Blue Apron had a rough quarter, but it’s a big market

Blue Apron posted mixed results for the quarter, but I think the CEO has the right outlook as he deals with pressure from Amazon:

But CEO Matthew Salzberg told CNBC that the grocery market is far from a “winner-take-all” battle between grocers, Blue Apron and Amazon.

“We admire Amazon as a company, and we take them seriously, big or small,” Salzberg said. “That being said, we are competing in a competitive and large market. … We think about ourselves very differently, I think, than Amazon thinks about themselves.”

That’s exactly right and a good way to look at the market. It’s easy to assume that he’s saying that because the quarter wasn’t great, but it is true.



  • Janak Parekh

    Respectfully disagree, Jim. Blue Apron’s biggest problem is not Amazon, it’s itself. If you’re a member of Stratechery, I highly recommend reading https://stratechery.com/2017/blue-apron-files-for-ipo-network-effects-and-customer-acquisition-costs-uber-concerns/.

    The tl;dr is: a) Blue Apron has to spend more and more money to acquire customer as they grow out of their initial niche; b) it’s unclear how long such customers stick around. The network effects of many other startups don’t work when it comes to food. Quoting Ben:

    “This is a fundamental problem for Blue Apron: while the company is benefiting from scale (the company’s gross margins are decreasing as the customer base grows), there are no network effects or other means by which Blue Apron is becoming more valuable to marginal customers. That means that, outside of cutting prices, the only way to grow is to spend more money on customer acquisition, and that is a very good way to make the lifetime value of a customer negative.”

    Their current business model is not sustainable. Something will have to change.