Dive Brief:
- Blue Apron will sell its meal kits through Jet.com’s online and mobile platforms, the companies said in a statement. The dinners will be available to shoppers in New York City, as well as Jersey City and Hoboken in New Jersey.
- Shoppers will be able to access Blue Apron through same-day or next-day delivery via Jet’s City Grocery offering. Shoppers will be able to select from four meal kit options ranging from $16.99 to $22.99. Choices include dukkah-spiced beef and couscous with tahini-dressed broccoli, and togarashi popcorn chicken with sweet chili slaw and jasmine rice.
- “This exciting launch is another step forward in our channel expansion strategy and reflects the strength of the capabilities we are developing to readily support a variety of opportunities to broaden our access to consumers,” Brad Dickerson, Blue Apron's CEO, said in a statement.
Dive Insight:
After selling its meal kits exclusively online since it was founded six years ago, Blue Apron has spent much of 2018 looking for new ways to sell its products through other avenues. In May, it launched a pilot program with Costco to carry its meals at the wholesaler. The maker of pre-portioned dinners also started pop-up locations to showcase its special occasion meal kits, forge stronger relationships with customers and provide an experience beyond the online space where it primarily operates.
The latest step in this path is its partnership with Walmart's Jet.com subsidiary. Blue Apron has spent its time as a public company dealing with high marketing costs, rapid customer churn, executive turnover, challenges opening a new distribution facility and mounting competition from HelloFresh and other competitors. The company, which went public in June 2017 at $10 a share, found its stock trading just above $1 last week. Blue Apron's shares soared 22% to $1.40 following the Jet announcement.
The challenge for Blue Apron is that in order to attract more customers, the company must increase its marketing spending. But by doing so, it bleeds cash and finds that many people take advantage of early promotional deals only to leave the service later on. Blue Apron, which warned before it came public that it may never post a profit, has watched losses mount during its time on the public market.
Jet and other partnerships signify that if Blue Apron wants to remain a viable company with greater customer reach, it will need to abandon a go-it-alone strategy that was once central to its business model. It needs to boost brand awareness in the store, with Costco and now online with Jet. While these efforts are not a cure, they do give Blue Apron one more way to get noticed and foster customer loyalty. Jet benefits by offering consumers another option when they go online to purchase products through the Walmart-owned website.
It remains to be seen how sales will fare, and how much of those dollars will ultimately make their way to Blue Apron. On the surface, there could be some challenges that limit the success of this partnership. The meal prices start out at $16.99, which might be a little steep for some shoppers. In addition, customers might not see enough value in the time they save to justify the cost; they might as well get the raw ingredients themselves and do the prep on their own.
Blue Apron and Jet appear to be testing out the service in the New York area before deciding whether to broaden the scope. Given the fresh aspect of meal kits, it's uncertain how wide this partnership could become across the country, even if it does prove to be a success in the largest U.S. city.
Jet is offering Blue Apron's meal kits as part of its City Grocery experience, which offers consumers in most of New York City 3-hour scheduled delivery windows for groceries, everyday essentials and other select merchandise. If Jet expands the service, perhaps Blue Apron will follow. Walmart has long been rumored to be a buyer of the struggling Blue Apron. This test could provide the retail giant with a closer look at Blue Apron that it could use to decide whether it wants to acquire or invest in the company.
