Meal-kit company Blue Apron Holdings Inc. is trying out a new distribution channel.
Beginning this week, Blue Apron products are available to consumers in select ZIP codes in New York City on the Grubhub and Seamless online and mobile food-delivery platforms.
The services, each best known for delivering prepared food from local restaurants, will offer a rotating selection of Blue Apron meals—which consist of pre-portioned ingredients that consumers use to prepare recipes at home.
In addition to Blue Apron meals, consumers can order add-on products from Blue Apron premium suppliers and partners, including Vermont Creamery cheeses, Irving Farm coffee and a selection of broths from Brodo Broth Co., which sells broth online and operates four “broth shops” in New York.
A Blue Apron spokeswoman says on-demand platforms like Grubhub and Seamless platforms make sense as distribution channels for Blue Apron meals. “Research shows that a sizable segment of consumers are planning their meals the same day as the occasion,” she says. “We are confident that our on-demand meal offering fulfills a distinct consumer need–a high-quality, convenient meal that can be cooked in under 30 minutes.”
The company expects “to build on this new competency with additional same day, on-demand platforms over the coming months that enable us to further expand the geographic reach of this offering,” the spokeswoman says, but offered no specifics.
Blue Apron, No. 67 in the Internet Retailer 2018 Top 1000, was one of the early pioneers in the meal-kit market. But an ill-timed IPO, coming on the heels of Amazon.com Inc.’s (No. 1) purchase of Whole Foods, as well as competition from Berlin-based service HelloFresh (No. 84), have put pressure on customer acquisition costs.
HelloFresh, the largest meal-kit company worldwide, passed Blue Apron in the first half of 2018 to become the largest meal-kit retailer in the United States, based on sales. For the six months ended June 30, Blue Apron’s revenue was $376.2 million, down from $482.9 million for the same period in 2017. During the first six months of 2018, HelloFresh reported U.S. sales of 368.3 million Euros, or $424.7 million, based on the current exchange rate.
Blue Apron, which saw its stock price sink to a record low closing price of $1.47 per share on Tuesday, has been seeking out alternative distribution channels. Earlier this year, the company announced plans to start selling its meal kits in stores. In May, the company started a trial with Costco Wholesale Corp. (No. 12) and now sells meal kits in at least 80 Costco locations. Originally, Blue Apron’s distribution consisted only of weekly deliveries of two to four recipes for as many as four people—ordered online via a subscription-based service.
Blue Apron reported that customers fell 24% in the second quarter ended June 30, reversing gains made in the previous period. The number of people purchasing its signature boxes of food to make home-cooked meals dropped 9% from the first quarter to 717,000. The average order value also dipped from a year earlier to $57.34.
Entering 2018, “we articulated that this year would be a ‘year of transition and building for sustainable growth,'” Dickerson said during an Aug. 2 conference call with analysts to discuss second-quarter results, “And it would take time to build top-line momentum particularly given our significant pull-back in marketing spend in the second half of 2017.”
Seamless was acquired by Grubhub Inc. in 2013. Grubhub went public in 2014.