Blue Apron went public Wednesday, slicing its individual share price to $10 and bringing the meal-kit delivery company’s market value to $1.89 billion. When Blue Apron first announced plans for an IPO it estimated shares would be $15-17 each, implying a market value of the $3.2 billion.
It seems that optimism was curbed by Amazon’s plans to swallow up Whole Foods, a game-changer for the grocery industry that leaves many questions unanswered. But Blue Apron CEO Matt Salzberg says he isn’t sweating the $13.7 billion deal.
“Amazon has been focused on grocery for a long time, obviously, and if they can help accelerate bringing online dollars into the offline grocery world and accelerate that transition from offline to online we think that is good for us and good for others players in online grocery,” he said in an interview with CNBC.
Previously: Amazon gobbling up Whole Foods has Blue Apron eating humble pie as food delivery company chops IPO price
The online grocery industry has turned out to be a tough nut to crack, which was likely a motivating factor in Amazon’s decision to gobble up a major chain of premier markets. Of the $782 billion U.S. grocery industry, just 1.2 percent is currently online, according to a report from Goodwater Capital.
“There have been tons of players trying to bring online grocery penetration up historically that haven’t been successful because quality is so important,” Salzberg told CNBC. “Because we run this vertically integrated supply chain and are involved agriculturally, manage our own FDA regulated food manufacturing centers and distribution network, is one of the things that allows us to offer higher quality food at better prices and grow the overall online share of the offline market.”
Unlike Amazon, Blue Apron owns and operates its own farm and gets exclusive deals on about 70 percent of food from suppliers. It is the leading U.S. meal kit company, delivering pre-measured ingredients and corresponding recipes to more than one million customers. Amazon also has a meal-kit delivery service through partnerships in a handful of cities but it hasn’t been the focus of the Seattle e-commerce giant’s grocery push.
Still, the combination of the Whole Foods brick-and-mortar grocery operation with Amazon’s massive delivery logistic network has some investors skeptical about Blue Apron’s ability to compete.
Blue Apron’s IPO raised $300 million with shares at $10 each. As of 9 a.m. PST, shares were trading at $10.59.
