Company Overview & Business Model
Blue Apron is a meal-kit company designed to make home cooking easier and more accessible to customers in the US. Blue Apron is committed to delivering original recipes and fresh ingredients, with an emphasis on convenience and eliminating waste.
Launched in 2012, Blue Apron now delivers over 5 million meals a month, up from 500,000 2 years ago. The company is stepping in to provide value to Americans who, studies say say, love to cook, but who feel constrained by time. Subscribers can choose to opt in weekly to receive a meal-kit comprised of precisely portioned ingredients and instructions for three creative, home-cooked meals.
Operating Model & Competitive Advantage
The meal-kit delivery space has recently seen many entrants who hope to monetize the home-cooked dinner market. Despite increased competition, Blue Apron has successfully scaled its operations by efficiently aligning the core pillars of its business model to its operating process. The company recently raised ~$190MM in funding which will be used to further scale its rapidly growing network.
Blue Apron sources its ingredients from ~100 family-run farms. By developing relationships with these suppliers and utilizing three central fulfillment hubs, the company is able to procure a variety of products and to eliminate many supply and overhead costs faced by competing start-ups and other traditional food distributors. Blue Apron’s operating model also relies on efficient packaging and recipe design to promote convenience and to further eliminate waste.
Suppliers & Fulfillment – Managing Cost & Waste
Among Blue Apron’s primary value drivers is its ability to manage its supply and fulfillment networks.
Asset – Supplier Relationships: By developing relationships with family-run farms, Blue Apron is able to efficiently plan for inventory and to lock in prices far in advance. The company eliminates an estimated 20% of costs by purchasing supplies in bulk. Additionally, by coordinating specific goods and quantity ahead of time, Blue Apron can efficiently plan for maximum product use, thereby reducing food waste costs due to spoilage.
Asset – Central Fulfillment Hubs: Once supplies have been farmed, they are transferred to one of Blue Apron’s central fulfillment hubs. A significant advantage of the partnership with local suppliers is the lower shipping and packaging costs incurred in this process, particularly compared to organizations that have produce shipped internationally. Additionally, many significant overhead and grocery maintenance costs are avoided through the company’s use of just three hubs that service the whole country.
Packaging & Delivery – Maximizing Convenience
Blue Apron’s packaging and delivery process seeks to create maximum convenience for its customers.
Asset – Online Delivery Scheduling: Users are required to opt in for their weekly meals by a given date in the previous week. At that point, they are able to specify the day and time frame that is most suitable for delivery. This control is highly attractive to the time-conscious consumer. Advanced scheduling capabilities also help Blue Apron’s planning process by allowing for maximum allocation of its delivery resources.
Asset – Design of Packaging / Recipes: All Blue Apron ingredients and supplies are packed in a chilled box. This assures freshness in case the consumer is unable to accept the bundle immediately upon delivery.
Inside each box, individually packaged and labeled products are provided in the exact measurements required for each recipe. The primary value creation of this operating decision is to eliminate food waste (ie. half a head of leftover lettuce rotting in the fridge), but the smaller quantities also create a manageable and safe opportunity for consumers to be adventurous with new foods. Blue Apron also designs its recipes to have an average assembly time of 35 minutes, further increasing ease of use and accessibility to the company’s customer base.