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Blue Apron Feeling Black-and-Blue After Amazon Moves

18 July 2017

"You be the chef".

In a filing with the U.S. Patent and Trademark Office on July 6, Amazon registered a trademark application for "prepared food kits composed of meat, poultry, fish, seafood, fruit and/or vegetables" that is ready for cooking and assembly as a meal. Shares of Blue Apron now trades below its IPO price of $10 per share, a decline of about 33%.

As Ruth pointed out, Blue Apron's customer acquisition costs are already out of control: "Blue Apron's marketing department is spending an exorbitant $94 per customer to get people to sign up for its service-and in the previous year, its customer growth rate has actually slowed".

"The target customer who uses a meal kit delivery service is a busy, affluent consumer". It has worked for over a decade on its Amazon Fresh online grocery delivery service, and last month, agreed to acquire upscale grocery chain Whole Foods Market for $13.7 billion in cash.

"We live to eat", the tagline for its already-in-circulation line of snack foods called Wickedly Prime.

Amazon working on its own social network app to compete with Facebook
One of the big positives is that it doesn't rely on users knowing each other's phone numbers, like with Whatsapp and others. This messaging app will let users chat with friends, enjoy videos and play games at the same time just like Facebook .

An Amazon spokesperson didn't immediately respond to a request for comment. When you combine that with slowing revenue growth, dismal customer retention rates, contracting margins, and rising expenses, Blue Apron becomes a high-risk stock for investors' money. Prior to being acquired by Amazon, Whole Foods had already dipped its toes in the water via a partnership with Salted at select stores.

After The Sunday Times uncovered a new Amazon trademark that signals the company's interest in its own meal-kit service, Blue Apron shares sunk more than 11 percent on Monday.

IPO in late June couldn't have come at a worse time.

Online grocery shopping still accounts for just about 7% of all grocery orders, although observers expect adoption in the U.S.to increase dramatically: Nielsen expects that share to rise to 20% by 2025. It lost another 10 percent in trading Monday after Amazon's trademark application was announced.

Blue Apron Feeling Black-and-Blue After Amazon Moves