The cost of adding scale
Financial information published in the filing shows a company spending significant amounts of money to add subscribers and scale. Sales rose rapidly between 2014 and 2016, when Blue Apron generated revenues of $77,806,000 in 2014, $340,803,000 in 2015 and $795,416,000 in 2016. During those years, the company incurred losses of $30,803,000, $46,965,000 and $54,886,000.
Blue Apron remained challenged during the first quarter of 2017, generating sales of $244,843,000 and a loss of $52,194,000.
Marketing and customer engagement stand out as significant expenses for the company. Between 2014 and 2016, the company spent $14 million, $51 million and $144 million, respectively on marketing. By the end of the first quarter of 2017, Blue Apron had invested $61 million in marketing.
“We have grown rapidly since our founding, but we believe we have only scratched the surface in terms of the role we can play in consumers’ homes and around their dinner tables,” the company said in the filing.
Focal points for Blue Apron’s future growth strategy include increasing the market penetration of its core product; expanding the core product to fit more lifestyles; broadening its product portfolio; developing new brands and channels; and international expansion.
“Our business is seasonal in nature and, as a result, the growth trends of our revenue and expenses fluctuate from quarter to quarter,” the company said in the filing. “For example, we anticipate that the first quarter of each year will generally represent our strongest quarter in terms of customer engagement. Conversely, during the summer months and the end of year holidays, when people are vacationing more often or have less predictable weekly routines, we generally anticipate lower customer engagement.
“While we believe these seasonal trends have affected and will continue to affect our quarterly results, our trajectory of rapid growth has masked these effects to date. As our growth rates begin to moderate, the impact of these seasonality trends on our results of operations will become more pronounced.”
“We are currently in the process of introducing additional product expansions to increase both customer flexibility (the ability to select greater or fewer recipes per order) and the number of recipe options (the ability to choose from a greater number of recipes each week),” the company said. “We expect that this product expansion will favorably impact our cumulative net revenue per customer.”