiple services? Answers to those questions would provide some insight. this presentation really had nothing to me. The closest thing was the food safety issue, but again did that actually impact delivery rates? Or costs? is it just normal cost of doing business in produce/meat delivery? I really expected more from this.
- emodendroket 9y agoI just don't know where all this demand is for single-serving meals you cook yourself but that are priced like restaurant meals.
- ben174 9y ago"Teach a man to fish." I've learned a lot of good recipes from services like Blue Apron. Having the ingredients prepped the first time you embark on a new recipe makes it way more approachable.
- emodendroket 9y agoIt seems like if that is the draw a lot of people are going to cancel their subscriptions once they feel a bit more comfortable and have a basic repertory.
- empath75 9y agoLiterally everyone I know who has used it does exactly that, including me.
- jklein11 9y agoMy cynical answer to that is: They may have considered that... and not cared. Their job was to pump up the number of subscriptions, sell Wall Street on their growth metrics, and then cash out in an IPO. Blue Apron truly doesn't feel like a company built to be around for a long time.
- deleted 9y ago[deleted]
- wil421 9y agoWhy not use books, cooking shows, or YouTube? I learned off reading books and watching shows. They will tell you what ingredients you need and where it’s possible to find them. Even most chefs start as prep cooks chopping vegetables. Start with watching how to cut an onion and start making dishes with onions. If people are only buying blue apron to learn then what happens when all their customers can cook for themselves.
- thearn4 9y agoAny opinions or predictions for the alternative meal prep box services, like Hello Fresh etc. ?
- adrianpike 9y agoWe use Hello Fresh. They're still iterating on the logistics side on a weekly basis - different shipments may use totally different packing materials. Initially there was a _ton_ of packing material waste every week, now it's way down. Big plus. They're starting to cross-sell with wine pairings, which makes me think they're needing to drive LTV. The problem I see is they haven't managed to build anything defensive. I've got not real brand loyalty, they're not capturing much information about my meal preferences other than what I order, and we're starting to get repeated meals. We'll probably cancel before the end of the year, even though it's been an enjoyable subscription overall to date. I'm not bullish on 'em, but would love to be proven wrong. :)
- soVeryTired 9y agoGusto is just as good
- tunesmith 9y agoWe've tried a few and prefer Plated. For us anyway, it's a nice mix of simple and creative.
- wtvanhest 9y agoWe used Platjoy for a while (doesn't ship you food, just makes buying food from grocery/instacart easy) and provides recipes. It was pretty good for a bit, but the recipes were not as good as we would have liked. I think services like Platjoy make the most sense in the future combined with automated ordering from services like Instacart. It makes more sense IMO to only handle half the equation when the two businesses do not need to be integrated. (logistics on one hand, recipe on the other)
- mcintyre1994 9y agoHelloFresh added a surcharge of £4.99 for the best meals in each box (salmon/steak). I used it a while ago but stopped because it just felt too expensive to be worth it and I forgot to cancel a box I couldn't use. They phoned me a few weeks ago and offered a nice discount on two boxes, I'll probably use them at some point but every box I want has that surcharge and I doubt I'll come back properly. You can skip weeks further ahead than just one now though, that's a nice comfort. I actually think they might've dropped the price on the base box.. but something about that surcharge just triggers a "this isn't a deal any more" reflex in me - it's really offputting for me and has definitely stopped me considering it seriously again. Also all their recipes are available for free, I don't see their moat. Their recipes and food are good though.
- Animats 9y agoIf you have $1 billion in sales and you cannot make money, when can you make money? A good question for Uber investors.
- emodendroket 9y agoI guess in that case the plan is after their money-losing prices drive competitors out of business and they can cut out the drivers with advances in autonomous driving. Both far from assured, in my opinion.
- kolbe 9y agoThey did make money. A lot of money. If you can sell $100 bills for $90, but get paid personally by investors who think that constitutes revenue, then you're making a good business decision.
- jimmywanger 9y agoI forgot where I read this, but Blue Apron spends a ton on customer acquisition, though non-traditional media channels. I listen to several podcasts (Bill Burr and Joe Rogan represent) and every single episode they got an ad plugging Blue Apron - except they recently yanked their spots on Burr's podcast because he joked around too much. They're probably banking on LTV of their customers, but it just doesn't make sense when a lot of your customers cancel after 6 months and it costs 400 dollars in marketing expenses to acquire each one. I just don't see a sustainable business model. The food industry is remarkably cutthroat, and the margins are already razor thin, even for a restaurant.
- tdeck 9y agoBlue Apron seems to have advertised on almost every single one of the 20+ podcasts I listen to. They share that distinction with the razor delivery companies (Harry's and DSC), Casper, and Nature Box. No matter the podcast or subject matter it always seems to be the same companies.
- Cbasedlifeform 9y agoDitto that. I listen to a variety of podcasts (politics, comedy, tech) and it is the same four or five adverts. Harry's probably most of all. As for Blue Apron itself, I recently discovered the pleasures of cooking and for me it is almost a therapy (and I listen to podcasts while I cook, in fact :) but I have a bit more free time than many people. I could appreciate the convenience of the delivery and the recipes but as others have noted the amount of packaging waste is absurd. And once people start cooking they'll quickly realise how easy (and tasty) it can be.
- emodendroket 9y agoHow could you forget stamps.com?
