Blue Apron’s subscription business has hit a wall, landing the company in the arms of Walmart-owned Jet.com.
With Jet.com, Blue Apron is offering same-day or next-day delivery for individual meal kits, a break from its subscription service, for a fee of $5.95. Shares soared on the news, up nearly 20 percent by midday Monday. Terms of the deal were not disclosed.
The company, which has had a rocky financial year, has already added a new stream of business: selling customized meals individually, both online and in-store. Jet marks its first venture into same-day delivery for customers outside of its subscription service. It’s a shift in strategy to respond to problems that have long held the company back: an expensive supply chain and the high cost of advertising to acquire new subscribers.
Blue Apron isn’t just failing to attract new customers, it’s losing existing ones, too. Up against competitors such as HelloFresh, the company has seen steady declines in its customer base. In June 2017, the delivery service had 943,000 customers, a figure that steadily declined, with one exception, to the 717,000 it reported to the SEC in June.
Blue Apron CEO Brad Dickerson said the deal builds off a year-long internal push to diversify its revenue streams outside its core DTC model. The on-demand delivery service will initially be available in New York City, Hoboken and Jersey City, but Dickerson said the companies could expand to additional areas if all goes well.
“A lot of the things that we’re doing and saying right now are a lot of things we were saying earlier in the year about broadening to a non-subscription platform,” said Dickerson.