https://apps.facebook.com/techworeld/proo/?i=1050825 LexxyTech Corporations LexxyTech Corporation: Strategy: Blue Apron is spending more than $400 for every new customer — and the results show why the company is doomed (APRN)

Monday, 7 August 2017

Strategy: Blue Apron is spending more than $400 for every new customer — and the results show why the company is doomed (APRN)

Blue Apron is spending more than $400 for each new customer — and it is taking the company a while to earn that money back.

Blue Apron's new customer math doesn't seem to be adding up.

Blue Apron is spending big to get new customers — and it doesn't look like it's making much money in return.

The meal kit company is spending more than $400 to recruit each new customer, despite only making $236 per customer a quarter, Eater reporter Whitney Filloon said in an interview on Cheddar on Monday.

When Blue Apron filed for its IPO in June, the company claimed that it spent, on average, $94 per customer to convince them to buy a subscription. At this point, the vast majority of Blue Apron's marketing costs are going towards customer acquisition.

However, as Recode pointed out in June, that figure was based on the timeframe of 2014 to the first quarter of 2017. If you use the marketing figures from the last 12 months — dividing marketing costs by customers added — the company was spending roughly $460 for each new customer.

At the same time, the amount of money that Blue Apron is making per customer has declined.

In the first quarter of 2017, Blue Apron made an average of $236 per customer in revenue. In Blue Apron's filing to go public, the company claimed that cumulative net revenue per customer for the six months after their first order was $402 for people who joined in 2014, $451 for 2015, and $387 for 2016.

In other words, it takes more than half a year for Blue Apron to recoup the money it spends on bringing in each new customer, based on recent marketing figures.

Blue Apron has struggled since its disappointing IPO in June.

When Amazon filed a trademark application on July 6 for "prepared food kits," Blue Apron's stock sank 11%. And, on Friday, stock dropped 5% after news broke that the company could lay off 1,207 employees from its Jersey City, New Jersey facility, though Blue Apron said employees would have the chance to transfer to a new warehouse.



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