DOP Deep: Blue Apron, HelloFresh and the economics of meal kits
Lessons in strategy for product teams
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Hi product people 👋,
In this week’s product briefing, we mentioned that meal kit delivery company Blue Apron was set to be acquired for just $103 million - a massive 95% discount from its original IPO of $1.89 billion back in 2017.
This got me thinking: what is it about Blue Apron’s business that meant it could collapse so quickly - and perhaps more importantly, what lessons can product teams take from this to apply to their own strategy?
Coming up in this DOP deep dive we’ll explore:
The economics of meal kit subscriptions
Industry retention rates
Why economies of scale matter for physical goods subscription businesses
Lessons product teams can learn from the meal kit subscription industry
The meal kit market
Meal kit companies started to gain traction around 2013 and originally set out to disrupt grocery stores and change the way we cook at home. Now there's 382 of them in the US alone, a 300% increase from a decade ago when there were just 13.
The premise is simple: why bother having to worry about what to cook every night when a company can take the hassle out of it for you by supplying you with weekly food boxes and recipes to match? The idea caught on initially, with the novelty capturing the attention of time stretched professionals who couldn’t be bothered to cook.
And Blue Apron quickly became one of the most popular meal kit companies in the US. But fast forward to 2022 and its revenues have dropped significantly.
