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Just two weeks after its initial public offering, Blue Apron’s stock is valued at half what it hoped prior to the IPO.
The New York-based meal kit service aimed for share prices of $15-17. Just prior to the IPO, they lowered that outlook to around $11, and two weeks after their June 28 launch, shares were trading for just $7.50.
What was initially touted as one of the hottest IPOs this year had its share of critics. Analysts pointed to the company’s inflated marketing budget, prices out of range of most shoppers and low retention rate.
They’re aggressive with the ads, for sure. I remember encountering my first Blue Apron ad as a post card in an online order of children’s clothing. On a recent flight from Dusseldorf to Boston, Air Berlin flight attendants handed out coupons for the German version of Hello Fresh. Talk about a captive audience. There’s nothing like thinking about good food when you’re eating lousy airline food.
Retailers ask me all the time what I think of meal kits.
I think the kit concept fosters a sense of ownership and adventure for consumers who want to cook but often don’t have the inspiration, knowledge and dedication cooking a meal from scratch involves.
That’s before we get to the significant challenge of cost and logistics. I tried Blue Apron and Hello Fresh last year for Produce Retailer, and I had a lot of issues with how the food was packed and how it arrived.
It seems like consumers want the adventure, inspiration, freshness and ease of a meal kit, with all of the ingredients portioned and semi-prepared, but they don’t want the commitment and cost of distribution a meal kit delivery entails.
This seems like the perfect recipe for a retailer to step in. Kroger is on it with Prep + Pared. H-E-B even has breakfast kits. The future looks promising ... if consumers follow through.
For now, my email is riddled with Blue Apron pleas for me to come back, offering as much as $60 off a weekly delivery. I’ve been in a cooking rut lately and am almost uninspired enough to take them up on the offer.