Blue Apron Blues

Prior to the GSB, I spent three years working at Blue Apron, the meal kit delivery company. (Note, all comments that follow are my own interpretation and in no way reflect the position of the company.) In addition to its core product, which features pre-portioned proteins, produce, dairy and pantry ingredients along with step by step cooking instructions, Blue Apron also offers a monthly wine subscription service. Many of the wines are delicious, and are produced in partnership with vineyards or wineries located throughout the West Coast, Old World regions like Spain, France and Italy,  and New World regions like South Africa and Chile.

In order to sell direct to consumer, Blue Apron is registered as a winery and distributes to consumer's homes under its own license in all states where it operates. Operating as a winery allows the company to offer high quality wines at an attractive price point of $65.99 per 6 bottle shipment, or just over $10.00 bottle. As has come up a few times in class, Blue Apron wines clock in at smaller bottle size than the standard format: 500ml (which is enough for 2.5 glasses) v.s. 750 ml (which is enough for 4.5 glasses). The idea is that 500 ml is the perfect size for one or two people looking for just enough wine to accompany a meal.

Blue Apron wines come with beautiful tasting notes that detail the flavor profile of each wine, as well as what types of Blue Apron recipes/food flavors they best pair with.

Despite being a high-quality product offered by an established consumer food brand, Blue Apron's wine program has had limited success. I interviewed the program's director, Evy, to better understand why. Here are the themes that emerged:

1. Customers want choice: When the wine program first launched, customers received a monthly shipment of six wines (3 reds and 3 whites) but did not have any choice over the varietals or source regions. Although Blue Apron's back-end systems were eventually updated to allow customers to swap bottles in and out of their delivery, and to give customers the option of ordering a box of all red or all white wines, the program still did not take off. Evy shared that, while customers reported enjoying the wines, many wished they had the option to order as few wines as one or the option to reorder their favorite wine, options that Blue Apron's supply chain and tech infrastructure unfortunately do not support. Moreover, given the company's subscription model, it most constantly balance tradeoffs between variety and inventory costs/turnover.

2. Limited avenues for customers to try the wines: Blue Apron is not able to serve wines on premise at its own events (such as pop-ups), and has had limited resources to work with partners to serve it's wines at bars, restaurants and food markets. As such, there is no way for prospective customers to try Blue Apron wines, or even get a sample bottle, before signing up for a subscription account and committing to six bottles. This creates a high barrier for customers who are curious about the brand but are on the fence. Moreover, these challenges make it is difficult for the company to effectively communicate the quality of the wines.

3. Legal restrictions around referrals: Regulation prohibits customers of companies like Blue Apron from setting up automated referral systems in which customers can enter a friend's email address, click a button, and automatically direct their friend to the site and the account set-up flow. Instead, the laws dictate that the customer must actively and personally write a referral message (although it would be permissible for them to do so via the Blue Apron website). In other words, Blue Apron would have to rely on customers literally writing messages to their friends to recommend the wines, a far less efficient form of "word of mouth".

4. Limited technology resources: Not surprisingly, most of the company's in house technology resources are focused on the core meal-kit business. However, for the wine team, this reality has meant limited resources for back-end and front-end innovation that would enhance the consumer experience, and better allow Blue Apron to compete with companies like Winc, Wine.com and the like.

In short, a combination of business model decisions, logistical challenges, legal restrictions and limited technical resources have created significant headwinds for an otherwise excellent product.