- groby_b 9y agoUltimately, they're hamstrung by the fact that by nature of their business, they have to limit selection. I haven't encountered a single set of recipes from Blue Apron that didn't contain at least one that I absolutely hate, taste wise - and that's what I hear from others as well. So what they do is, they teach you how to cook. At some point, you'll lose the fear of it (because it really isn't hard). The moment you add the first ingredient of your own, just because you like it, you're pretty much lost to them. The one useful pivot I could see - but where I can't see the feasibility - is you picking recipes a la carte, and they ship the ingredients prepped. (That's where the major time sink is - and people are always willing to pay to get back time). That requires a huge number of customers, figuring out how to keep prepped materials fresh, and tremendous automation to be possible. It's a far cry from "we ship these 6 meal kits to you"
- razvanh 9y agoMy problem with blue apron is with all the waste/trash generated by their packaging. I tried their services and the recipes were ok — although for someone that likes to cook or is a more experienced cook, their service is not worth it.
- nxsynonym 9y agoI had the same experience. Me and my SO ordered on and off for a few months, mostly just to try out new recipes and get ideas. Out of everything we tried we've only gone back to make 4 or 5 of the recipes on our own (without re-ordering that meal). The waste is the biggest issue for me. The price point is a little high, but if you're not relying on it for every meal it's not terrible. The amount of cardboard and plastic that came in every box was absurd.
- empath75 9y agoIt seems pretty crazy that a grocery store chain hasn’t implemented a service like that where you can pick it up on the way home for less money and with less waste.
- ceejayoz 9y agoThey are: https://www.cnbc.com/2017/08/08/grocery-stores-are-fighting-back-against-meal-kit-companies.html https://www.cnbc.com/2017/08/08/grocery-stores-are-fighting-...
- wils1245 9y agoThey not only don't have a moat, the incumbents are better positioned to execute their business model than Blue Apron is.
- ballenf 9y agoI would guess that grocery stores have been hesitant to implement any new model which allows customers to avoid the high margin checkout item goods and high margin prepared foods. The web order / quick pickup model shows they are slowly coming around in some ways, however. For the model you describe to work, they'd have to charge quite a bit more for the ingredients that one would pay simply buying them yourself (or, again, totally forgo the prepared food high margins). Premium prices for "ingredients + recipe card" would trigger price inflation complaints from mainstream shoppers who aren't comparing the option to blue apron but taking an extra 15 minutes to get the items themselves. What's that term for the profits an established player has to sacrifice to compete in a new market?
- kenoyer130 9y agoMy wife's comment was "I can get all these ingredients at the local super market and there is a lot of prep work". If Blue apron or a like service had all the food ready to go into the oven/microwave we would of stuck with it. Since she still had to do all the chopping and prepping, it was a waste of time.
- gandreani 9y agoThey have those in the supermarket. If you want the same thing wrapped up in a startup package, try https://www.freshly.com/ https://www.freshly.com/
- Klathmon 9y agoThat's like saying "if puzzles came already put together people would buy more". They are marketing their product at people that want to do the prep, the cooking, the whole deal, but don't know where to begin. I loved my few Blue Apron boxes that I got. It was exactly what I expected and wanted. There is a market for what you describe, but it's not what they are trying to solve.
- gehwartzen 9y agoThe thing is that model can be solved with a simple rescipe app that tells you what to buy and how to make it. A lot of grocery stores even have pickup.
- Klathmon 9y agoI'm not saying it's impossible to do any other way, but for me it was perfect. I could download some recipes online, then go buy the stuff. But then I end up with a whole jar of hoisin sauce that I'll never use again because I didn't really like it, or 2x the ground chicken that I don't know what to do with now. With the "recipe in a box" style things, they give you what you need, AND how to make it. I used it like a trial. Of the food I got over the like 6 total times I got it, I liked about 10 of the recipes (they give you 3 meals with each box), and we continue to make about 4 of them on a regular basis. The "regular" ones we now go to the grocery store for, because now we know how much to get, what we can use it for, how long it will store, and where to get it. I'm sad it sounds like this might not be a sustainable business model, as it was a really nice thing for us, and we do want to do it again at some point. I guess the closest "traditional" thing to it would be like going to a cooking class. But this was cheaper, at home, and had much more variety.
- rootedbox 9y agoBlue Apron has multiple problems. 1. Once they teach you cooking isn't hard you will do it on your own. 2. Most grocery stores of all levels have meal kits now. 3. If you buy a mandolin(knife skills are for tv shows and culinary school) and safety glove you can go from raw not chopped ingredients to plated hot meal in under 20 minutes..
- djrogers 9y ago> If you buy a mandolin(knife skills are for tv shows and culinary school) I’m happy that a mandolin is working for you, but there is a lot more to knife skills than slicing - there are a lot of foods and cuts that a mandolin can’t do, and they aren’t difficult or unsafe. As long as you don’t feel a need to be as fast as a line chef, you can do pretty much any cut with about 5 minutes of practice.
- Jemmeh 9y agoNah, I was much faster with a knife and a bit of practice than with a mandolin, and mandolins can only do certain things. I liked the mandolin but it was also a pain to clean vs a knife.
- Frondo 9y agoJust cook your own food for a few months and you develop enough knife skills to never look back. I don't even have fancy knives--ever--I buy the $3 knives from the Asian grocery store. They dull after a few months, and sometimes I sharpen, sometimes I toss.
- j7ake 9y agoIs current society so depend on ready prepared meals that people don't even have basic knife skills? This is mind blowing to me.
- chrisgd 9y agoWith Kroger clicklist, instacart, amazon fresh, etc. I don't see the need for this. I need more companies that auto order from kroger click list my recipe selections. I also really like freshly that delivers fresh, ready to heat blue arpon quality meals (high end tv dinners, but never frozen)