In Blue Apron’s view, the post-pandemic future of meal kits is less about getting everyone on board and more about engaging more fully with the customers who already enjoy the service. The company saw a 15 percent year over year increase in orders per customer in Q1 2021, and a 22 percent increase in average revenue per customer to $331, with the number of customers increasing 4 percent year over year to 391,000, the company reported Thursday (May 6).
One of the key issues that has always faced meal kit subscription services, and becomes especially relevant now as consumers begin once again to feel safe in brick-and-mortar grocery stores and in restaurants, is that of churn. Accordingly, Blue Apron has directed its focus toward retaining its customers more than acquiring new customers.
“We were very focused on building product innovation that would drive sustainable growth,” President and CEO Linda Findley Kozlowski said on a call with analysts. “So we were focused on creating value, and that’s where you’re seeing some of these continued record numbers around value coming from, as far as revenue per customer, et cetera. So we feel really good about what we’re seeing when it comes to behavior coming through the pandemic, because of the work that we’ve done around higher quality customer attraction and retention.”
In the next quarter, the company expects losses relative to Q2 2020, which was the first fully in-pandemic quarter. Still, the company ultimately expects growth over 2020 throughout the year. Kozlowski explained, “We expect second quarter revenue to improve over the same period in 2019. We believe Q2 2019 is a more appropriate benchmark than Q2 2020, given that the year-ago quarter results reflect the initial and the greatest impact of the pandemic on our business … For the full year, we anticipate high single-digit to low double-digit revenue growth compared to 2020.”
From the company’s early insights into newly vaccinated consumers’ behavior, Kozlowski said, it looks like these customers will continue much of their purchasing behavior.
“We watch very carefully as pandemic behaviors shift, look at some of the recent travel trends, et cetera, and we’re able to look at how our customer base behaves during this time,” she explained. “And we are seeing a lot of positive sustained behavior in the value of those customers throughout those fluctuations, as vaccinations are rolled out and travel continues.”
This strategy is the converse of the one competing meal kit subscription service HelloFresh has taken. The company’s CEO and co-founder Dominik Richter began his brief statement accompanying the company’s Q1 earnings release, “2021 has set off to a strong start. Our teams have been working hard to de-bottleneck the capacity constraints we were experiencing over the majority of 2020, especially in our US market. As a result, we’ve welcomed more customers than ever to HelloFresh.”
HelloFresh may be the authority here — the company has 3.7 million active customers in the U.S., an 844 percent increase over Blue Apron’s 391,000, and 7.3 million active customers globally. Additionally, the company’s revenue increased 116 percent year over year, compared to Blue Apron’s 27 percent. Despite meal kit subscriptions’ notorious churn problem, new customer acquisition may prove to be the winning strategy in the year to come.
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