Blue Apron embraces omni-channel strategy as Costco pilot expands

04-May-2018 - Last updated on 04-May-2018 at 00:53 GMT

Blue Apron CEO: 'There is a vast number of consumers who maybe want to interact with our product on a different basis...'

Related tags Meal kits Blue Apron

As rivals Plated and Chef’d have embraced an omni-channel strategy, Blue Apron has unveiled plans to expand the rollout of branded meal kits at Costco in a bid to woo consumers that buy into the meal kit concept, but don’t want to commit to a subscription.

Speaking on the firm’s Q1, 2018 earnings call, CEO Brad Dickerson said: “We do realize that there is a vast number of consumers who maybe want to interact with our product on a different basis, and maybe want to make decisions closer to the actual meal experience they're going to encounter.”

To date, the New York based firm has tested some kits in selected Costco stores across the Pacific Northwest and San Francisco Bay area (the recipes rotate monthly and are slightly less elaborate than some of the direct to consumer kits), but had “only scratched the surface of how the Blue Apron Meal experience can engage with consumers,” he added.

“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.

“We are out talking to a bunch of folks [and I] can't get into a lot of detail right now about who and the timing… but I will tell you is that it's important for us to have partners with national reach. It's also important to have strong regional players."

The number of food occasions we can potentially serve is vast

He added: “Across the board, folks have been very positive relative to the strength of our brand and excitement about putting our brand in their locations and their platforms and accessing their consumers... The number of food occasions we can potentially serve is vast.”

As for the core direct to consumer business, Tim Smith, SVP and general manager of consumer products, highlighted the recent launch of Whole 30 and Mediterranean diet plans and the imminent launch of new multi-course meals designed for parties, which will include an appetizer, two sides and a choice between two proteins for the main dish.

Blue Apron Q1 2018 results

Blue Apron posted a net loss of $31.7m on net revenues of $196.7m in the first quarter of 2018, representing a 20% decrease in revenue year on year, but a modest improvement over the previous quarter (+ 5% vs Q4, 2017), reflecting the company’s decision to scale back on marketing last year as it addressed operational issues, which are now being resolved.

Dickerson noted that some key metrics were also improving, with average revenue per customer up from $236 in Q1 2017 to $250 in Q1 2018. And while customer numbers had dropped from over a millions in Q1 2017 to 746,000 in Q4, 2017, they had increased again in Q1 2018 to 786,000, said Dickerson, who expects a net loss for FY 2018 to be between $126-$131m.

Meal kit brand Chef’d - which has recently opened a $10m production facility specializing in producing meal kits for retail – is rolling out meal kits to 1,500 grocery stores by the end of May, SVP retail Sean Butler told us in March.

“Meal kits instore are likely to become the top growing category in 2018 for all retail grocery. Over the next couple of months you're going to see some really large launches in big national retailers - hundreds or thousands of stores at a time."

In a February 20 presentation about the Albertsons Rite Aid merger, Albertsons CEO Robert Miller said revenues at meal kit brand Plated (which Albertsons acquired last year) were up 50% year on year and that Plated kits would roll out to more than 650 "premium stores" by the end of fiscal year 2018. He also anticipated that the Plated subscriber base and revenues would double in fiscal year 2018.