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Blue Apron’s Growth Strategy in a Competitive Field

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Growth initiatives

Blue Apron (APRN) is credited with conceptualizing meal delivery kits, which include recipes along with proportionate fresh and organic ingredients. However, the company’s revenue growth has been decelerating quickly, as we discussed previously in this series. The meal kit market is becoming crowded with numerous players such as Kroger (KR), Walmart (WMT), and Amazon (AMZN).

To combat these odds, the company has undertaken a variety of initiatives that include managerial changes, cost cuts, improvement in product offerings, and streamlining its fulfillment centers.

In November 2017, the company’s co-founder and CEO, Matt Salzberg, stepped down, and CFO Brad Dickerson was named as the new CEO.

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Automated facilities and data analytics

In July 2017, Blue Apron (APRN) announced that it was moving all operations from its Jersey City fulfillment center to its Linden facility, also located in New Jersey. The company has two other facilities located in Richmond, California, and Arlington, Texas. 

Blue Apron has been focusing on automating the entire production process in its facilities to save costs and reduce the fulfillment time. The company said it was able to reduce its OTIF (On Time in Full) rates at Linden to become nearly on par with the other two facilities.

OTIF calculates the number of times its customers’ orders were processed according to their time limits. Increases in OTIF rates are important to control operating expenses. In October 2017, Blue Apron slashed 6.0% of its workforce to reduce operating expenses.

Blue Apron is also utilizing customer behavioral data and feedback to simplify its operational complexities. According to the company, behavioral data can help customize the product based on the individual customer’s preference. This data can also help the company suggest recipes.

Improvement in offerings and brand campaigns

Blue Apron (APRN) is continually investing heavily in marketing and upgrading its portfolio of recipes to attract more customers. The company had reduced its marketing expenses in 2H17 but stepped up its expenditure in the last week of December. It is also inking deals with companies such as the Whole30 program to enhance brand visibility.

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