Blue Apron’s Struggles Show Why It’s Tough to Make It With E-Commerce Subscriptions

How Blue Apron shows the trouble with subscription commerce
By Gabriela Barkho.

In the complex world of e-commerce, subscription boxes are such a simple idea that they sound foolproof. Customers sign up for regular installments of your products—meals, wine, cosmetics, clothes, whatever. They trust you to send them things they’ll mostly want, and they trust you with recurring payments on their credit cards. It’s a model meant to synthesize tech buzzwords such as “disruption” with an old-school, Columbia House sense of brand loyalty. What could go wrong?

Blue Apron Holdings Inc. is an object lesson. The meal-kit maker’s share price has fallen by almost half, to a little over $5, well under the price of one of its dinners, since its disappointing initial public offering at the end of June. In its first quarterly earnings report, on Aug. 10, the company’s $238 million in revenue slightly beat analysts’ estimates. But Blue Apron lost money ($31.6 million) and customers (down 9 percent, to 938,000) and revised the rest of the year’s sales projections downward. On an earnings call, Chief Financial Officer Brad Dickerson blamed costs associated with automating Blue Apron’s warehouses, which he said forced deep cuts in its marketing budget.

Read more at Bloomberg.

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