To say BlueApron has had a summer of discontent is an understatement.
Since IPO in June, Blue Apron’s share price has fallen 36% from its IPO price of $10.
COO Matt Wadiak has since stepped down from the company & C-suite members are being reshuffled as we speak.
So what led to the demise of Blue Apron’s stock price & what can we all learn from it?
Falling into the trap of being all things to all people
Blue Apron leveraged its first-mover advantage & delivered a service which was appealing to a broad spectrum of people & gained early successes in the meal kit delivery industry early on. However, as competition grew in the market, although they were able to retain market share against smaller/newer players like HelloFresh, they were quickly made vulnerable by larger players such as established grocers who entered the market. As beasts like Amazon announced that they were also going to enter into this arena, this quickly undercut Blue Apron’s position & raised questions around their underlying growth potential, leading to its share prices taking a punch.
The unwillingness to turn down segments of the market & opportunity meant Blue Apron spread itself thinly throughout the market, making it all the more vulnerable for competitors to snatch away market share.
Succumbing to the allure of being overvalued
Companies nowadays are often caught in a self-congratulatory daze where the founder/CEO is tantalised by their valuation – the higher the better. However, having seen enough episodes on Silicon Valley, we all know that going public with an overvaluation is a dangerous game. When a company is unable to immediately deliver to their plan, bad publicity will drive stock price down & trust from the public will slowly erode. Shortly after, the attention is no longer on the company & brand but the limelight is solely focused on the stock value performance.
Burning money without a clear picture
We all know by now that Blue Apron’s marketing costs are questionable to say the least. Customer acquisition & marketing expenses increased by 180% last year – well outpacing its revenue gains of 133%.
Companies often think the louder your voice is in the market, the more likely people will pay attention. This in turn means they fall into the trap of throwing money in the fire pit of PR & marketing. Without a clear view of whom we’re actually trying to target, what are we trying to say that’s different in the market, the ROI will almost always be close to zero.