Blue Apron, in its first quarterly earnings report since going public, posted a mixed bag of results that show both the promise and the challenges of the meal kit space.
Second-quarter revenue growth cooled to a gain of 18% over the year-ago period, compared with a 42% year-over-year gain in the first quarter. The cooldown was to be expected, as the company pulled back on marketing spend to drive sales.
With marketing spend reduced by $26.1 million, revenue eased from the first quarter, as total customer count order count declined. On the plus side, average value and orders per customer rose, a signal of loyalty.
The meal-kit category is projected to grow at an average of 20% a year over the next five years to a total of $11.6 billion by 2022, more than double an estimated $4.65 billion this year, according to market research firm Packaged Facts.
Blue Apron was arguably the biggest name in the field, but there is new competitor: Amazon. And Amazon's pending acquisition of Whole Foods will make it even more formidable for rivals such as Blue Apron.
But survey data indicates that consumer enthusiasm for meal kits is held back by perceived high prices of some of the offerings.
According to July 2017 research from Morning Consult, nearly six in 10 US internet users who haven’t subscribed to a meal-kit delivery service said the cost of these kits deterred them from trying it out.