![]() Or, said another way, the company wastes marketing dollars.Īnd when you’re a newly public company spending heavily on marketing as it is, you’re going to reduce marketing spend when you know it’s not going to be as effective as you would like.īut what happens when you plan to aggressively ramp down marketing, from 20 percent of revenue in the first half of the year to around 15 percent in the back half? Your revenue forecasts suffer.īlue Apron generated $421 million in revenue in the second half of 2016 now, the company is only forecasting $380 million to $400 million for the second half of 2017. What happens when a new customer tries out Blue Apron for the first time and gets a late delivery or wrong ingredients? Yep, they bail.Īnd when Blue Apron’s new customers are bailing at a higher rate than before, Blue Apron’s marketing investments become less efficient. ![]() (This probably explains the exit of the company’s co-founder and Chief Operating Officer Matthew Wadiak, which was announced just last month.) Got that? Let’s go piece by piece, starting at the top.īlue Apron announced on Thursday that it has encountered “unexpected complexities” with the opening of a new, highly automated warehouse in Linden, N.J., and that the transition from its previous New Jersey warehouse is taking longer than expected. The company is in the midst of a vicious cycle that goes something like this: Blue Apron is experiencing warehouse issues that are causing customer satisfaction issues that are causing retention issues that are causing marketing issues that are causing revenue issues. ![]() One of the clouds hanging over Blue Apron since its IPO has been the looming threat of what an Amazon-Whole Foods combination could mean for its business.īut when Blue Apron’s stock got hammered on Thursday, falling more than 17 percent by day’s end, that had nothing to do with it it was the company’s disappointing financial forecast for the back half of the year that was the culprit.
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