Once a darling in Silicon Valley, Blue Apron has seen its stock plummet.
Like many other startups, the meal-delivery service company fell short of expectations with an unsustainable and unproven business model as competition increased. After a meteoric rise, demand for the pre-packaged ingredients for a single meal with no leftovers collapsed. The company is considering multiple strategic alternatives including the sale of its assets and cost optimization initiatives.
Video Spotlight: Blue Apron Review from a Loyal Customer
This post is based on the CNN article, Blue Apron May Be Up for Sale as Losses Mount, by P.R. La Monica, February 19, 2020, and the YouTube video, Blue Apron Review | After 2 Years, by Miss Sarah E K, December 15, 2018. Image source: Â© Image Source/Alamy Stock Photo.
1. What are the reasons for Blue Apron’s financial struggles?
Guidance: There are two major reasons for Blue Apron’s financial struggles. The company misunderstood the market and underestimated the competition. People who cook at home do not really care for single-use ingredients such as one pat of butter. Moreover, they may not want to go through the trouble of cooking small portions with no leftovers. Finally, they may frown upon the waste generated by the large amount of packaging and the hassle of recycling it. In a business with low barriers to entry, it was also inevitable that competitors with vast resources and a diversified portfolio of products and services would flood the market rapidly.
2. In light of its difficulties, how is Blue Apron attempting to resume its growth?
Guidance: Review the competitive priorities of an operations strategy: cost, quality, delivery, and flexibility. Based on the article, Blue Apron is trying to expand its product and subscription mix (mix flexibility) and “optimize” its costs. There are no details on how it intends to control its costs which include building and maintaining prep kitchens, packaging, shipping, marketing, and offering introductory promotions.
3. If you were a consultant for Blue Apron, what service redesign alternatives would you propose?
Guidance: Responses will vary: expand the product line or tailor it to its loyal customer base and foster retention; partner with other businesses to offer same-day delivery for non-subscribers; customize portions to individual customers’ preferences; use bio-degradable packaging for customers willing to pay more for it; etc.