Blue Apron Looks To The Grocery Aisle After First Quarter Earnings

Meal kit delivery service Blue Apron is trying to build momentum beyond the first quarter as it eyes new sales channels to attract more customers.

The company reported slightly less than expected quarterly revenue of $196.7 million compared to analysts’ estimates of $197.3 million, while reporting a loss of $0.17 a share compared to a loss of $0.24 a share analysts had estimated.

Blue Apron faces ongoing challenges, with its customer base dwindling 24 percent year over year and increasing 5 percent quarter over quarter “following the deliberate pullback in marketing spend in the second half of 2017,” the company said in an earnings press release.

To help grow its customer base, the company is rolling out on-demand offerings. In a post-earnings conference call on Thursday (May 3), Blue Apron CEO Brad Dickerson said those on-demand offerings will come from both its own platform and through other companies.

Blue Apron is already working with Costco to sell meal kits that were specifically designed for the retailer in its locations in the Pacific Northwest and the San Francisco Bay area.

Dickerson said the on-demand meal kit pilot program builds on Blue Apron’s existing relationship with Costco (Blue Apron has a gift card business with Costco, for example). Additionally, Blue Apron will continue to pursue other partnerships.

“In the months ahead, we will continue to launch new partnerships with different products and price points to further broaden our geographic reach, introduce the Blue Apron brand to new consumer segments and expand our total addressable market,” Dickerson said. “In our view, we have only scratched the surface of how the Blue Apron meal experience can engage with consumers.”

Beyond Costco, Dickerson said it’s important for Blue Apron to have partners with national reach as well as partners that are “strong regional players.” While he did not name other potential partners, he did say his discussions with them are going well.

“The conversations that we are having … across the board, folks have been very positive relative to the strength of our brand and [are excited] about putting our brand in their locations and their platforms and accessing their consumers,” Dickerson said.

Blue Apron is not the only player selling meal kits in brick-and-mortar stores. The company will face competition from both big box retailers and consumer packaged goods (CPG) brands.

Walmart, for example, has begun selling meal kits and “one-step meals” in more than 250 of its brick-and-mortar stores.

The retailer plans to bring the meals to 2,000 of its locations in 2018, CNBC reported. Additionally, customers can order them through the retailer’s online grocery pickup service.

Weight Watchers also plans to roll out meal kits in grocery stores. The company will sell them under the “WW Healthy Kitchen” brand name.

Blue Apron’s Senior Vice President and General Manager of Consumer Products Tim Smith believes the Blue Apron brand can support the company as it moves to new channels.

“As it relates to the brand, one of the things that’s been really exciting as we’ve been engaging in conversation is the power of the brand to help bring to life a new category in the retail space,” Smith said. “I think what we’re seeing is that there is a tremendous potential for full meals within the retail space and as consumers move to a new category, they look to trusted brands that bring credentials.”