Even though Blue Apron has reduced its marketing expenses by 31% and decreased its employees by 6%, the company still saw its operating costs increase by 15%. 71% of the meal kit delivery service’s net revenue comes from costs of goods sold. As the meal kit delivery industry grows Blue Apron is falling behind.
Last week, its main competitor, HelloFresh, went public reporting 53% revenue growth in the second-quarter. One of the reasons for the issues Blue Apron is having is because their relocation from one fulfillment center in New Jersey to another, causing unexpected expenses for the company.
Additionally, the new center is not expected to be fully functional for several months, which will not pose well for the financial well-being of the company. While Blue Apron and its rival Hello Fresh have similar financial metrics, Hello Fresh’s initial public offering (IPO) in Europe was much more successful. One of the main goals for the meal kid companies is the retention of current customers, which has a fairly low success rate.
It is estimated that 28% of Blue Apron customers are still using the service after six months; that retention rate is just 17% for HelloFresh.
