Posted on Tuesday, Jun 23rd 2015
A recent Business Insider report estimates the food and beverage industry to be worth $600 billion. The market had seen the least disruption due to the growth of the Internet, but all that is changing now. The report estimates that from 2013 through 2018, online grocery sales will grow 21% annually to be worth $18 billion by 2018, compared with the 3% growth in offline grocery sales during the same period. The huge untapped market is being eyed by giants like Amazon and eBay, who are experimenting with same-day delivery options and grocery etailing for their customers. Meanwhile, Billion Dollar Unicorn club member Blue Apron is already making a mark in its own niche in the market.
Blue Apron’s Offerings
New York-based Blue Apron was founded in 2012 by Matthew Wadiak, Matt Salzberg, and Ilia Papas. As an undergrad at Harvard, Matt had already run a successful student-run laundry business. It may not have been a glamorous business, but the experience helped nurture the spirit of entrepreneurship in him. Even after he became a successful venture capital investor at Bessemer Venture Partners, he still wanted to set up a business that would provide a service that people needed.
Matt integrated this desire with his love to cook and launched Blue Apron with his partners Ilia Papas and chef Matthew Wadiak in 2012. The company was set up to help simplify cooking by delivering all the ingredients for gourmet meals at home.
To order meals from Blue Apron, a consumer has to subscribe to their service, post which they are able to receive ingredients and recipes for up to four meals per week. Ingredients are delivered twice a week in refrigerated boxes that are packed with ice packs and insulated liners so that ingredients remain fresh for the entire day.
Blue Apron ensures that the meals delivered cater to any dietary restriction that the subscriber may have. Their recipes are created by their culinary team and guest chefs and use seasonal products. The ingredients shipped are fresh and perfectly measured so that there is no waste. They have a broad selection of recipes so that they are never repeated in the same year. The recipes sent are easy to follow and provide 500-700 calories per serving and need 35 minutes to prepare.
Within a year and a half of the launch of their service, Blue Apron expanded their operations from delivering a few orders out of a kitchen in Long Island City, Queens to delivering over 500,000 meals a month nationwide.
In 2014, they also expanded their offerings by opening an online marketplace for kitchen products including knives, prep tools, cookware, bakeware, cookbooks, and a limited selection of pantry products.
Blue Apron’s Financials
Blue Apron’s innovative idea has seen rapid adoption. Subscribers can choose from a two-person plan, which is priced at $59.94 a week for a three-meal delivery schedule or a family plan, which is priced at $139.84 a week for four meals for a family style meal for four.
They were already generating revenues of nearly $3 million a month by the end of 2013. They were expecting to end 2014 with revenues of $70 million. Earlier this month, Blue Apron reported that they were delivering 3 million meals a month. Considering that a meal is priced at nearly $9 each, it translates to $27 million in monthly revenues or $324 million in annual revenues. And this does not include any revenues they earn from their online market.
Blue Apron is venture funded so far with investments of $193 million received from investors including Jason Finger, BoxGroup, Bessemer Venture Partners, Stripes Group, Fidelity Investments, Peak Opportunity Partners, Joseph N. Sanberg, First Round, Alan Gould, Eric Gould, and Nat Turner. Their last round of funding was held earlier this month when they raised $135 million at a valuation of $2 billion. That is a significant increase compared with the valuation in April 2014 when they raised $50 million at a valuation of nearly $500 million.
The valuation makes Blue Apron the first company in the meal delivery business to enter the Billion Dollar Unicorn club. However, a lot of competition is brewing in the market with companies like Hello Fresh and Plated offering similar products.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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