Blue Apron is a meal kit company that works by sending its customers the desired recipe with the required ingredients. It is ideal for customers who want to make a meal at home but avoid the trip for groceries. Blue Apron has closed below its $10 original public offering price before its second day of trading. This offer is lower than the previous one which ranged around $15 to $17. The price was reduced soon after Amazon disclosed its decision of purchasing the Whole Foods market.
Due to the drop,
Blue Apron is currently valued at $1.9 billion in comparison to the previous higher valuation of $ 2 billion.
It is estimated that Blue Apron would raise about three hundred million dollars which are lesser than what was estimated earlier. It has been a win-win situation for the investors as they got the opportunity to get hold of the shares at a low price. To get more of an offering through a different channel, Blue Apron is moving on to public market, which is a very different approach since many others are running away from these markets.
Pantheon has stated that the ratio of public listed companies had dropped by 50 percent in 20 years. This drop has been due to the capital that is being invested by the private investors, which made it possible for startups to go on without trying in public markets.
However, some investors of Blue Apron are concerned about the situation for the company.
Amazon made a deal with Whole Foods to buy the chain for $13.7 billion.
It is the dominance of Amazon in e-commerce that is a cause of concern for many of the retailers, as it creates a potential rival for others in the market.
Blue Apron has been piling under the losses due to the high expenses of the marketing. Almost a quarter of the company’s sales equal to the expenses of marketing. Moreover, the company faces another expense through the purchase of beef from wholesale suppliers. This was done to eliminate the cost of the middlemen, but the solution did not turn out to be as beneficial as predicted. There has been statistics showing the high rate of customer abandonment. The observations by S3 Partners which is a research company show that about 60 percent of the customers of Blue Apron leave the service after six months.
Blue Apron continues to face competition in the market which includes, Sun basket, HelloFresh, and Purple Carrot. Such companies are giving Blue Apron a hard time in surviving in the market, but Blue Apron is determined with its aim to change the way food is produced, distributed by the markets and finally consumed.