Blue Apron isn’t thinking too much about a challenge from Amazon, if its first earnings call as a public company is any indication.
Blue Apron executives did not directly mention Amazon by name on the call, and only a couple of investors asked about competition. Most of the discussion was on Blue Apron’s future products, such as more recipe choices and quicker meals, a decision to reduce marketing spending in the second quarter and the progress of a new automated manufacturing center in New Jersey.
But CEO Matt Salzberg did briefly address competition in the grocery market on the call. He said the best way for Blue Apron to stay on top in the meal kit delivery space is through a strong distribution network and a roadmap of new products for the customer.
“Certainly we have competition, and it’s our job as a company to outcompete competition through great consumer product innovation,” Salzberg said.
That Amazon wasn’t mentioned by either Blue Apron officials or investors is a bit of a surprise given the recent push that the retail giant has made into Blue Apron’s territory with a new meal kit delivery service of its own. Amazon’s blockbuster purchase of Whole Foods Market puts even more pressure on Blue Apron, as the two companies share similar customer bases.
Salzberg did address Amazon in an interview with CNBC Thursday. He said there is plenty of room in the grocery business for a variety of different business models, including traditional grocers, Amazon and Blue Apron.
“We admire Amazon as a company, and we take them seriously, big or small,” Salzberg said. “That being said, we are competing in a competitive and large market. … We think about ourselves very differently, I think, than Amazon thinks about themselves.”
On the earnings call, Salzberg also discussed the challenges of scaling a meal kit delivery business, which Amazon may run into if it decides to invest more in that space.
“It’s not all that hard for someone out of their kitchen to put together a small volume of customers to do something similar to what we do, but doing it at a national scale in a high quality way, consistently week in week out and make money doing it is certainly a complex task,” Salzberg said. “And when you’re dealing with something like perishable food it makes it even more complex, because perishable food is not a widget, the quality really matters, the supply chain you build really matters.”
Wall Street wasn’t thrilled with Blue Apron’s first earnings report. It’s stock is down more than 15 percent this morning, and shares of the meal kit company have dropped 46 percent since it went public in late June. As Bloomberg notes, Blue Apron stock is now worth less than the cost of one of its meals.
And the company is losing customers too. Blue Apron’s decision to cut marketing spending by $26.1 million in the quarter played a role in the 9 percent reduction of its customer base this quarter to 943,000 down from about 1 million customers last quarter.
As it spends heavily to ramp up a new automated distribution center in Linden, New Jersey, Blue Apron had to delay some of its new product launches. This also led the company to revise guidance for sales in the second half of the year down to $380 to $400 million.
