Ok, so it’s the second day of trading for Blue Apron and my Twitter feed is exploding with people calling the IPO a failure. As of the time of writing, Blue Apron is trading 5% below it’s opening price of $10. It’s certainly it’s a rocky start to public life for the meal kit company, but they are by no means “failing.”
I don’t think that anyone can deny that Blue Apron CEO Matt Salzberg and his team have created an amazing company. But here are a few points to consider as you sift through the news.
Blue Apron Got People to Buy Groceries Online
When we first started Chicory, a year after Blue Apron, the common adage was still no one is going to buy fresh groceries online. We heard time and time again that people need to touch and feel their food. To a certain extent, that notion still exists and you see that in the online grocery industry where the majority of groceries are still bought in-store.
But Blue Apron now touts over eight million meals shipped a month. It is an incredible feat of finding product-market fit. The fact that their service can help consumers overcome their fear of buying food online is a huge testament to their product.
They Spearheaded an Industry
Five years ago the meal kit industry didn’t exist. Today, there are dozens of companies that have a similar subscription model that offers consumers a convenient way to cook and the entire industry earned between $1 Billion and $1.5 Billion in 2016, according to TechCrunch. Had it not been for Salzberg and his vision, this industry would not be where it is today.
They Overcame Huge Logistic Challenges
Delivering groceries is one of the most challenging forms of ecommerce out there. Products need to be stored at different temperatures, have to be handled delicately, and delivery times need to be short enough that the food doesn’t spoil. Amazon, the largest ecommerce company in the world, doesn’t have a logistics system for grocery that matches Blue Apron's--or at least that's what their recent Whole Foods acquisition could suggest.
They Went from Zero to Two Billion in 5 Years
Even with the aforementioned challenges, Blue Apron has grown a tremendous amount in the past two years. Founding a company is difficult and most startups fail. But the fact that they could take a new business model (with new logistics and new consumer behaviors) and grow it to this point in this short of a time is almost a miracle in and of itself.
A lot of people ask if Chicory is competitive to Blue Apron. Yes, we dip into the same space but ultimately we aren’t very competitive. I have the utmost respect for Matt Salzberg and the Blue Apron team, and their going public can really only mean good things for the grocery delivery space in general.
While their stock may be down today, their going public represents a big shift in consumer shopping behavior. I'm excited to see where they go from here.
Photo via Zirra